Wall Street Beat: PC Makers Stress Positive Signs
Though PC-maker earnings this week confirmed sales declines for the second quarter, vendors and analysts underscored signs of a recovery in technology for the second half of the year.
Dell's fiscal second-quarter earnings declined by 23 percent to US$472 million on weak PC sales, the company said Thursday. Revenue dropped 22 percent to $12.76 billion. But the second-largest PC maker in the world stressed a positive outlook.
"If current demand trends continue, we expect revenue for the second half of the year to be stronger than the first half," said CEO Michael Dell in a statement.
Globally, things are looking better than expected for the chip industry, according to a Gartner report
released Wednesday. The market research company now forecasts worldwide chip revenue to hit $212 billion this year, down 17.1 percent from last year. The figure is better than its prior forecast, which called for a 22.4 percent decline.
Demand for PCs and mobile phones as well as consumer electronics gear like LCD TVs is higher than what was expected earlier in the year, Gartner said. At least part of the demand was fueled by government stimulus efforts around the world, Gartner said, specifically citing China's recovery package as key to a global economic recovery.
Taiwan-based contract manufacturer Quanta Computer reported results that declined from last year, but like Dell stressed positive news. The company said Tuesday that it suffered a 2.6 percent decline in its second-quarter net profit, which dropped to 4.9 billion New Taiwan dollars (US$149.4 million). However, it said that the launch of Windows 7 in October will help boost notebook PC sales.
Acer, also based in Taiwan, on Thursday said second-quarter earnings declined to NT$2.3 billion, from NT$2.93 billion a year earlier. However, the earnings met expectations of analysts surveyed by Dow Jones Newswires, according to the Wall Street Journal.
Meanwhile, India's PC market looks like it's getting healthier, according to IDC India. PC shipments in the second quarter increased sequentially from the first quarter by 5.2 percent to 1.77 million units, the market research company said Wednesday. The Indian market also posted sequential quarterly growth in the first quarter, which suggests that a recovery is under way, according to IDC analyst Kapil Dev Singh.
In the U.S., the number of large companies planning on reducing IT staff continues to decline rapidly, indicating the country's tech sector is experiencing a developing trend toward recovery, according to data released by CDW IT Monitor Thursday.
Currently, 10 percent of large companies say they may be reducing IT staff in the next six months, down from 17 percent in February, according to the August CDW IT Monitor report.
"The fact that the largest employers are decreasing planned job cuts in IT is an encouraging sign in the marketplace as we continue to make small steps toward recovery," said CDW's Mark Gambill in a statement. "While we're not there yet, this is a positive step that paves the way for future hiring and creates a more stable environment across the industry," he said.
Investors have appeared confident that the tech sector will lead the way out of the recession. With at least six weeks to go before third-quarter sales figures are reported, and with many traders on vacation, trading on U.S. markets has been listless lately. But tech vendors continue to outperform companies in other sectors on U.S. exchanges.
By midweek, shares of computer companies on the Nasdaq exchange were up 44 percent for the year, while Nasdaq telecom stocks were up by 40 percent. The broad Dow Jones Composite, meanwhile, was up by only 6 percent.
News on the macro economy has also helped prop up tech vendor shares on U.S. exchanges. Second-quarter gross domestic output declined by 1 percent, according to the U.S. Commerce Department Thursday. The report confirmed earlier government estimates. Many market watchers had expected a 1.5 percent decline. The latest GDP figure has led some industry watchers to expect growth to return in the current quarter.