IT Earnings Reports Show Vast Disparities
EMC, Amazon.com and Data Domain watch revenues soar while most other companies keep struggling to avoid red ink. SAP, IBM, Sun Microsystems and others continue to lay off staff in IT management efforts to control operational expenses.
This week's IT earnings reports, as covered
daily by eWEEK staff and affiliated news services, indicate a huge disparity in
the performance of companies in the high-tech business world at the moment.
A "chosen few" are doing very well, thank you, while a vast majority of enterprises are feeling the pinch and are scrambling to cut operational and discretionary costs.
The worldwide recession has created a massive gulf between profitable and unprofitable companies. For example, data storage infrastructure market leader EMC posted its first $4 billion revenue quarter, while SAP-the world leader in enterprise business management software-announced that it was forced to lay off about 3,000 people.
Some reports were puzzling. For example, Data Domain revealed a 122 percent jump in year-over-year revenues, yet its stock took a big hit because its profit was 10 cents per share, falling short of Wall Street's expectation of 12 cents per share. Symantec lost $6.8 billion, yet beat Wall Street expectations, so its stock went up 3.6 percent.
Here is a brief look at this week's quarterly IT financial report news.
EMC Posts Record Q4 and Financial Year
EMC reported record fourth-quarter revenue of $4.02 billion, an increase of 8 percent sequentially and 5 percent year over year.
The world's largest data storage infrastructure company also posted a total revenue record of $14.88 billion, an increase of 12 percent year over year.
Data Domain Shows Huge Revenue Upswing-but There's a Caveat
Data Domain, which makes automated data storage arrays with deduplication as a standard feature, posted earnings of $13.9 million on Jan. 29, compared with a loss of $76,000 in the same quarter a year ago.
However, that $13.9 million figure includes a $5.7 million deferred tax benefit. Excluding one-time items, Data Domain's profit came to 10 cents per share, short of Wall Street's estimate of 12 cents. Sales grew 90 percent to $85.2 million from 44.9 million.
JMP Securities analyst Peter Bussi told the Associated Press that "we believe the company is going to face an increasingly brutal competitive landscape and tougher environment for its high-end products."
Amazon.com Reports Stellar Quarter
Amazon.com stock was up about 18 percent Jan. 30 after the Internet retailer posted much better-than-expected fourth-quarter results-buoyed by 2008 holiday season retail sales. The online retailer and service provider reported revenue of $6.70 billion, compared with analysts' consensus of $6.44 billion.
However, Amazon.com joined most other IT companies in issuing guidance that the first quarter of 2009 won't be nearly as profitable. The company offered first-quarter revenue guidance of between $4.525 billion and $4.925 billion, compared with Wall Street's consensus of $4.57 billion.
Quantum Reports 19% Dip in Revenue
Data storage disk and tape products maker Quantum reported a GAAP operating loss of $334 million and a net loss of $340 million, or $1.63 per share, in its third-quarter fiscal year earnings report on Jan. 29. Quantum's total revenue of $204 million was down 19 percent from the previous year.
Despite a revenue decline, storage company Quantum's fiscal third-quarter GAAP gross margin rate was 42 percent, up from 35 percent in the third quarter of the previous fiscal year and the highest level Quantum has achieved in eight years, CEO Rick Belluzzo says.
"Revenue was definitely impacted and was below what we would have liked," Belluzzo said, "but we more than made up for it because of our growth toward higher-margin businesses and expense management that we put in place."
Symantec Posts Loss, but Results Beat Expectations
Security and data backup software maker Symantec reported a $6.8 billion quarterly loss because of writedowns, but its operating profit beat Wall Street forecasts as sales stayed steady and it cut costs. Symantec shares rose 3.6 percent in after-hours trade.
SAP Sales Drop; It Will Cut 3,000 Jobs
SAP, the world's biggest maker of business management software, said Jan. 28 it would reduce its work force by 3,000. The company gave no target for its key software and software-related sales in 2009, but based its margin forecasts on the assumption core sales would be flat or 1 percent lower than 2008 sales of 8.62 billion euros.
SAP implemented cost-cutting measures in October after sales dropped sharply, and said it would continue to slash costs and announced it intended to reduce its work force to 48,500 by the end of 2009 from 51,800 in January.
IBM also reiterated it would cut 2,800 jobs in 2009.
Sun Microsystems Wrestles with Restructuring, Economy
Sun Microsystems reported Jan. 27 that the recession in the United States and an overall rough global economy translated into steadier low-end software and storage sales in its fiscal 2009 second quarter. Its sales numbers for higher-end systems, such as those based on the UltraSPARC processor, also suffered.
Sun's results for the second quarter of fiscal 2009 show the company taking a beating in many categories, with revenues decreasing 10.9 percent year over year from 2008.
Yahoo Beats Expectations as New CEO Takes Charge
In some much-needed good news, Yahoo posted a stronger-than-expected fourth-quarter profit on Jan. 27 after several months of cost-cutting initiatives in the face of a weak advertising market.
Analysts said investors were relieved that the Internet company managed to beat their low expectations for the fourth quarter. Yahoo "didn't bleed to death as much as some of the bear scenarios," Martin Pyykkonen, analyst at Wunderlich Securities, told Reuters.
Fourth-quarter profit, excluding write-downs and onetime charges associated with its restructuring efforts, rose to $238 million, or 17 cents per share, from $205.7 million, or 15 cents per share, a year earlier.