An ugly end to the tech boom
Oct 26, 2012
Some of the biggest names in technology have now presented their third-quarter earnings – and the “picture is not pretty”, says Marc Ferranti on Computerworld.in.
America’s tech-heavy Nasdaq Composite index has slumped from a 12-year high to a two-month low as Microsoft, Google, Advanced Micro Devices, Intel and IBM have all disappointed.
With around a fifth of the technology sector having reported by early this week, earnings were almost 11% down on the same quarter in 2011. If the other 80% of tech firms meet their profit expectations, sector earnings will still be slightly down on last year, a sharp reversal from the trend of recent years.
A key problem for this highly cyclical industry is that the darkening global outlook “is weighing down almost all sectors of IT”, says Ferranti. Google’s sales grew at less than half last year’s pace as global advertising weakened. Microsoft reported lower sales as consumers put off purchases.
Sliding revenue at IBM’s technology unit shows that large companies are becoming increasingly hesitant about buying large hardware systems. The decline in hardware sales, meanwhile, has hit chip vendors, as AMD Micro Devices and Intel’s poor results show.
We are also seeing the first signs of “the inexorable shift away from PCs”, says Tiernan Ray in Barron’s. Global PC sales are set to drop by 2% this year as tablets and smartphones eclipse them. The upshot is that Apple, Google and Samsung are set to be among the main winners of the “post-PC world”.
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