November 20th, 2009

Michael Dell sticks to Windows 7 big bang theory

Posted by Larry Dignan @ 4:30 am

Categories: Dell, Earnings, Economy

Tags: Revenue, Dell Computer Corp., Theory, PC, Microsoft Windows 7, Microsoft Windows, Desktops, Operational Accounting, Operating Systems, Software

Dell chief Michael Dell is projecting a Windows 7 upgrade cycle that could put PC growth “well into the teens.” What’s unclear is whether Dell will be able to grab a bigger share of the revenue pie or be outmaneuvered by rivals like HP and Acer.

Following the company’s disappointing quarter, Dell executives said the timing of the Windows 7 launch hurt revenue and earnings. That’s why Dell’s third quarter results fell short of expectations.

On a conference call, Dell executives sounded upbeat about the fourth quarter and the fiscal year to come.

When asked about the potential for a PC replacement cycle that would be above the 10 percent growth rate usually expected, Michael Dell said:
Read the rest of this entry »

November 19th, 2009

Dell's third quarter disappoints yet it sees IT demand improving

Posted by Larry Dignan @ 1:17 pm

Categories: Dell, Earnings, Economy, General

Tags: Dell Computer Corp., Information Technology, Financial Accounting, Finance, Larry Dignan

Dell’s fiscal third quarter financials fell well short of estimates across the board.

The company on Thursday reported third quarter net income of $337 million, or 17 cents a share. That tally is down 54 percent from a year ago. Wall Street was expecting earnings of 28 cents a share. Dell’s earnings included pre-tax expenses and other moving parts that knocked 6 cents a share off of the earnings sum. But even excluding those items, Dell fell short.

Revenue wasn’t much better relative to expectations. Dell reported revenue of $12.9 billion, down 15 percent from the $15.16 billion in the third quarter a year ago. Wall Street estimates: $13.18 billion.

Meanwhile, Dell’s gross margins fell short of targets too. Dell reported gross margin of 17.3 percent in its fiscal third quarter compared to Wall Street estimates calling for 18.19 percent.

Simply put, Dell is either taking hits in the PC market or analysts got way ahead of themselves predicting a rebound. In a presentation, Dell did note that pricing has been aggressive (statement).

On a conference call, Dell CFO Brian Gladden said:

Our third quarter reported revenue was adversely affected by the timing of the Windows 7 launch and our SMB and consumer businesses where we did build more backlog than normal due to the later quarter order dynamics. We expect our backlog to return to more normal levels in the fourth quarter.

For its part, Dell did say that things were improving sequentially. Shipments were flat sequentially and down 5 percent from a year ago.

Here’s Dell’s view of the PC market:

Read the rest of this entry »

November 16th, 2009

NPD: The subscription model bucks economy

Posted by Larry Dignan @ 7:46 am

Categories: Economy, Entertainment, General, Mobile

Tags: Entertainment, Subscription, Advertising & Promotion, Games, Satellite Radio, Network Technology, Marketing, Personal Technology, Consumer Electronics, Networking

The economy may stink, but consumers are clinging to their entertainment and mobile subscriptions.

According to NPD, monthly per capita entertainment subscriptions rose to $115, up 7 percent from a year ago.

The breakdown from NPD is notable. To wit:

• As of August, 81 percent of U.S households subscribed to a television service (cable, satellite and fiber-optic).
• 76 percent have an Internet subscription.
• 17 percent subscribe to an online music service or satellite radio.
• 14 percent subscribe to an online gaming service.
• Mobile data subscription plans were 9 percent, up from 6 percent last year.
• 14 percent of consumers had a home-video subscription service like Netflix, up 2 percent from a year ago.
• 29 percent of Americans had a newspaper subscription, down 2 percent from a year ago (you’d think it would be worse).
• And 41 percent of consumers subscribed to magazines, down from 43 percent from a year ago.

November 11th, 2009

Recovery? This week's pink-slip tally tops 5,000 for tech

Posted by Sam Diaz @ 4:43 pm

Categories: Economy, Layoffs

Tags: Job, Recovery, Workforce, Recruitment & Selection, Workforce Management, Payroll Solutions, Human Resources, Sam Diaz

What happened to the recovery - the light at the end of the tunnel, the beginning of the end - that big tech companies like Intel are talking about recently? That light, it seems, is still being shadowed by layoffs.

The latest company gearing up to hand out pink slips is semiconductor equipment company Applied Materials, which said on its earnings call today that it was reducing its workforce by 1,300 to 1,500 employees, or 12 percent of its workforce, according to a Dow Jones report.

Those cuts fall on the heels of other announcements this week - the 2.500 jobs being cut at Sprint-Nextel, the 1,500 at Electronic Arts, another 680 over at Adobe and even the 100 at AOL (with more to come, according to All Things D’s Kara Swisher). Add it all up and we top the 5,000 mark for the week - and today’s only Wednesday.

If you want to count by the month, let’s not forget Nokia-Siemens’ plans to cut more than 5,000 jobs or  Microsoft’s 800. By my count, that puts us well over 10,000 jobs for November - and I’m sure there are some that I’m not counting and should be, like last month’s 3,000 at Sun.

There’s an old saying that things sometimes have to get worse before they can get better. It seems that this is one of those times.

November 10th, 2009

Adobe cuts 680 jobs

Posted by Larry Dignan @ 2:29 pm

Categories: Adobe, Economy, General

Tags: Job, Adobe Systems Inc., Restructuring, Restructuring Plan, Strategic Planning, Strategy, Management, Larry Dignan

Adobe said Tuesday that it will cut 680 full-time positions by the end of its fiscal year.

The company said it will take a $65 million to $71 million restructuring charge. That charge includes consolidation of leased facilities and severance.

According to Adobe, the restructuring only applies to employees of the company before the acquisition of Omniture.

From the SEC filing:

On November 10, 2009, we announced a workforce reduction to appropriately align our costs in connection with our 2010 operating plan (the “Restructuring Plan”). As a result, we expect to eliminate approximately 680 full-time positions worldwide. We expect to record in the aggregate approximately $65.0 to $71.0 million in pre-tax restructuring charges associated with this Restructuring Plan. Included in these charges are (i) approximately $17.0 to $19.0 million primarily related to the consolidation of leased facilities and (ii) approximately $48.0 to $52.0 million related to employee severance arrangements. We expect to record approximately $18.0 to $20.0 million of these charges in the fourth fiscal quarter ended November 27, 2009. We expect to complete the majority of the activities related to the Restructuring Plan by the end of fiscal 2010. Substantially all of these charges will result in cash expenditures.

Also: The Adobe-Omniture deal: Does it make sense?

November 6th, 2009

U.S. unemployment rate highest in 26 years, at 10.2%

Posted by Andrew Nusca @ 11:10 am

Categories: Economy, IT jobs

Tags: Job, Unemployment Rate, Recruitment & Selection, Human Resources, Workforce Management, Andrew Nusca

The unemployment rate in the United States reached a 26-year high of 10.2 percent in October, up from 9.8 percent in September, the Department of Labor said Friday.

Americans lost 190,000 jobs in October, according to the department’s monthly report.

The good news? The pace of job losses has slowed significantly since the peak of the recession a year ago.

But the unemployment rate — the percentage of people actively seeking work — continues to rise.

The biggest losses came in construction, manufacturing and retail. Meanwhile, the healthcare industry grew by 29,000 jobs and added another 34,000 temporary positions.

So when will the unemployment rate start to decline? Some are guessing next spring.

But production and profits are on the rise, despite the job losses, indicating that we might be turning around.

For the tech sector, that means that it’s a slow (but upward) haul from here.

October 30th, 2009

McAfee vs. Symantec: Dueling in consumer and enterprise

Posted by Larry Dignan @ 3:00 am

Categories: Earnings, Economy, General, Security, Symantec

Tags: McAfee Inc., Revenue, Symantec Corp., Security, Larry Dignan

The most recent quarterly reports from McAfee and Symantec highlight some trench warfare in both the enterprise and consumer markets.

Both companies reported solid quarters, but Symantec was the one that really knocked the cover off the ball. Symantec reported fiscal second quarter net income of $150 million, or 18 cents a share, on revenue of $1.47 billion. Non-GAAP earnings were 36 cents a share, three cents ahead of Wall Street estimates.

But what was curious is the reason behind Symantec’s surge. Sure, CEO Enrique Salem has given Symantec more focus, but the quarter got a lift from small and mid-sized businesses and consumers. The consumer business coupled with improving enterprise trends enabled Symantec to maintain its outlook for the next quarter.

Salem said on a conference call:

We started to see initial signs of progress in SMB security as we renewed our relationships with channel partners given the launch of our new security products. We also saw strength in the consumer segment as our business continues to benefit from our market-leading products…The strength of our Consumer business was driven by strong Norton 360 sales and by our relationships with eight of the top nine OEMs…During the quarter, we won consumer online backup deals with Toshiba and Acer. We now have backup relationships with four of the top five OEMs.

Add it up and Symantec’s consumer business was up 6 percent to $463 million in the second quarter compared to a year ago. All other businesses—security and compliance and storage—were down anywhere from 3 percent to 9 percent.

Enter McAfee. McAfee’s quarter was also solid (statement). The company reported fiscal third quarter earnings of $36.8 million, or 23 cents a share, on revenue of $485.3 million, up 18 percent from a year ago. Non-GAAP earnings were 62 cents a share, two cents better than estimates. Revenue, however, fell short of the $487 million projected by Wall Street.

McAfee also projected fiscal fourth quarter non-GAAP earnings of 61 cents a share to 65 cents a share. Wall Street was looking for 63 cents a share.

Under the hood though, McAfee showed a 25 percent jump in its corporate business. Third quarter corporate revenue checked in at $308 million. On the consumer side of the house, McAfee had revenue of $177 million, up 8 percent from a year ago.

Based on growth rates, it appears Symantec is taking it to McAfee in the consumer market. In the enterprise, McAfee, which is much smaller than Symantec, appears to be gaining some strength from a smaller base.

October 29th, 2009

Motorola delivers profit; Android-powered future awaits

Posted by Larry Dignan @ 5:29 am

Categories: Android, Earnings, Economy, General, Mobile, Motorola

Tags: Mobility, Motorola Inc., Droid, Sales Strategy, Wireless And Mobility, Sales, Larry Dignan

Motorola reported a slight third quarter profit and projected  better-than-expected fourth quarter earnings. But Motorola’s real prospects going forward will depend on how many Android devices it can sell. Sanjay Jha, co-CEO of Motorola, said the company met its commitment to deliver Android devices. Now consumers just have to show up.

In many respects, Motorola’s third quarter is anticlimactic (statement). The results—a profit of $12 million, or a penny a share—reversed a loss from a year ago and topped Wall Street estimates for a break-even quarter. Excluding a charge, Motorola had a profit of 2 cents a share. Revenue for the third quarter was $5.45 billion, down from $7.48 billion a year ago.

Meanwhile, Motorola projected fourth quarter earnings between 7 cents a share to 9 cents a share excluding charges. That outlook was better than the 6 cents a share profit Wall Street expected. The company also named Edward Fitzpatrick, acting CFO, as CFO.

Motorola remains a tale of two companies. A broadband and wireless mobility gear unit and the recovering device division.

But given the Droid launch on Wednesday most of the Motorola focus is on new devices. On a conference call with analysts, Jha described the launch of the Droid and Cliq as the first step in revamping Motorola’s smartphone lineup. “These devices have what is required in a smartphone today,” said Jha, who added that Motorola will continue to closely collaborate with Google and Android developers.

Also see: The Droid assault begins

See full review and hand-on gallery. Plus: All Droid resources

Jha was asked whether Motorola will be prepared to meet demand if Droid is a big hit. Motorola has supply chain and component planning to account for dramatic upside in the company’s base demand scenario, said Jha.

“With our devices we’ll continue to offer differentiated functionality,” said Jha. He said MotoBlur, which integrates social contacts, will be weaved throughout the device lineup. He also added that MotoBlur will be used to solve other consumer problems in the future.

“In 2010 we will launch a variety of new devices,” said Jha. Jha added that Motorola’s financial performance will largely be driven by demand for its smartphones. He wouldn’t be pinned down on the timing of sustainable profits for the device unit and emphasized that Motorola will be focused on evolving the smartphone lineup. “I would be surprised if I don’t break even in one quarter in 2010,” said Jha.

By the numbers:

• Mobile device sales in the third quarter were $1.7 billion, down 46 percent from a year ago. The unit had an operating loss of $183 million.
• Motorola shipped 13.6 million handsets and had a market share of 4.7 percent.
• The home and networks mobility unit had sales of $2 billion, down 15 percent from a year ago. Operating earnings were $199 million, down from $263 million a year ago.
• Enterprise mobility sales were $1.8 billion, down 13 percent from a year ago. Operating earnings were $306 million, down from $403 million a year ago.

October 29th, 2009

Sprint loses money, more subscribers in third quarter

Posted by Larry Dignan @ 5:04 am

Categories: Earnings, Economy, Mobile, Sprint, Sprint Nextel, Wired & Wireless

Tags: Sprint Communications, Operational Accounting, Finance, Larry Dignan

Sprint Nextel continues to lose money and subscribers.

The company said Thursday that it reported a third quarter net loss of $478 million, or 17 cents a share. That tally was 3 cents worse than Wall Street expectations. Revenue was $8 billion, down 9 percent from a year ago.

In addition, Sprint lost 135,000 retail subscribers (statement). However, Sprint said that its year-over-year post paid gross additions were a sign the company was headed in the right direction. Sprint has been saying that for a few quarters, but it’s unclear how long the Wall Street patience will last.

The big question: Is this blip something for Sprint to really get excited about?

As for the outlook, Sprint said it expects that subscriber losses should improve in 2009 from 2008. The company also expects sequential subscriber improvement.

By the numbers:

• Post-paid wireless churn in the third quarter was 2.17 percent compared to 2.15 percent a year ago and 2.05 percent in the second quarter. The uptick was due to “seasonality and heightened competition.”
• Prepaid churn—Sprint owns Boost Mobile—was 6.65 percent, down from 8.16 percent a year ago and 6.38 percent in the second quarter.
• Wireless service revenue in the third quarter was $6.3 billion, down 8 percent from a year ago.
• Sprint generated free cash flow of $664 million.
• The company has $5.9 billion in cash, equivalents and investments.

October 28th, 2009

SAP: Enterprise software market 'difficult'; Emerging markets weak

Posted by Larry Dignan @ 3:46 am

Categories: ERP, Earnings, Economy, General, SAP, Software Infrastructure

Tags: Software, Revenue, Enterprise Software, Emerging Market, SAP AG, Howlett, Operational Accounting, Tools & Techniques, Marketing Research, Financial Services

SAP’s third quarter was a mixed bag. Earnings were a touch better than expectations, but revenue and the outlook disappointed investors. Meanwhile, SAP said the software market showed “signs of stabilization,” but remained difficult.

The third quarter breaks down like this:

• Revenue for the quarter ending Sept. 30 was 2.51 billion Euro down 9 percent from a year ago. Estimate: 2.57 billion Euro.
• Software and software related services revenue were 1.94 billion Euro, down 3 percent.
• Software revenue was 525 million Euro, down 31 percent from a year ago.
• Net income was 435 million Euro, up 12 percent from a year ago. Earnings of 0.37 Euro a share were two cents better than Thomson Reuters expectations.
• Add it up and you have a quarter that was roughly in line with estimates, but the outlook disappointed. Non-GAAP software and software related revenue will fall 6 percent to 8 percent for 2009.

But what caught my eye was the commentary. SAP CFO Werner Brandt noted in a statement:

Read the rest of this entry »

October 26th, 2009

Verizon preps fourth quarter device barrage; Droid will 'stimulate demand'

Posted by Larry Dignan @ 4:50 am

Categories: Earnings, Economy, General, Telecommunications, Verizon

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

Verizon delivered a solid third quarter courtesy of its wireless business, which added 1.2 million net customers excluding acquisitions. The company also said it is set up for the fourth quarter with the launch of Research in Motion’s Storm 2 on Wednesday, two Motorola Android devices and 12 other handsets.

However, AT&T added customers at a faster pace in the third quarter on the strength of the iPhone. Verizon is hoping to change that equation via a partnership with Google. John Killian, CFO of Verizon, characterized the company’s wireless performance as strong and said there “are plenty of revenue growth opportunities” ahead. It’s clear Verizon is betting big on Android.

“We think our new device lineup will stimulate demand,” said Killian, on a conference call with analysts. Killian said that the Storm 2 will be available Wednesday and the Droid device “will be groundbreaking.”

Verizon on Monday reported third quarter net income of $2.88 billion, or 41 cents a share, on revenue of $27.3 billion, up 10 percent from a year ago. Non-GAAP earnings were 60 cents a share, a penny better than Wall Street estimates (statement, quarterly presentation).

As usual, the quarter was all about the wireless business. By the numbers:

Read the rest of this entry »

October 22nd, 2009

AT&T cuts churn rate; Activates 3.2 million iPhones; Touts network upgrades

Posted by Larry Dignan @ 4:52 am

Categories: AT&T, Earnings, Economy, General, Mobile, Telecommunications, Wired & Wireless, iPhone

Tags: Apple iPhone, AT&T Corp., Wireless, Wi-Fi, Wireless And Mobility, Larry Dignan

AT&T’s bet on the iPhone continues to work well. The company reported a better-than-expected third quarter, delivered post paid churn of 1.17 percent (a low for AT&T), activated 3.2 million iPhones and boosted data revenue by 33.6 percent.

The telecom giant on Thursday delivered net income of $3.2 billion, or 54 cents  a share, on revenue of $30.9 billion, down from $31.3 billion a year ago. Wall Street was expecting earnings of 50 cents a share. If you’re an AT&T customer you may be more interested in AT&T’s update on its infrastructure improvements. The company added that dropped calls declined by 12 percent.

As usual, AT&T was powered by its wireless unit, which represents 44 percent of total sales. Among the key wireless data points (statement, financial supplement, quarterly overview, presentation):

Read the rest of this entry »

October 22nd, 2009

EMC: Customers have 'more comfort' about IT budgets

Posted by Larry Dignan @ 4:43 am

Categories: EMC, Earnings, Economy, General, Storage

Tags: IT Budget, Joe Tucci, Information Technology, non-GAAP, Earnings, EMC Corp., Non-GAAP Earning, GAAP, Storage, Financial Accounting

EMC CEO Joe Tucci said that customers are “signaling more comfort spending their IT budgets.” The company reported better-than-expected third quarter results.

The storage giant reported third quarter earnings of $298.2 million, or 14 cents a share, on revenue of $3.52 billion, down 5 percent from a year ago. Under a non-GAAP basis, EMC reported earnings of $480.3 million, or 23 cents a share, two cents better than Wall Street estimates.

Generally speaking, EMC has been well positioned in the downturn due to a focus on storage, cloud computing, virtualization and data centers — hot areas in enterprise IT. Tucci added in a statement that the company has expanded its product line while cutting costs.

Also see: VMware posts solid third quarter, tops estimates

As for the outlook, Tucci added that the company was well positioned to hit its 2009 targets. EMC expects fourth quarter revenue of $4 billion and 2009 revenue of $13.9 billion. Net income is expected to be 21 cents a share in the fourth quarter and 55 cents a share for the year.

Read the rest of this entry »

October 21st, 2009

eBay 'cautiously optimistic' heading into the holidays, but outlook disappoints

Posted by Larry Dignan @ 1:35 pm

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

Tags: eBay Inc., GAAP, Financial Accounting, Operational Accounting, Finance, Larry Dignan

EBay’s third quarter results weren’t too shabby, but the company’s outlook disappointed some on Wall Street. In addition, the company said it was “cautiously optimistic” heading into the holiday season.

The company reported net income of $349.7 million, or 27 cents a share. Non-GAAP earnings were $501.5 million, or 38 cents a share, a penny better than Wall Street estimates. Revenue for the quarter ending Sept. 30 was $2.2 billion, up slightly from a year ago.

However, there were a few disappointing items in eBay’s report. Operating margin fell to 19.8 percent in the quarter, down from 24.7 percent a year ago. The margin decline was largely attributed to eBay’s Bill Me Later unit and a weaker U.S. dollar. Bill Me later had a net charge-off rate of 11.5 percent as bankruptcy and credit write-offs increased.
Read the rest of this entry »

October 21st, 2009

VMware posts solid third quarter, tops estimates

Posted by Larry Dignan @ 1:19 pm

Categories: Cloud computing, Datacenter, Earnings, Economy, General, VMware, virtualization

Tags: Revenue, Quarter, VMware Inc., Operational Accounting, Virtualization, Finance, Hardware, Larry Dignan

VMware’s third quarter financial results were better than expected based on maintenance renewals and federal IT spending.

The company reported net income of $38 million, or 9 cents a share, down from $83 million, or 21 cents a share a year ago. Non-GAAP net income of $95 million, or 24 cents a share, flat with a year ago. Wall Street was expecting earnings of 20 cents a share. Revenue for the quarter was $490 million, up 4 percent from a year ago.

By the numbers:

Read the rest of this entry »

October 20th, 2009

Earnings flash (memory): SanDisk delivers big quarter

Posted by Larry Dignan @ 2:31 pm

Categories: Earnings, Economy, General, Seagate, Storage

Tags: SanDisk Corp., Memory, Earnings, Flash Memory, Financial Accounting, Finance, Larry Dignan

SanDisk CEO Eli Harari said he was encouraged by “improved industry fundamentals.” And there’s a good reason for that. The company crushed third quarter estimates with a blowout quarter.

The flash memory card maker reported net income of $231 million, or 99 cents a share, on revenue of $935 million, up 14 percent from a year ago. Those results reversed a year ago loss of $166 million, or 74 cents a share. Excluding a bevy of items—acquisition expenses, option compensation and interest expenses related to retiring debt—SanDisk reported earnings of $176 million, or 75 cents a share (statement).

To put all of those moving parts in perspective, Wall Street was expecting earnings of 26 cents a share on $787.9 million. Harari also added that he expects strong pricing and orders to continue into the fourth quarter.

A few odds and ends:

Read the rest of this entry »

October 20th, 2009

Sun cuts 3,000 jobs as Oracle takeover twists in regulator limbo

Posted by Larry Dignan @ 2:08 pm

Categories: Economy, General, Oracle, Sun

Tags: Job, Regulator, Oracle Corp., Sun Microsystems Inc., Restructuring, Restructuring Plan, Company, Strategic Planning, Mergers & Acquisitions, Regulations

Oracle hasn’t completed its Sun Microsystems acquisition yet, but the restructuring is already underway.

In a regulatory filing, Sun said Tuesday that it will lay off 3,000 workers across the globe. The company added that it had to restructure as it waits for Oracle’s purchase of the company to be approved by regulators—notably the European Union.

The filing with the Securities and Exchange Commission reads (Techmeme):

In light of the delay in the closing of the acquisition of the Company, approved a plan to better align the Company’s resources with its strategic business objectives, including reducing its workforce across the North America, EMEA, APAC and Emerging Markets regions by up to 3,000 employees over the next 12 months (the “Restructuring Plan”). The Company expects to incur total charges ranging from $75 million to $125 million over the next several quarters in connection with the Restructuring Plan, the majority of which relates to cash severance costs and is expected to be incurred in the second and third quarters of the fiscal year ending June 30, 2010.

Also see: Oracle tries to stop Sun’s bleeding: Is it too late?

• Oracle’s big plan: Double revenue in five years
• All Oracle-Sun posts

October 19th, 2009

Stinks to be the CIO: The 2010 IT budget may spike to 2006 resource levels

Posted by Larry Dignan @ 8:00 am

Categories: Economy, Gartner Symposium 2009, General, IT Management

Tags: IT Budget, CIO, Information Technology, Gartner Inc., Strategy, Management, Larry Dignan

Welcome to 2010 with the same resources you had back in 2006 and 2007 (if you’re lucky). Now go out and be useful to the business.

That cheery outlook was delivered by Gartner in its 2010 CIO Agenda talk. Some pep talk, guys. Gartner analyst Mark McDonald opened the talk with some entertaining riffs, but the overall message was clear: Budgets aren’t coming back quickly and CIOs need to evolve or they are screwed.

McDonald took an applause poll of CIOs who are seeing a budget increase of 15 percent, which would only get you back to par from a few years ago, and about three people clapped (in a room with probably 400 IT execs). These three people are likely to be attacked by vendors later today.

The reality: In 2009, 88 percent of enterprises cut their IT budgets. The good news:  Even with strong increases in 2010, CIOs will face the future with essentially the same resource levels they had in 2006 or 2007.

Put it into a graph, the IT budget picture goes like this (Gartner updated these figures to a decline of 6.9 percent in 2010 on Monday):

Read the rest of this entry »

October 19th, 2009

Wither Silicon Valley? IT will be driven by emerging markets

Posted by Larry Dignan @ 5:53 am

Categories: Economy, Gartner Symposium 2009, General, IT Management

Tags: Silicon Valley, Information Technology, Gartner Inc., Emerging Market, IT-spending, Application Roster, Marketing Research, Financial Services, Strategy, Marketing

Gartner is projecting that the “worse year ever” for IT spending—down 6.9 percent in 2009—will be followed up with dead-cat spending bounce in 2010 of a meager 3.3 percent. Does this dead-cat IT spending bounce mean traditional tech power centers—notably Silicon Valley—are no longer in the driver’s seat?

Peter Sondergaard, senior vice president of research at Gartner, said at the research firm’s Symposium in Orlando that 2009 was the worst spending cycle ever (including 2001). And half of companies will face no budget increases or a decline (see Gartner’s projection).

But his main point is that Silicon Valley will no longer be in charge of the rebound. To wit: The U.S. has trust issues, spending declines and increasing technology risks. Sondergaard said that previous rebounds were led by emerging markets. And given that effect will be magnified going forward, “Silicon Valley is no more in the driver’s seat,” said Sondergaard. As emerging regions resume strong growth and IT spending accelerates there will be “a culturally different approach to IT.”

In the near future—2011, 2012 and beyond—emerging markets will increasingly shape how IT is deployed.

The point is an interesting one. We’ve heard about the death of Silicon Valley forever and Sondergaard is pitching that the BRIC countries (Brazil, Russia, India and China) will drive IT spending and how it’s deployed. In the future, the tech centers may be India and China.

Among other key themes from Sondergaard and his merry band of analysts:

• Things are so bad that federal spending on IT is the new emerging market.
• There will be a continued shift from capital spending to operating expenditures.
• Equipment is getting older. In 2010 will be dominated by old equipment. The point: Enterprises have to prepare for increased failure rates. CFO comments like “it still works why replace it” will be the norm.
• A million servers around the world will have their replacements delayed. That’s 3 percent of the installed base. By 2011 that tally will be 10 percent.
• The application roster is bloated. Gartner analyst Andy Kyte noted that companies have a bunch of orphaned applications. When it comes to applications companies are interested in making babies (acquiring software), but not responsible parenting (having any discipline about their application portfolio). Get control of the application portfolio. Everyone is in denial.
• Top 2009 topics were cloud computing, cost and ERP/supply chain management.
• CIOs will need to have a budget based on a rolling forecast. The key will be to position for growth while still cutting expenses. 2010 will feature focus on improving applications and the processes around them.
• The aim for companies will be to create what Sondergaard dubs “pattern-based strategy.” In a nutshell, this approach means developing strategies that adapt and react to changing conditions automatically.

October 19th, 2009

Apple's September quarter: Expect Mac unit upside

Posted by Larry Dignan @ 2:02 am

Categories: Apple, Earnings, Economy, General, iPhone

Tags: Apple Macintosh, Analyst, Apple Inc., Desktops, Hardware, Larry Dignan

Recent signs of PC market strength are likely to translate into a happy September quarter for Apple courtesy of Mac sales.

Gartner and IDC reported that the third quarter was better-than-expected for PC sales and that bodes well for Apple. Meanwhile, NPD data is also looking good for Apple. Piper Jaffray analyst Gene Munster reckons Apple will deliver 2.8 million Macs in the September quarter.

Wall Street is expecting Apple to report earnings of $1.42 a share on revenue of $9.2 billion for its fiscal fourth quarter ending Sept. 30.

Susquehanna Financial Group analyst Jeffrey Fidacaro is also upbeat about Apple’s Mac potential in the quarter. He wrote:

Read the rest of this entry »