Wednesday, 22 October 2008

Doom, Gloom and a Mighty Brightspot

(by Richard Holway) I could spend all my time writing up ‘doom and gloom’ news stories right now.

The latest to hit my desk are Yahoo’s plans to cut 10% of its 15000 employees as it announced a pretty stunning 64% drop in profits in Q3 – from$151m to $54m. Weaker on line display advertising was blamed.

Sun is now anticipating a much greater loss than previously expected in its quarter ending 30th Sept 08. Revenue guidance has been reduced to $2.95b – that compares with $3.2b in the same quarter last year.

The bright spot was from Apple which announced a 26% rise in profits for Q4; riding on some 6.9m iPhones (mainly the new 3G version) in the quarter. Apple claims to have outsold Blackberry (6.1m units) in the quarter. Apple reached its goal of selling 10m iPhones 3 months ahead of schedule. Revenues rose 27% to $7.9b. Steve Jobs was understandably cautious in his outlook on the analyst call. The fact that Jobs was on the call at all was a great boost – given the rumoured state of his health. We will wait to see what happens to Apple’s share price when the UK markets open. Early indications in after hours trade would point to a strong rise.

However, I would caution that the events since 30th Sept 08 really have hurt consumer confidence. The Christmas quarter is key to Apple. Will consumers still fork out on those sexy Apple products as stocking fillers as in years gone-by? As a long term Apple shareholder, I certainly hope so!

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