TECH BRIEF: Bearish Outlook
James Connell IHT
Tuesday, August 7, 2001
S&P Cuts Its Debt Rating for Alcatel and Marconi
Alcatel SA, the No. 4 European maker of phone equipment, and its British rival, Marconi PLC, had their long-term debt ratings cut two notches by Standard Poor's Corp. on concerns over waning demand for their products.
S&P cut Marconi's rating to BBB-minus, one notch above junk status, from BBB-plus and Alcatel's to BBB-plus from A. In both cases, S&P cited "extreme adverse structural change" in the industry and said the outlook for both companies was "negative."
"What comes across is the extremely bearish tone that S&P is taking on the industry," Patrick McCullagh, a credit analyst at Merrill Lynch, told Bloomberg News. "The phrase 'extreme adverse structural change' sounds pretty biblical to us."
British Telecommunications PLC, a Marconi client, and other telecoms companies have cut spending on new networks as the U.S. and European economies have slowed. Alcatel, Marconi and rivals, including Nortel Networks Corp., posted losses and announced thousands of job cuts as sales of phone equipment slumped this year.
CYBERWORKS' NET EFFORT: Pacific Century CyberWorks Ltd., which fired 340 people from its Internet operations last month, said Monday that it would link with the online unit of Television Broadcasts Ltd. and other content providers to try to revive its Web business.
CyberWorks has invited the media to a ceremony Tuesday to introduce "a range of partners that will provide content" to its now.com.hk site. TVB.com is one of those partners, and Cheong Shin Keong, chief executive of the online arm of the city's dominant free-to-air broadcaster, will attend the ceremony, said a TVB executive who asked not to be identified.
ASIA'S ONLINE SURGE: The Asia-Pacific region will overtake the United States as the No. 1 Internet market in two years, according to the research firm Gartner Dataquest Inc.
Led by Japan and China, the region will have 183.3 million Internet subscribers in 2003, compared with 162.8 million in the United States and 162.2 million in Western Europe. But the rapid growth in subscribers might not be matched by revenue, the firm said. By 2005, the Internet access market in the United States will be worth an estimated $21.2 billion, compared to $17.2 billion in the Asia-Pacific region.
PDA SHIPMENTS FALL: Worldwide shipments of personal digital assistants fell 21 percent, to 2.8 million units, in the second quarter from the first, Gartner Dataquest Inc. reported.
As shipments fell, Compaq Computer Corp. doubled its share of the handheld computer market in the quarter, narrowing the gap with the industry leader, Palm Inc., Gartner said. Compaq's market share rose to 16.1 percent from 7.8 percent. Palm's share fell to 32.1 percent from 50.4 percent as the number of Palm organizers shipped dropped by half. Handspring Inc. came in at No. 3.
'CODE RED' WORM TURNS: A new and possibly more virulent version of the "Code Red" computer worm was detected over the weekend attacking computer servers and leaving them vulnerable to other intruders, a leading Internet security site reported.
The System Administration, Networking and Security Institute said in an advisory on its Web site that the latest variant of the worm seems to leave a "back door" in infected systems that makes them easy for an intruder to infiltrate.
TREND MICRO SHARES PLUNGE: Shares in Trend Micro Inc., a Japanese maker of anti-virus software, plunged after the company posted a first-half loss and cut profit and sales forecasts because of weakening demand from companies in the United States and Japan.
On Friday, Trend Micro slashed its net income forecast by 63 percent after posting a group loss of ¥1.38 billion ($11 million) in the half. The company also reported onetime charges of ¥5 billion related to accounting changes and the liquidation of a unit. It shares fell ¥500, to ¥2,570.
GOOGLE NAMES CEO: The Internet search-engine company Google Inc. named Eric Schmidt as its chief executive officer on Monday, replacing co-founder Larry Page at the helm of the company. Mr. Page will take over as president of the company's products division. Mr. Schmidt, 46, was named chairman of Google earlier this year.
L&H SELLS MENDEZ UNIT: Lernout Hauspie Speech Products NV sold its Mendez translation unit to Bowne Global Solutions of the United States for $44.5 million in an auction Friday, a spokesman for the failed Belgian company said.
The offer from Bowne Global, a division of Brown Co., trumped an earlier $27 million bid from Lionbridge Technologies Inc., but a report in the Belgian daily Le Soir said the company last year had hoped to raise $180 million.
CACHEFLOW CUTS JOBS: CacheFlow Inc., a maker of devices that speed data retrieval from Internet sites, said first-quarter sales were less than forecast and that it planned to fire 89 sales and administrative workers, or 18 percent of its work force, to cut costs.
Sales were about $20 million in the quarter ended July 31, the company said. It said it would post a loss of 21 cents to 22 cents a share, excluding compensation and amortization costs and other items. It had been expected to post a loss of 33 cents, according to Thomson Financial/First Call.
NANYA LOSSES MOUNT: Nanya Technology Corp., a Taiwan maker of computer memory chips, posted its third consecutive quarterly loss and said earnings would not rebound this year. The second-quarter loss totaled 3.8 billion Taiwan dollars ($109.7 million) as sales fell 12 percent, to 2.9 billion dollars. For the full year, the company said it expected a 5.8 billion dollar loss, in contrast to an earlier forecast of a 2.3 billion dollar profit.
COLT FORECAST LOOKS GLOOMY: Colt Telecom Group PLC posted a wider second-quarter loss, hurt by the euro's decline and delayed customer orders, and predicted that losses would continue to expand. Colt, a British provider of voice and data services to businesses, posted a loss of £53.8 million ($77 million) compared with £33.7 million in the year-earlier period.
ASPIRO STOCK TUMBLES: Aspiro AB shares fell 48 percent after the Swedish developer of Web services for cell phones cut its full-year sales forecast and said it would fire 70 workers, or about half its staff, because of sluggish demand. The company lowered its projection for 2001 sales by 68 percent, to 60 million kronor ($5.8 million).
Compiled by James Connell from staff and news agency reports
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