February 4th, 2010

Lenovo sales surge; Company hits stride in third quarter

Posted by Larry Dignan @ 3:59 am

Categories: Earnings, Economy, Hardware Infrastructure, Lenovo

Tags: Revenue, Lenovo Group Ltd., Sales Strategy, Sales Force Management, Sales, Larry Dignan

Lenovo delivered a solid fiscal third quarter profit on strong PC sales in China and the U.S.

The PC maker reported an operating profit of $99 million, a sum that doubled the second quarter tally. Fiscal third quarter revenue was up 33 percent from a year ago to $4.8 billion.

Lenovo also said that it has 9 percent worldwide market share, its highest total in its history. In a statement, the company said that it has cut expenses and is operating efficiently using Lean Six Sigma in its supply chain to squeeze costs.

For the company (all resources), the results are proof that Lenovo has emerged as a fast-growing PC maker since the acquisition of IBM’s PC business.

By the numbers (statement):

• Lenovo’s third quarter China revenue was $2.3 billion, up 45 percent from a year ago. China represents 47 percent of Lenovo’s global sales.
• In emerging markets such as Russia, Asia Pacific and Middle East, Lenovo posted sales of $857 million, up 53 percent from a year ago.
• The company reported third quarter revenue of $1.7 billion in mature markets (U.S., Europe, Australia), up 13 percent from a year ago. Mature markets represent 35 percent of Lenovo’s sales.
• Notebook revenue was $3 billion, up 46 percent from a year ago. The company credited the Windows 7 launch and products like the IdeaPad consumer line for the sales growth.

February 3rd, 2010

Cisco earnings: Demand expected to bounce back; Supply worries loom

Posted by Larry Dignan @ 2:30 am

Categories: Cisco, Earnings, Economy, General

Tags: Analyst, Earnings, Cisco Systems Inc., Larry Dignan

Cisco Systems is on deck to deliver its fiscal second quarter results Wednesday and analysts are upbeat about the company’s prospects. The rub: Supply constraints may have put a lid on Cisco’s revenue.

Overall, Cisco is expected to deliver a strong quarter amid strong spending on data center upgrades and telecom companies’ infrastructure upgrades. In fact, a few analysts expect Cisco to hire about 2,000 to 3,000 employees over the next two to three quarters as demand bounces back.

Analysts expect Cisco to report second quarter earnings of 35 cents a share on revenue of $9.4 billion, according to Reuters Thomson. Gross margins are projected to be at 64.84 percent. In recent days, estimates have been creeping higher.

The bottom line: Cisco has weathered the downturn well and now is playing offense as it targets new markets and ramps up acquisitions.

Here are a few key themes to watch in the quarter:

Overall demand: Jefferies analyst William Choi said in a research note that Cisco likely saw demand across its entire product line. Overall, Cisco’s Nexus switches are performing well even though there may be supply constraints, said Choi.

Telecom carrier spending ramps. Telecom companies note that their capital spending is increasing. Verizon, AT&T and select European carriers are all spending more. Cisco is likely to benefit.

Enterprise spending recovers. Cisco’s switches lineup may benefit from better enterprise spending. However, Choi comes back to supply concerns in his research note:

We’ve heard lead-times on some switches extended to 6-8 weeks and that 10GB component availability is tight across the industry. We believe these shortages likely meant some business shifted into Q3. We believe the shortages were primarily in Dec. month and execution has improved since.

Wedbush Securities analyst Matthew Robison said in a research note:

Adding 3Com together with H-P yields a competitor with about 10% of Cisco market share in switching, so for a combined competitive effort of that magnitude to get a meaningful edge on Cisco they would have to have the ability to respond with a large percentage increase in supply. We view such circumstances to be unlikely. Cisco shortages may have marginal benefit for peers, but we think the more meaningful effect will be pricing power and bookings visibility.

What’s the impact of those supply problems? Robison said in a research note:

We believe demand is good and if it were not for continued supply constraints, we would forecast revenue to be at the high end of the range.

The big question is whether Cisco has a fix for these supply chain issues.

Some color on the Unified Computing System. UCS isn’t large enough as a business to yield hard data, but analysts are hoping for some indication of how many customers are evaluating Cisco’s data center systems.

Stifel Nicolaus analyst Sanjiv Wadhwani noted:

Our recent checks show that Cisco’s UCS product is faring quite well with recent wins at HSBC Bank and Mastercard.

The outlook matters. Analysts generally expect, Cisco to project a return to double-digit growth. “As usual, the outlook matters more and we expect a forecast that yields double-digit year-over-year organic growth thanks to a better environment and easier comparisons,” said Morgan Keegan analyst Simon Leopold.

January 28th, 2010

Microsoft earnings: 'Exceptional demand' for Windows 7 stokes bottom, top lines

Posted by Larry Dignan @ 1:35 pm

Categories: Earnings, Economy, General, Microsoft

Tags: Revenue, Microsoft Corp., Earnings, Microsoft Windows 7, Microsoft Windows, Operational Accounting, Operating Systems, Software, Finance, Larry Dignan

Updated: Windows 7 powered Microsoft to a record fiscal second quarter.

The company on Thursday reported net income of $6.66 billion, or 74 cents a share, on revenue of $19.02 billion. The results include $1.71 billion in Windows 7 deferred revenue. That added 14 cents a share to Microsoft’s bottom line.

The view of the quarter depends on whether you discount the deferred revenue impact or not. The company was expected to report second quarter earnings of 59 cents a share on revenue of $17.9 billion. If you factor out the deferred revenue, Microsoft’s earnings beat projections, but revenue could be seen as light.

In a statement, Microsoft said Windows 7 demand was “exceptional.” Microsoft said it sold more than 60 million Windows 7 licenses.

The outlook from Microsoft boiled down to this: We’ll do as well as the PC market.

Read the rest of this entry »

January 28th, 2010

Motorola turns profit in fourth quarter, but outlook weak

Posted by Larry Dignan @ 5:42 am

Categories: Earnings, Economy, General, Motorola

Tags: Revenue, Smart Phone, Earnings, Motorola Inc., Smart Phones, Sales Strategy, Cellular Phones, Operational Accounting, Handhelds, Financial Accounting

Motorola is making progress on its turnaround, but the company’s fourth quarter revenue total and first quarter outlook illustrated there’s a lot more work to do.

Motorola reported fourth quarter earnings of $142 million, or 6 cents a share. That tally includes 3 cents of charges. Revenue was $5.7 billion in the quarter. Wall Street was expecting fourth quarter earnings of 8 cents a share on revenue of $5.94 billion.

In other words, Motorola’s earnings were solid, but revenue fell short (statement). And the outlook wasn’t so hot either. For the first quarter, Motorola projected a loss of a penny a share to 3 cents a share. Wall Street was expecting a profit of 3 cents a share.

For the year, Motorola delivered a loss from continuing operations of $51 million, or 5 cents a share, on revenue of $22 billion, down from $30.1 billion a year ago.

By the numbers:

Read the rest of this entry »

January 27th, 2010

SAP earnings: Conditions improve, but uncertainty remains

Posted by Larry Dignan @ 6:14 am

Categories: ERP, Earnings, Economy, General, SAP

Tags: Revenue, SAP AG, Earnings, Operational Accounting, Tools & Techniques, Managed Hosting, Finance, Management, Larry Dignan

SAP said it expects to return to revenue growth and deliver stronger profit margins in 2010 amid a gradual economic recovery. The company also said sales were rebounding in the U.S. and added that its on-demand Business ByDesign suite will be ready for volume deployments in mid-2010.

In an earnings statement, which didn’t offer any surprises since SAP preannounced results, CEO Leo Apotheker said:

Along with margin expansion for 2010, we are also ready to return to top-line growth, although the market continues to be challenging and uncertainty among customers still exists.

The aim for SAP is to grow its core business and offer new technologies that speed implementation—think Business ByDesign, which will be ready for volume deployments in mid-2010.

In a presentation with investors, SAP noted that it expects subscription revenue to grow in 2011 because of its Business ByDesign suite for small and mid-sized businesses and on-demand extensions for large customers. The company will focus on fast growing regions such as Brazil, Russia, India and china.

SAP will also keep a tight lid on costs, according to SAP CFO Werner Brandt.

SAP said it expects software and software related service revenue to rise 4 percent to 8 percent in 2010. Operating margins will be between 30 percent and 21 percent.

By the numbers, SAP didn’t offer many surprises. Under U.S. accounting, fourth quarter software and software related service revenue was euro 2.57 billion, down 4 percent from a year ago. Total revenue was euro 3.19 billion, down 9 percent from a year ago. Income from continuing operations was euro 750 million, down 13 percent from a year ago.

SAP touted a bevy of customer wins at companies like Deutsche Bank, 3M and Valero. Deutsche Bank is building a core banking system with SAP starting in 2010 under a multi-year pact.

Among the key charts:

Read the rest of this entry »

January 26th, 2010

Verizon earnings: Fourth quarter on target; Loss due to layoff costs; Wireless hums along

Posted by Larry Dignan @ 4:59 am

Categories: Earnings, Economy, General, Telecommunications, Verizon, Wired & Wireless

Tags: Revenue, Layoff, Verizon Communications Inc., Earnings, Wireless, Operational Accounting, Wi-Fi, Finance, Wireless And Mobility, Larry Dignan

Verizon’s wireless business continued to perform well in the fourth quarter, but the company reported a net loss as it took charges related to job cuts.

Verizon reported a fourth quarter net loss on a $3 billion charge related to layoffs. Excluding that charge, Verizon met Wall Street expectations.

In the fourth quarter (statement), Verizon reported a loss of 23 cents a share, or $653 million, compared to a profit of 43 cents a share a year ago. Adjusted for severance, pensions and other charges, Verizon had earnings of 54 cents, in line with Wall Street estimates.

Revenue for the fourth quarter was up 10 percent to $27.1 billion. Verizon’s revenue got a boost from the acquisition of Alltel. For 2009, Verizon reported earnings of $1.29 a share on revenue of $107.8 billion.

Read the rest of this entry »

January 25th, 2010

VMware earnings shine: Customers 'move forward' on IT spending

Posted by Larry Dignan @ 1:34 pm

Categories: Earnings, Economy, General, VMware, virtualization

Tags: Revenue, IT-spending, VMware Inc., Earnings, Virtualization, Operational Accounting, Hardware, Finance, Larry Dignan

VMware’s fourth quarter handily topped expectations as the company saw strong demand for its vSphere virtualization platform. Meanwhile, the company said customers are beginning to spend more money and raised its first quarter revenue outlook.

The company reported net income of $56 million, or 14 cents a share, on revenue of $608 million, up 18 percent from a year ago (statement). Non-GAAP net income was $127 million, or 31 cents a share. Wall Street was expecting earnings of 26 cents a share on revenue of $553.8 million.

For fiscal 2009, VMware reported net income of $197 million, or 49 cents a share, on revenue of $2 billion, up 8 percent from a year ago.

In a statement, VMware CEO Paul Maritz said:

The quarter’s strong performance, anchored by demand for vSphere, signals that virtualization is a key technology for customers who need to save money today, yet invest in a strategy that is central to the emerging cloud computing model.

The outlook for VMware was also solid. VMware CFO Mark Peek said:

While the economy is slowly recovering, we have improved near-term visibility as customers move forward with their IT investments.

The company projected first quarter sales to be between $580 million and $600 million, or up 23 percent to 28 percent from a year ago. Wall Street was expecting revenue of $530.5 million. Note that VMware just acquired Zimbra, which is contributing some revenue going forward.

For 2010, VMware is projecting revenue between $2.45 and $2.55 billion, an increase of 21 percent to 26 percent from 2009. Wall Street was expecting $2.28 billion.

January 25th, 2010

Apple's December quarter: Big earnings an appetizer ahead of tablet

Posted by Larry Dignan @ 3:05 am

Categories: Apple, Earnings, Economy

Tags: Larry Dignan

Apple’s upcoming financial report Monday is likely to be stellar, but the focus will shift from what one analyst calls “the year of the Mac” to Wednesday’s expected launch of a tablet.

Wall Street analysts expect Apple to report earnings of $2.07 a share on revenue of $12.06 billion in the December quarter. Apple’s fiscal first quarter is generally known as the iPod quarter because of the Christmas pop in sales of the music player.

Analysts such as Kevin Dede at Jesup & Lamont expect strong iPod sales, iPhone 3GS adoption and Mac momentum. Dede said in a research note said:

The combination of solid results from Intel in concert with solid results from some high-end retailers leave us comfortable that consumers bought high-end electronics through the quarter despite the nascent economic recovery. Pent-up demand post the downturn could also be a positive sales factor as well, but Apple’s new, large-flat panel screens and increased functionality point to much more computer functionality at lower prices, which we think contributed to solid sales through December.

Indeed, Apple should benefit from a December surge, but any comments from the company are likely to be overshadowed by Wednesday’s unveiling of a tablet-like device.

Nevertheless, here’s a look at the figures that are expected to propel Apple’s results:

3.1 million: The number of Mac units Piper Jaffray analyst Gene Munster expects Apple to sell in the December quarter. Munster wrote in a research note:

Domestic Mac NPD retail data for all 3 months of the Dec. quarter is up 26% year over year vs. Street consensus of up ~19% year over year for the Dec. quarter. The Street is at ~14 year over year growth for CY10; with Mac unit growth tracking up mid-20s year over year we believe Street numbers will come up following the Dec. quarter report. Keep in mind, before the economic slowdown began Mac units were up 30-40% y/y on a quarterly basis. While hype surrounding the expected tablet will be focus of Apple long-term strategy, we believe we will see meaningful near-term upside from the Mac business.

9.3 million: The number of iPhones Apple is expected to sell in the first quarter, according to Munster. The consensus is for 9.1 million iPhones to be sold.

20.45 million: The number of iPod units expected to be sold by Apple in the December quarter based on Macquarie Research estimates. There are some conflicting estimates here. Barclays Capital analyst Ben Reitzes notes that iPod shipments were off 1 percent in December compared to a year ago based on NPD data. Munster projects 20.1 total iPod units, down from 22.7 million units in the December quarter a year ago. The good news: iPod sales will be driven by the iPod touch, a more profitable device.

2 million: The number of tablets Apple will sell in calendar 2010, according to Munster’s estimates. Analysts aren’t factoring sales of Apple’s tablet into their fancy financial models—yet.

Related:

• Apple Tablet: Mind share over market share · Coming to Verizon? · Special Report

January 22nd, 2010

AMD: Positive signs emerge, but Intel and Nvidia loom large

Posted by Larry Dignan @ 6:31 am

Categories: AMD, Earnings, Economy, Hardware Infrastructure

Tags: NVidia Corp., Advanced Micro Devices Inc., Intel Corp., Smb/Sme, Larry Dignan

AMD’s fourth quarter earnings delivered a series of positive data points for the company, but as the company hones its strategy it still faces an uphill climb against well-heeled rivals like Intel and Nvidia.

The company’s fourth quarter results handily topped Wall Street estimates, but the company said the March quarter would be “seasonally down.” Revenue was $1.65 billion, up 42 percent from a year ago. Earnings were $1.52 a share courtesy of a $1.25 billion litigation settlement from Intel. Excluding that gain, AMD had a loss of 5 cents a share in the fourth quarter.

In the quarter, AMD’s notebook, graphics and server units all showed good growth.

Here’s the breakdown:

On a conference call, AMD CEO Dirk Meyer noted the following:

AMD is targeting the SMB market and hoping that bleeds over into the enterprise upgrade cycle. Meyer said: “The SMB sub-segment of commercial is really our focus area. As an example, the ThinkPad products from Lenovo are really targeted at the SMB segment. Though having said that I do expect and we do see our SMB focused offerings from OEMs bleed over into enterprise because they represent a very good value. So you know not a direct target for us as compared to SMB but to the extent that enterprise takes off, we’ll get some updraft for sure.”

AMD is landing design wins for its graphics chips and plans to refresh its lineup in the second half.

The PC market is looking up. Meyer said:

We’re looking into next year feeling pretty good about the opportunity for the PC market being a growth year in 2010. You know low double digits, 10, 11, 12%, something like that, more or less consistent with what we said on the analyst day call in November. You know I would say our experience with Q4 confirms that thesis about the way 2010 will look. End user demand was strong, certainly the holiday sales out were strong and that’s true really in all regions, even in Eastern Europe which was pretty weak through the whole of 2009. We started to see a recovery there.

However, analysts remain a touch skeptical about AMD mainly due to competition. Relative to Intel’s quarter, AMD’s improvements leave a lot to be desired.

JMP Securities analyst Alex Gauna focuses on AMD’s gross margins. In a research note, he writes:

Gross margins for the quarter were up 300 bps to 45%, a nice improvement but well shy of the powerful 710 bps improvement Intel delivered to reach 64.7% in its just reported December quarter. This poor margin performance relative to Intel underscores the ongoing competitive and execution disadvantages AMD suffers owing to inferior process technology and ability to invest in capacity or R&D.

Gauna notes, however, that AMD’s products are competitive in virtualized and cloud computing-led data centers. Those markets remain AMD’s best hope in the enterprise.

Deutsche Bank analyst Ross Seymore notes that AMD’s notebook footing is also weak:

We estimate >70% of AMD’s (chip and chipset) revenue comes from the desktop PC market and any deterioration in desktop demand is likely to hurt AMD as it is unlikely to be offset by share gains in notebooks or servers.

Those mixed bag recaps of AMD were everywhere Friday. It’s not that analysts dislike AMD; they just think there are better ways to play the PC upgrade cycle via Intel and Nvidia. Simply put, the jury remains out on AMD.

January 20th, 2010

Seagate second quarter earnings shine; Outlook raised on strong demand

Posted by Larry Dignan @ 2:55 pm

Categories: Earnings, Economy, General, Hardware Infrastructure, Seagate, Storage

Tags: Revenue, Microsoft Outlook, Earnings, Seagate Technology LLC, Financial Accounting, Operational Accounting, Finance, Larry Dignan

Seagate Technology’s fiscal second quarter results blew away expectations as it shipped a record number of disk drives.

The company reported earnings of $533 million, or $1.03 a share, on revenue of $3.03 billion. Gross margins were 30.5 percent.

Wall Street was expecting earnings of 62 cents a share on revenue of $2.85 billion. Seagate’s results were even more impressive when compared to a year ago. In the second quarter a year ago, Seagate reported a net loss of $2.8 billion on revenue of $2.27 billion.

Seagate said that demand is shaping up well. For the quarter ending Jan. 1, Seagate shipped 4.94 million disk drives.

The outlook is also stronger than expected. On a conference call, Seagate executives raised guidance. The company said that its third quarter revenue will be between $2.9 billion and $3.1 billion with earnings of 88 cents a share to 92 cents a share.

Read the rest of this entry »

January 20th, 2010

eBay: Does it have any answers for Amazon?

Posted by Larry Dignan @ 3:08 am

Categories: Amazon, E-commerce, Earnings, Economy, General, eBay

Tags: Revenue, Amazon.com Inc., eBay Inc., Listings, Operational Accounting, Finance, Larry Dignan

EBay is expected to deliver a better-than-expected fourth quarter, but the elephant in the room will be the same one that has been around for the last two years or so: Amazon.

Does eBay have an answer for Amazon? The company is expected to report fourth quarter earnings of 40 cents a share on revenue of $2.29 billion. Wall Street analysts are upbeat about eBay. Listings are tracking at the high end of expectations and Wall Street’s operating margin targets, roughly 29 percent, appear to be beatable. That operating margin target is down from 31 percent a year ago.

Simply put, eBay has hurdles that it should be able to clear in the fourth quarter.

But then what?

As most shoppers know, eBay is being squeezed hard by Amazon. It also faces competition from Craigslist. Can eBay deliver sustainable revenue growth? Probably not.

Here’s the eBay challenge, according to Piper Jaffray analyst Gene Munster. EBay made its name in an auction model that’s out of favor with shoppers. Indeed, eBay’s “buy it now” feature is gaining momentum. The problem: Buy it now is what you can do on Amazon and other e-commerce companies everyday.

Given that fact, it’s not surprising that eBay isn’t viewed as the first pick of online shoppers. Here are the results of Munster’s survey of 332 online shoppers in early January and the trending data:

The bottom line: Auctions are out. You can expect eBay to spend a lot of time talking about non-auction revenue such as PayPal. But eBay is still tethered to auctions.

Benchmark analyst Frederick Moran highlights the eBay conundrum:

eBay’s shift away from its core auction platform toward a more traditional fixed-priced platform has helped stabilize revenue declines at the cost of slight margin compression. However, an increasing emphasis on the fixed price format could transform eBay into a more traditional commerce site, thus lessening its competitive differentiation.

In other words, the more eBay tweaks its model the more it competes directly against Amazon—and a bunch of other e-commerce players. Can eBay navigate that transition?

Jeffries analyst Youssef Squali outlines the mixed bag that is eBay:

• Global listings for eBay are estimated to be up 36 percent in the fourth quarter compared to a year ago;
• The buyer experience for eBay’s marketplace is improving;
• Fixed rate purchases are becoming a larger share of sales;
• PayPal is a gem;
• But the outlook for 2010 is expected to be cautious since that marketplaces turnaround, the economy and unemployment are all wild cards.

More Wall Street estimates:

• 2009 estimates: Earnings of $1.54 a share on revenue of $8.65 billion.
• Fourth quarter gross margins of 71.88 percent and 72.15 percent for 2009.
• First quarter targets: Earnings of 39 cents a share on revenue of $2.15 billion.
• 2010 targets: Earnings of $1.60 a share on revenue of $9.03 billion.

January 19th, 2010

There's a great IT spending, budget disconnect brewing

Posted by Larry Dignan @ 4:17 am

Categories: Economy, General, IT Management

Tags: Information Technology, Gartner Inc., IT-spending, Survey, Larry Dignan

Gartner said Tuesday that IT budgets will be up 1.3 percent in 2010 and roughly at 2005 levels.

According to Gartner’s CIO survey, 2009 IT budgets were down 8.1 percent. Indeed, 2009 was “the most challenging year for IT since the survey began in 1999.

Gartner surveyed 1,586 CIOs across 41 countries and 27 industries. So where’s the disconnect?

Forrester Research just last week reported a relatively rosy outlook. According to Forrester projections, IT spending in the U.S. will grow 6.6 percent in 2010 to $568 billion. In 2009, IT spending fell 8.2 percent. Projections for IT spending in 2010 have been moving gradually higher.

Gartner took its survey in December.

Obviously, one of these well-known research firms is going to be wrong about IT spending. Weak budgets and an IT spending boom don’t go together. However, the vastly different projections from Gartner and Forrester illustrate how no one really knows how IT budgets will turn out. Tech spending will bounce around like the S&P 500 and CEO confidence.

Here’s Forrester’s take on the gap between IT budgets and spending projections in a research note:

At this point, there will be a discrepancy between our forecasts of a good 2010 tech recovery and the 2010 budgets and spending plans that CIOs have put together. After a recession, CIOs tend to be very cautious about their budgets, erring on the side of little or no growth in what they plan to spend. We saw this pattern in surveys of CIOs coming out of the 2001 to 2003 recession; we fully expect to see it when we do our survey in early 2010 of IT decision-makers and their 2010 budgets. As evidence of an economic recovery becomes clearer, CIOs then get the go-ahead to spend above their budget. So, while IT vendors can prepare their 2010 plans on the basis of solid growth in the US and global tech markets, in their sales and marketing efforts, they should still assume they will be facing very cautious CIOs.

Gartner acknowledges that budgets are transitioning from budget cuts and canceled projects to those efforts that may deliver growth. Here’s a look at the top priorities in 2010 from Gartner’s survey:

January 19th, 2010

Despite China concerns, Google stays on track to push Apps into enterprise in 2010

Posted by Sam Diaz @ 2:30 am

Categories: Apps, Economy, Enterprise 2.0

Tags: China, Google Inc., Google Apps, Cloud Computing, Security, Sam Diaz

When Google went public last week to announce that it had been targeted in a cyber attack from within China, it was quick to point out that this was not an attack on the cloud, but rather one on the infrastructure itself. The attackers used a “very sophisticated” piece of malware that relied on an old-school method of infiltration - spoofing e-mail addresses and using phishing scams to get real people to unintentionally launch the malware. It’s something that’s been used on legacy systems for years, but just more complex and harder to detect.

It’s an important detail for the company to emphasize as it continues its push to sell businesses on Google Apps, its cloud-based suite of business software tools. In 2009, conversations with potential customers were largely centered around cost savings. Oh sure, those folks wanted some reassurances about security on the cloud and had questions about the sort of features they’d be giving up by moving away from systems like Exchange or Lotus. But, the economy kept bringing conversations back to cost savings.

Then came China.

Read the rest of this entry »

January 14th, 2010

Intel: Strong quarter expected amid PC unit growth

Posted by Larry Dignan @ 5:42 am

Categories: Earnings, Economy, General, Hardware Infrastructure, Intel

Tags: Unit Growth, PC, Analyst, Intel Corp., Desktops, Hardware, Larry Dignan

Intel’s fourth quarter should be a strong one courtesy of strong PC unit shipments.

The chip giant reports earnings after the closing bell on Thursday and analyst are generally expecting a strong showing. As IDC reported Wednesday, PC shipments popped in the fourth quarter courtesy of consumer demand for value-priced notebooks and netbooks.

Given that Intel chips—notably Atom—power most of those units company executives should have a few upbeat comments. Meanwhile, the outlook should be solid considering that the year ago quarter was a total trainwreck as the U.S. economy hit bottom.

Wall Street is expecting Intel to deliver earnings of 30 cents a share on revenue on $10.17 billion. Gross margins for the quarter are expected to be 62.19 percent, according to Thomson Reuters. For the first quarter, Wall Street is expecting earnings of 34 cents a share on revenue of $9.35 billion.

Auguste Gus Richard, an analyst with Piper Jaffray, says in a research note:

We believe the PC market was strong in Q4 and expect this strength to continue into Q1 due to inventory restock in the US retail channel and Chinese New Year.

However, there are a few wild-cards following the Chinese New Year (Feb. 14) that may temper the outlook a bit. That lull is expected to be only temporary as the corporate PC refresh cycle begins in the second half, say analysts.

Oppenheimer analyst Rick Schafer adds that inventories appear to be well managed and Intel has the PC upgrade cycle and strong server performance to keep the solid results coming.

By our work, enterprise spending (back-half loaded) will be a key driver pushing overall PC unit growth close to 15% in 2010–nearly 2x normal. With almost 60% enterprise exposure, Intel appears uniquely positioned to benefit on the top line as well as gross margin line.

Schafer adds that the “stars are aligned” for a server upgrade cycle too in 2010.

Analysts across the board were upbeat about Intel. With that assessment the only remaining question is how much of this happy talk is already factored into Intel’s share price.

January 12th, 2010

Forrester: IT spending in U.S. to jump 6.6 percent in 2010; Will the optimism stick?

Posted by Larry Dignan @ 5:10 am

Categories: Economy, General, Hardware Infrastructure, IT Management, Software Infrastructure

Tags: IT-spending, Forrester Research Inc., Larry Dignan

Declaring the tech downturn history, Forrester Research came out with a rather optimistic view of IT spending in the U.S.

According to Forrester projections, IT spending in the U.S. will grow 6.6 percent in 2010 to $568 billion. In 2009, IT spending fell 8.2 percent. Projections for IT spending in 2010 have been moving gradually higher.

The global outlook goes like this: IT spending will grow 8.1 percent in 2010 to top $1.6 trillion. In 2009, global IT spending fell 8.9 percent.

Software and hardware will garner most of the investment as companies start a “new multi-year cycle of technology investment growth.” Forrester predicts a 7-year buying cycle led by analytics. These smart computing efforts will have technologies such as service oriented architecture, virtualization and cloud computing as pillars.

Here are the projections for global spending by category in 2010:

• Computer equipment, up 8.2 percent;
• Communications equipment, up 7.6 percent;
• Software spending, up 9.7 percent;
• IT consulting and systems integration services, up 6.8 percent;
• IT outsourcing services, up 7.1 percent.

The weak dollar will fuel IT growth in regions abroad (at least measured in the greenback). Forrester is projecting Western and Central Europe will see tech purchase rise by 11.2 percent. Canada IT spending will jump 9.9 percent in 2010 followed by Asia Pacific (up 7.8 percent) and Latin America (up 7.7 percent).

The big question: Will this projection hold?

Another survey by Wedbush Securities seems to back up what Forrester is seeing. Indeed, it appears that IT managers are becoming more optimistic.

Wedbush surveyed 110 IT managers at large companies. In a nutshell, Wedbush found the tech recovery was accelerating over time. The usual categories—virtualization, Windows 7, cloud computing and enterprise software—are getting the most attention.

The Wedbush survey has a lot of data, but the two money charts are one focused on percentage of IT projects being postponed or canceled. Respondents saying that IT projects have been frozen checked in at 38 percent in the fourth quarter of 2008. That percentage fell to 18 percent for the fourth quarter of 2009. The three quarters in between were hovering around 22 percent to 25 percent.

And here’s the outlook for the year ahead by IT managers. Simply put, things are looking up.

January 7th, 2010

Barnes & Noble: Nook production will catch up with demand 'in next few months'

Posted by Larry Dignan @ 6:07 am

Categories: Earnings, Ebook, Economy, General

Tags: Barnes & Noble Inc., Sales Strategy, Sales Force Management, Sales, Larry Dignan

Barnes & Noble said orders for its nook e-reader accelerated throughout the holiday season, but demand is still outstripping supply. The bookseller said that it expects have stores fully stocked with the nook “in the next few months.”

The company detailed nook sales as it detailed its holiday sales for the period ending Jan. 2.

In a statement, Steve Riggio, CEO of Barnes & Noble outlined the nook picture:

“We’re pleased we were able to ship all holiday orders for nook in time. Orders for nook remained strong throughout the holiday season, and, in fact, accelerated after we announced that we had sold out our initial supply. Demand remains strong in the New Year and greater than our supply, however, we expect production to catch-up with demand and be fully stocked in our stores in the next few months.”

It’s unclear whether Barnes & Noble was expecting a big sales pop or additional store traffic from the nook, but its holiday revenue of $1.1 billion was lower than expected. The company’s same store sales fell 5.4 percent. Sales at Barnesandnoble.com were up 17 percent from a year ago. The revenue figures include sales of the nook since Thanksgiving.

The company cut its fiscal third quarter earnings to $1.20 to $1.40 a share, down from its previous guidance of $1.30 to $1.50.

Related:

• Video of B&N nook 1.1 update and gallery of in-store retail experiences
• Hands-on: B&N nook updated to version 1.1.0
• Hands-on: B&N Nook is the king of connectivity and content
• Barnes & Noble: Ramping production of the nook isn’t cheap

January 4th, 2010

Chip sales turn positive in November

Posted by Larry Dignan @ 3:26 am

Categories: Economy, General, Hardware Infrastructure

Tags: Semiconductor Industry Association, Chip, Chip Sale, Sales Strategy, Sales Force Management, Semiconductors, Sales, Hardware, Larry Dignan

Chip sales delivered positive growth compared to a year ago for the first time in months, according to the Semiconductor Industry Association.

The SIA reported that November chip sales were $22.6 billion, up 8.5 percent from a year ago. November chip sales were up 3.7 percent from October’s tally.

Overall, chip sales are shaping up to be horrid for 2009. Sales for the first 11 months of 2009, were $202.1 billion, down 13.2 percent from the same period in 2008.

The SIA noted that the release of Windows 7 seems to be boosting chip sales as handsets and LCD TVs continue to stoke semiconductor demand.

Here’s the scorecard (statement):

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January 4th, 2010

The year ahead: Five moving parts behind a 2010 tech recovery

Posted by Larry Dignan @ 2:05 am

Categories: Cisco, Cloud computing, Dell, Economy, General, Hardware Infrastructure, Hewlett-Packard, Microsoft, Oracle, Software Infrastructure, Windows 7

Tags: Consumer, Software-as-a-service, Dell Computer Corp., Data Center, Recovery, Information Technology, Operating Income, Small Business, CEO, Data Point

The quarterly data points are looking up and there’s a quiet optimism about technology spending for 2010. But there are a bevy of wild cards.

The back half of 2009 could be summed up in one sentence: The bottom is in. Tech CEOs across the board cited sequential improvement in their business even as the year ago comparisons remained putrid. Cisco CEO John Chambers summed it up for a lot of technology chiefs on the company’s latest earnings conference call:

The initial phase of recovery is underway based upon (Cisco’s) order momentum. While the continued strength of the recovery and eventual job creation may still be in question, we are clearly basing our decisions and our investments upon an optimistic evolution of the economy.

In December, Oracle president Safra Catz gave a similar assessment after a strong quarter:

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December 24th, 2009

2009 - the year of papering over cracks

Posted by Phil Fersht @ 7:34 am

Categories: Economy

Tags: Polar Bear, Stock, Crack, Stock Market, Investment, Finance, Phil Fersht, Economy, Global Warming

Most people I speak to can’t wait for 2009 to be put to bed.  People suddenly awoke to the realization that everything they have grafted so hard to achieve in their lives could be seized from them, because their economy had failed them. 

Like everything else in this world, we always wait until its too late before taking drastic action, and 2009 epitomized this reactionary mindset that dominates so much of our society.

However, I did want to sign off from 2009 with a dose of realism… fancy phrases such as “New Normal”, or “Preparing for the Recovery” only wash when they attempt to address the question: “How the blimming heck can we radically change our attitudes and actions to save our children from economic and environmental disaster”.

But what really gets my goat is that we keep on making the same mistakes over, and over, and over again.  One can only hope that the lessons of this year will have broader ramifications than simply learning how to bail out banks and save our stock market from total collapse.  Somehow I doubt it; 2009 was just the beginning of the realization that our short-term mentality has to change, but we will - alas - likely need to endure another bout of pain and hardship before we’ll eventually do something about it.  We got off too easy this time and somehow managed to paper over some pretty cavernous cracks.

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December 17th, 2009

Oracle: Delivers strong quarter; Outlines plans for Sun

Posted by Larry Dignan @ 2:18 pm

Categories: Earnings, Economy, Oracle

Tags: Oracle Corp., Sun Microsystems Inc., SAP AG, Mergers & Acquisitions, Corporate Law, GAAP, Investment, Finance, Business Operations, Financial Accounting

Updated: Oracle delivered better-than-expected fiscal second quarter results, touted its applications business vs. SAP and said it expects the European Union to “unconditionally clear the acquisition of Sun in January.” Oracle also outlined some of its strategy for taking Sun hardware upmarket.

The company reported net income of $1.5 billion, or 29 cents a share, on revenue of $5.9 billion, up 4 percent from a year ago. On a non-GAAP basis, Oracle had earnings of 39 cents a share, 3 cents better than Wall Street estimates. Oracle’s second quarter sales were also better than the $5.7 billion expected by Wall Street.

According to a statement, Oracle reported its best second quarter operating margin in its history. In addition, the third quarter outlook was also strong. Sun projected GAAP earnings of 36 to 38 cents a share, or 30 to 33 cents a share in constant currency. Wall Street is expecting fully loaded earnings of 29 cents a share and non-GAAP earnings of 36 cents a share.

Meanwhile, Oracle said it expected the EU to approve its acquisition of Sun. Oracle president Safra Catz confirmed reports that the EU was leaning toward approval of the merger. Oracle moved to reassure MySQL customers earlier this week. On a conference call, Catz said that the Department of Justice, advisers and other U.S. representatives were helpful in dealing with the EU and getting a good outcome. Catz said:

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