There were more bad news from the tech sector over the last few days, although there are some bright spots.
Cisco Drops After Chambers Says Customers 'Cautious'
Shares of Cisco Systems Inc., the world's biggest maker of computer-networking equipment, fell as much as 11 percent after Chief Executive Officer John Chambers forecast slowing sales growth and said customers are "more cautious" about the economy...
...National Semiconductor Corp. yesterday [10 August] cut its first-quarter sales forecast, triggering a decline in computer chip stocks.
"Most CEOs I talk to have put a little bit of caution on their optimism and termed it 'moderate growth'," Chambers, 54, said in an interview yesterday. Last quarter, Chambers said executives were becoming more optimistic.
Inventories rose 39 percent to $1.21 billion in the fourth quarter and will remain high for the rest of the year as Cisco stocks up on its routers, switches and consumer products to more quickly meet demand, Chief Financial Officer Dennis Powell said...
Cisco last night reported profit rose 41 percent to a record $1.38 billion as sales increased 26 percent to $5.93 billion, the biggest growth in three years.
Sales will increase at a slower pace this quarter than last quarter, Cisco said. Some investors were expecting 3 percent growth, Eiswert said.
Revenue will grow 16 percent to 18 percent from a year earlier, Powell said. That's a slowdown from the fastest growth in more than three years in the current period, and would generate sales of $5.92 billion to $6.04 billion.
Cisco's fourth-quarter gross margin, or the percentage of revenue left after subtracting the cost of goods sold, fell to 68.4 percent from 68.8 percent in the preceding three months.
The gross margin will be between 67 percent of sales and 68 percent this quarter, Cisco said.
Yesterday, it was Hewlett Packard's turn, although the news was mitigated by a better outlook from Dell.
H-P fires 3 executives after lower-than-expected earnings
A surprise, lower-than-expected earnings report cost three Hewlett-Packard executives their jobs and sent shares down 13% Thursday — the same day rival Dell reported its highest revenue ever.
H-P, the No. 2 PC maker behind Dell, reported net income of $586 million, or 19 cents a share, in its fiscal third quarter. Excluding some charges, H-P earned 24 cents a share, 7 cents less than expected...
Another bad sign: H-P reported a $472 million increase in inventory from the previous quarter...
H-P's woes appear to be internal, company-specific issues, not signs of industrywide weakness, says Pacific Crest Securities analyst Brent Bracelin.
Dell CEO Kevin Rollins said he had seen no signs of a slowdown. "This is just better execution by some companies than others," he said. Dell's inventory declined in its fiscal second quarter, and its server sales were up...
Dell's revenue of $11.7 billion rose 20% from $9.8 billion a year ago. Rollins attributed the jump to an overall increase in IT spending and market share gains.
Net income of $799 million, or 31 cents a share, was up from $621 million, or 24 cents a share, a year ago. The numbers met revised projections Dell made in July.
In the current quarter, Dell expects revenue of $12.5 billion and earnings per share of 33 cents.
IBM also appears optimistic.
IBM sees growth spurt, looks to hire 18,800 workers in '04
IBM said Thursday that it expects to hire 18,800 employees this year, an 88% boost over what it forecast at the start of the year...
... IBM pointed to rising sales in consulting, grid computing and Linux-related businesses as rationale for expanding its workforce. IBM now expects to end 2004 with 330,000 workers, its highest total since it employed 344,000 staffers in 1991.
"We do see growth, unlike some of our competition," says IBM spokesman Clint Roswell.
It's not quite all gloom in the tech sector, but analysts hoping for the sector to prop up the economy and the stock markets would probably be disappointed.
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