Wall Street Beat: Hardware taking brunt of recession
Job cuts at AT&T and Adobe Systems and lower expectations for bellwethers like Google and Microsoft this week make it is clear that the now-official U.S. recession is hitting all sectors of IT, though so far it looks like hardware and components will get the worst of it.
AMD Thursday issued one of the latest harbingers of bad news, announcing that it now expects revenue, excluding process technology licensing, to decline by 25 percent from US$1.59 billion in the third quarter.
On Wednesday, brokerage Robert W. Baird lowered its quarterly earnings forecast for Intel by $0.02 per share to $1.08 and slashed its 2009 forecast from $0.85 to $0.56 per share. Analyst Tristan Gerra cited, among other issues, weakness in the notebook market, which has been a driver for growth in the hardware market.
"Our checks indicate notebook demand trends have further deteriorated since Intel reduced its 4Q guidance," Gerra said in a research note.
Intel three weeks ago cut its own fourth-quarter targets, one of the biggest indications yet of what is shaping up to be a bad year for PCs, as demand slumps and manufacturers cut prices. IDC Wednesday said worldwide 2009 PC unit shipment growth will be 3.8 percent, with the value of shipments declining by 5.3 percent. IDC's forecast earlier this year called for 13.7 percent unit growth and a 4.5 percent increase in PC revenue. U.S. shipments will decline by almost 3 percent next year, with low single-digit growth in the next three years, IDC said
In the server realm, Gartner on Monday said that while the worldwide market for servers hit 2.3 million units during the third quarter of 2008, up 4.4 percent from a year earlier, revenue fell by 5.4 percent to $12.7 billion.
The recession is also hitting other hardware components and mobile devices. On Tuesday, iSuppli estimated total shipments of mobile phones would decline 5.6 percent next year. The company this week also said global shipments of hard disk drives will be flat or decline in the fourth quarter of 2008.
Research In Motion, the most successful PDA maker for the corporate market, Wednesday gave preliminary results for its fiscal third quarter that call for revenue of $2.75 billion to $2.78 billion, down from its earlier forecast of $2.95 billion to $3.10 billion. RIM cited macro economic woes and changes in ship dates for products. The BlackBerry Storm touchscreen device was finally released late last month.
The slowdown is global. Netherlands-based Philips Electronics, which makes a range of consumer electronics goods, Thursday said that due to a sharp drop in demand, it would revise earnings goals and quicken the pace of restructuring. The company no longer forecasts a doubling of earnings for 2010, and will take new restructuring charges of $139.8 million.
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Either way you look at it Microsoft Data Center management did not follow standards or best practices in this failure. In which case it makes me wonder more about the outsourcing of corporate data much less personal data.
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Our country is in the midst
Our country is in the midst of recession and more and more people today are now looking for financial aid that they could rely in times of trouble. The popular online auction site eBay may be next in line for payday loans. The website has been an online Mecca for people looking to sell superfluous items, collectible and offbeat, for over a decade, but their revenue has been slipping of late. The auction function of the site hasn't been as lucrative as it once was. The website may be looking for payday loans to boost its diminishing stock price. Extraneous spending has been dropping across the board, and most of eBay's income has been from straight sales rather than auctions. The average person doesn't want to bid on a vintage lava lamp when they are contemplating payday loans just to keep their lights on.