Softening advertising spending and plummeting business and consumer confidence have dealt new blows to some of the world's biggest
technology companies, as Google and Intel yesterday further dampened
The heavyweights cemented their position as bringers of bad news after
Google said it would dump some advertising programs, and reports
circulated that Intel executives had warned staff the chipmaker could
soon report its first loss in 21 years.
The bad news accompanied a steep drop in quarterly revenue and
earnings at computer equipment maker Logitech and the announcement
that audio technology company Bose would lay off 1000 workers, about
10 per cent of its workforce.
The bleak reports were tempered by better-than-expected fourth-quarter
results and 2009 forecasts from IBM, though the company confirmed
revenue falls in all geographic regions in recent months.
The developments helped propel a 4.8 per cent slide in the tech-heavy
Nasdaq index on Tuesday, adding to the grim tidings that greeted US
President Barack Obama on his inauguration.
Software and hardware maker Sun Microsystems was one of the worst
affected. Its shares dropped 10.3 per cent to close at $US3.56.
Software maker Adobe fell 7.8 per cent, to $US19.42. Microsoft and
Intel suffered more than 5 per cent falls, while Apple, Cisco, Oracle
and Google were all down more than 4 per cent. Google, which laid off
100 workers last week and has announced it will rein in contractor
numbers, said it was dumping a two-year-old program to expand its
reach beyond internet advertising. The program aimed to place print
advertisements in about 800 US newspapers, but the company said it
would stop the service at the end of next month.
"In the last few months, we've been taking a long, hard look at all
the things we are doing to ensure we are investing our resources in
the projects that will have the biggest impact for our users and
partners," Google director of Print Ads Spencer Spinnell said. "While
we hoped that Print Ads would create a new revenue stream for
newspapers and produce more relevant advertising for consumers, the
product has not created the impact that we - or our partners -
At the same time, Bloomberg reported that Intel chief executive Paul
Otellini had told staff in an email last week that the company was in
danger of reporting its first loss in 21 years for its fiscal first
"We are not going to wake up in six months with everything rosy
again," Mr Otellini wrote in the internal memo, which was obtained by
Bloomberg. He wrote that profitability in the first quarter was "too
close to call". Last week, Intel reported that fourth-quarter net
profit had slumped 90 per cent to $US234 million ($361 million).
Logitech yesterday reported its first sales drop in at least seven
years as third-quarter revenue slipped 16 per cent to $US627.5 million
and net income plunged 70 per cent to $US40.5 million.
IBM reported better-than-expected fourth-quarter results and
stronger-than-predicted guidance for 2009. Its net profit rose 12 per
cent to $US4.43 billion in the fourth quarter, but revenue fell 6.4
per cent to $US27 billion as sales slowed.
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