The US information technology industry finished last week with a flurry of bad news as equipment makers cut forecasts and reports
circulated that Hewlett-Packard, one of the better performers in the
sector, was freezing salaries.
Texas-based AMD led the downgrades with a warning that fourth-quarter
sales would plunge 25 per cent from the $US1.59 billion ($2.46
billion) worth of sales made in its third quarter.
Its cut reflected spreading pain for the semiconductor sector,
highlighted last month when Intel slashed $US1 billion off its
forecasts for its current quarter.
More bad news came from software maker Adobe Systems, which forecast
sales for the quarter ended February would come in between $US800
million and $US850 million, well short of the average $US929 million
that analysts polled by Bloomberg anticipated.
The company also fell short of expectations for the three months to
November 28, reporting revenue of $915 million compared with consensus
analyst forecasts for revenue of $US926.8 million.
HP was reported to have told its 320,000 employees via email that they
would not receive pay increases in its 2009 financial year as it
clamped down on spending, despite its forecast last month of a solid
improvement to full-year net profit.
EMC vice-president of technology alliances Chuck Hollis, who was in
Australia last week to meet with clients, said the impact of the
economic slowdown on the US IT industry was "already widely seen as
worse than 2001".
"It's very steep and deep," Mr Hollis said. "We also had a lot of
bubble IT propositions - companies like consultancies that had made
their living on the periphery - so there's a pretty big seismic shift
going on in the US IT sector."
The shift has precipitated thousands of job cuts in the industry at
companies including AMD, Sun Microsystems, AT&T and Adobe.
Other big names, including Google, have taken a razor to their rosters
of contract workers and unveiled a variety of other cost-cutting
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