Hopefully the tech sector is seeing a bottom. Once they feel they are turning around I can't help but think the big boys will be in a better mood to spend money.
Many High-Tech Firms Say Profit-Bottoms in Sight
SAN FRANCISCO (Reuters) - Now that the bulk of high-tech giants have reported quarterly results, a consensus is building that the second quarter will be the bottom of the downturn in high-tech spending and that companies can better forecast how the rest of the year will likely shape up.
International Business Machines Corp. (IBM.N), when it reported first-quarter results on Wednesday, said it's on track to meet earnings estimates for the rest of the year. Intel Corp. (INTC.O), which reported earnings on Tuesday, said that late last month customers started again ordering chips for immediately delivery. And Microsoft Corp. reported profits and sales on Thursday that topped forecasts.
"We've got a much, much clearer vision of where we're going -- it's just not a happy place," John Sullivan, chief financial officer for chipmaker PMC Sierra Corp. (PMCS.O) told Reuters after his company reported results on Thursday that matched reduced forecasts. "It's not murky anymore like it was a quarter ago."
TECH STOCKS RALLY
Indeed, Intel's comments that its microprocessor business appeared to have stabilized along with a surprise U.S. interest rate cut breathed life into all but moribund tech stocks. For the Week, the Nasdaq surged 10.3 percent, the Dow Jones Industrial Average, of which Intel is a component, rose 4.5 percent and the Standard & Poor's 500 gained 5 percent.
Intel, as the world's largest chipmaker and maker of more than 80 percent of the microprocessors that power personal computers, has long been a tech bellwether, as has the other half of the Wintel world, No. 1 software maker Microsoft.
Although Intel had one of its worst quarters in years -- first-quarter net income fell 82 percent to $485 million, or 7 cents a share and sales tumbled 16 percent to $6.68 billion -- Chief Financial Officer Andy Bryant said he saw some rays of hope toward the end of the period.
"In our microprocessor business, given what we saw happening in March, gives us a lot more comfort that we'll have a pretty normal second quarter and a seasonally strong second half of the year," Bryant told Reuters in an interview.
Santa Clara, Calif.-based Intel's chief rival Advanced Micro Devices Inc. (AMD.N), while it, too, saw profits fall from a year ago, didn't fare nearly as badly. Its net income declined by 34 percent to $124.8 million, or 37 cents, as sales rose 9 percent to $1.19 billion, on the back of market share gains.
MICROSOFT PROFITS
The company's Chairman and Chief Executive, W.J. "Jerry" Sanders echoed the view of his rival's chief financial officer on a conference call. "We're certainly scratching the bottom here," he said. "I think the computer industry will lead us out" of the current semiconductor downturn.
Microsoft, of Redmond, Wash., on Thursday said
third-quarter net profit inched up 2.5 percent to $2.45 billion, or 44 cents, from $2.39 billion, or 32 cents a share, as sales rose 14 percent to $6.46 billion. It credited strong sales of its Windows 2000 operating system and other corporate software for the results that bucked those of many other high-technology companies.
And computer- and printer-maker Hewlett-Packard Co. (HWP.N), while it announced on Wednesday it would nearly triple the number of job cuts in the face of a weaker-than-expected fiscal second quarter, went so far as to call the bottom.
"I think a recovery is too strong a word, but we're clearly talking about the second quarter being a bottom," H-P's Chief Executive Carly Fiorina told a conference call on Wednesday. Her comments dove-tailed with those of Intel the day before and markets across the globe surged on Bryant's comments and further buoyed by those of Fiorina and other high-tech chieftains.
The two-day gain in the Nasdaq from Tuesday's close to Thursday's close was 13.5 percent, though stocks paused for breather on Friday following the broader rally that was spurred by a surprise Federal Reserve interest rate cut on Wednesday.
SUN NOT SO SANGUINE
Of course, not all the news was good.
Computer and server maker Sun Microsystems Inc. (SUNW.O) missed a lowered sales target in its fiscal third quarter and while profit was in line with forecasts, it said on Thursday it wasn't yet clear if the economic downturn -- most pronounced in the United States -- was drawing to a close.
"The economy looks more like Bill Clinton's lie detector test than any kind of sine wave," said Sun Chairman and Chief Executive Scott McNealy on a conference call. "The real issue is can you turn on a dime as the needle starts slamming back and forth."
Sun's profits tumbled by nearly half to $263 million, or 8 cents a share, from $464 million, or 14 cents, a year ago as sales inched up 2 percent to $4.1 billion.
And Swedish telecom equipment maker and No. 3 mobile phone maker Ericsson (LMEb.ST) said on Friday it would post another loss in the second quarter and cut a further 12,000 jobs as it struggles to get back in the black.
"We have taken cost-cutting measures to adapt to a situation where we don't see any improvement in market conditions for the rest of the year," Ericsson Chief Executive Kurt Hellstrom told Reuters.
Excel - Greg
News 
Market Data 
Discover 
