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