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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.
Motorola Posts Loss; IBM Layoffs
Motorola Posts a Quarterly Loss, Faces Stiff Competition in 2009
Motorola forecast a deeper-than-expected first-quarter loss, suspended its quarterly dividend, and said it was looking for a new chief financial officer, sending its shares down 10 percent.
The embattled cell phone maker slid to fifth place from fourth in global rankings in the last quarter, and said on Tuesday it expects its handset division to post a loss in 2009.
IBM Still Mired in Layoff Spiral
IBM continues to lay off employees and to take heat from employee groups for its practice of not providing more information such as exact numbers or other particulars on the layoffs. The word is IBM has eliminated nearly 5,000 positions since the action began in January, according to sources.
An IBM employee organization called Alliance@IBM says IBM has laid off more than 4,800 people, including 1,449 in Sales and Distribution, 1,419 in the IBM Software Group, 1,200 in IBM’s Systems and Technology Group, 307 in IBM Finance, 193 in IBM Research, and 92 in human resources.
Meanwhile, according to reports, IBM has an effort called “Project Match” that aims to help IBM employees in the United States and Canada move overseas to work for IBM, or essentially “offshoring” themselves.
Report: Virtualization Sector to Grow 43 Percent in 2009
Despite the recession, global revenue from the sector will surpass $2.7 billion by the end of the year. The biggest market driver? Enterprises’ need to reduce the total cost of ownership of its IT systems; green IT is a welcome byproduct.
Intel Investing $7 Billion in U.S. Manufacturing Facilities
Intel plans to invest $7 billion over the next two years to build and update its U.S. manufacturing facilities in order to ramp up production for the company’s new line of 32-nanometer processors – a vital component for the still-growing “netbook” market as well as for future generations of desktops, laptops and servers.
Intel’s investment is a breath of fresh air at a time that other companies, including Panasonic, have cut back on jobs and costs.
Report: SMBs Add Employees, Cut Salaries in January
Despite a worsening economic outlook and massive layoffs at enterprise-level organizations, small and midsize businesses managed to add new employees in January, based on a survey of 20,000 small businesses conducted by online payroll service SurePayroll.
The company’s hiring index rose to 11,306 in January, up from 11,274 at the end of December. This represents a 0.3 percent increase in the average small-business size, meaning that the average small business grew in size in January. However, the hiring growth has been flat of late, with the last five months all being in the 0.2 to 0.3 percent range.