Server sales up in 2000

Although server vendors suffered in the third quarter of 2000, analysts say that the server industry apparently is unaffected.

Preliminary statistics from Dataquest show that worldwide server shipments in the third quarter of 2000 reached approximately 1 million, representing an increase of 16.5% over the third quarter of 1999.

Compaq, Dell and IBM servers accounted for more than 58% of the market. Compaq pulled in 27.3% of the market, followed by IBM at 16.4%, Dell at 14.9%, Hewlett-Packard at 10.9% and Sun at 7.1%. Miscellaneous server vendors, including Gateway, Micron and Toshiba, accounted for 23.3% of the market.

These results were in spite of lackluster company performances. Bellwether Intel issued an earnings warning for its fourth quarter stating that revenues would be flat, " plus or minus a couple of percentage points, with third-quarter revenue of $8.7 billion. "

Intel had expected its fourth-quarter revenue would be up 4% to 8% from the third quarter. The company attributes the earnings shortfall to decreasing demand for PCs and cancelled orders.

Dell, too, reported that its revenue growth would slow in 2001. The company -- which saw quarterly net revenue rise 22% to $8.3 billion - has recently experienced a backlog in shipping Dimension 8100 desktop computers and Inspiron laptops. Its shares are trading just above a 52-week low of $17.

The soft financial market also affected Compaq, IBM, HP and Sun. Compaq issued a fourth-quarter warning. IBM’s stock is trading at an all-time low despite what analysts predict will be a solid fourth quarter. A memo from CEO Scott McNealy of Sun told employees that the company would save money by cost cutting and more prudent hiring.

HP is taking stringent measures to cut its costs -- it hopes to save $140 million for the fiscal year by deferring employee raises, cutting temporary workers and encouraging employees to save electricity by turning their computers off over the holidays.

This story, "Server sales up in 2000 " was originally published by Network World.

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