Tech Financials: 'It's the Winter of Our Digital Discontent'

 
 
By Chris Preimesberger  |  Posted 2009-02-13 Print this article Print
 
 
 
 
 
 
 

It's not hard to see that 2008-09 is going to get worse before it gets much better. Some sectors, such as storage, data center automation and e-discovery, seem immune to the downturn, but chip, computer, handheld, flash memory and server makers continue to struggle big time.

As the smoke clears and the Q4 earnings report window closes, it's a bit daunting to look back and revisit the economic damage key players in the the IT industry have had to suffer in the last three months of 2008.

The Q1 2009 forecasts, as one might imagine, are not any better. As one IT analyst caustically told eWEEK the other day: "This is certainly a downturn like no other we've seen -- quick and hard-hitting -- even since the bubble [of 2000-2003]. Here's hoping the [Obama] stimulus package gets something going, and soon."

It's not hard to see that 2008-09 is going to get worse before it gets much better. Some sectors, such as storage, data center automation and e-discovery, seem immune to the downturn, but chip, computer, handheld, flash memory and server makers continue to struggle big time.

It could well be that 2008-09 will be known in years to come as "the winter of our digital discontent."
Following are quick-look recaps of key IT companies and their financial reports and forecasts over the last two weeks.

RIM Warns Earnings Down, Subs Up

Sales of Research In Motion's new BlackBerry Storm has prompted RIM to up its fourth-quarter sales prediction by 20 percent but lower its gross margin and earnings-per-share projections. Why? New subscriptions cost more than upgrades.

Cisco Revenue Outlook Misses Expectations, Shares Fall

Cisco Systems said it expects revenue in the current quarter to fall 15 percent to 20 percent from a year ago as the economic weakness deepens, sending its shares down 3.5 percent.

The forecast came on the network equipment maker's earnings conference call, after it posted higher-than-expected quarterly profits as it managed to contain costs. Analysts had forecast Cisco's fiscal third-quarter revenue at $8.8 billion, which would be a 10.5 percent drop year on year.

However, the company said it was keeping its long-term target for annual revenue growth in a range of 12 percent to 17 percent.

Panasonic Warns of $4.2 Billion Loss, Cuts 15,000 Jobs

Japan's Panasonic, the world's No. 1 plasma TV maker, warned it would post an annual loss of $4.2 billion and said it would cut 15,000 jobs as it grapples with a stronger yen and slowing demand.

The maker of Viera flat TVs and Lumix digital cameras joins a growing list of electronics makers stepping up restructuring in the face of a global slump that is shaping up to be nastier than the last major downturn in 2001 after the IT bubble.

Sony, Toshiba and Hitachi are all facing multibillion dollar losses, crippled by the double whammy of falling sales and a strong Japanese currency that eats into overseas profits when repatriated.

SanDisk Ends Rocky Year with $1.9B Loss in Q4

SanDisk, the world's largest supplier of flash memory cards and holder of hundreds of valuable industry patents, probably wishes it could forget 2008 and start all over again.

The company boasted a stock that sold for more than $33 in May 2008, and shortly afterward it had a generous buyout offer on the table from longtime competitor Samsung. But things have changed big time in the SSD memory business, thanks to a continual oversupply of flash in the market.

SanDisk was trading Feb. 3 for under $9 after the company reported that its Q4 2008 revenues fell a whopping 31 percent to $863.9 million from $1.25 billion a year ago.



 
 
 
 
Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz
 
 
 
 
 
 
 

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