Wednesday, 28 January 2009

It’s getting really tough out there

(By Richard Holway) To add to the bad news from SAP - see post below SAP to cut 3000+ jobs - the bad news affecting parts (and I repeat only some parts) of the tech sector continued to gather pace yesterday. Sun, once the darling of the sector, reported sales down a pretty massive 11% to $3.22b in the latest quarter. The $209m quarterly loss reported means that, in the last two quarters alone, Sun has lost a massive $1.9b on $6.2b of sales.

It’s really tough out there for the hardware manufacturers. Even IBM saw sales in its hardware division dive 20% in the last quarter. Last night EMC announced another 2400 staff layoffs. Chief Executive Joseph Tucci said that he expected global technology spend to decline “in the mid-to-high single digits” – that's 5-10% to you and me.

But, as we have said countless times before, even in hardware, there are winners to set against the losers. Researcher ABI Research reckons that Netbook shipments will reach 35m units this year (up from 11m in 2008 and practically zilch in 2007) , rising to 139m units in 2013. That is even higher than the previous figures I reported from IDC. The netbook leaders are Acer and Asus. You might (or might not) be surprised to learn that Acer is now the Number One supplier of PCs in EMEA with a 21% market share (by units) – ahead of HP with 18% and Dell in the Number 3 spot. Given that the unit price of a Netbook is under half that of a laptop or PC, you can see the pain that all this is inflicting on the established players.

Even Yahoo last night announced revenues down 1% - I think that’s the first ever quarterly revenue decline on record. Although Yahoo has its own set of problems, it does show that even internet advertising revenue is suffering in today’s climate.

The other concern that is running through all the announcements right now is the lack of guidance. All the companies I mention above have given up giving any guidance. The only thing that everyone I talk to – in technology, retailing, services etc - seems to agree on is that Q1 2009 is going to be very, very bloody.

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