Tech giants see light at end of their dark tunnel
Monday, April 23, 2001
REUTERS in San Francisco
Now that most high-technology giants have reported quarterly results, a consensus is building that the second quarter will be the bottom of the spending downturn and that companies can better forecast prospects for the rest of the year.
IBM, when it reported first-quarter results last Wednesday, said it was on track to meet earnings estimates for the year.
Intel, which reported earnings on Tuesday, said that late last month customers started ordering chips again for immediate delivery.
On Thursday, Microsoft Corp reported profits and sales that topped forecasts.
"We have got a much, much clearer vision of where we are going - it is just not a happy place," John Sullivan, chief financial officer for chip maker PMC Sierra, said after his company on Thursday reported results that matched reduced forecasts. "It is not murky anymore, like it was a quarter ago."
While computer and printer maker Hewlett-Packard announced on Wednesday that it would almost triple job cuts after a weaker-than-expected second quarter, it went so far as to call that the bottom.
"I think a recovery is too strong a word, but we are clearly talking about the second quarter being a bottom," chief executive Carly Fiorina said.
Of course, not all the news was good.
Several companies that have reported earnings in recent weeks said there was still so little visibility on future business conditions that they could not say when they expected a turnaround.
Cisco Systems, which recently warned that third-quarter results would fall far below forecasts, said it had never seen a more challenging business environment.
Computer and server maker Sun Microsystems missed a lowered sales target in its fiscal third quarter, and while profit was in line with forecasts, it said that it was not yet clear whether 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," Sun chairman Scott McNealy said.
"The real issue is, can you turn on a dime as the needle starts slamming back and forth?"
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