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By Dan Berkes –
This week, Wall Street continued to worry about weakened corporate profits, sending tech stocks to the dumpster for the second week in a row. Also, Sun and IBM both claim number one server spots, and TiVo comes clean.The Dow Jones Industrial Index closed today at 10,623.49, down 66 points for the day, and down 354 points from last week. The Nasdaq ended the week at 2,028.43, a 15-point drop from Thursday, and down 187 points from last Friday.
The overall tech slump was led by a decline in the network and communications industry segments this week, when Nortel Networks was rewarded with a 10-percent drop in its stock price for revising its financial estimates for the current and upcoming fiscal quarters. Other companies jumped on the bandwagon with their revised estimates, investors decided guilt by association was the best practice for the entire tech industry, and almost everything closed the week on a low note.
The markets declined steadily all week, but the Street did take hope in some of the latest retail reports, however marginal they might be. Retail purchasing increased ever so slightly last month, up just 0.1 percent, a shocking decline from April’s 1.4% jump in sales, and missing Wall Street’s expectations of 0.2 percent. Goods with the lowest rate of sales increase included new cars and home-improvement materials. Consumer purchases are considered by economists as an accurate indicator of the state of the American economy.
Consumer prices elevated by 0.4 percent in May due to increases in the prices of gasoline and electricity bills. This led the U.S. Department of Labor to state that inflation isn’t a serious problem at this time. Furthermore, the University of Michigan’s preliminary numbers on its consumer confidence index state that retail sentiment for the month of June decreased by just 0.4%, from 92.0 last month.
TiVo tunes in
TiVo Inc. recorded $3.2 million in revenues for the quarter ending on April 30, 2001, a sharp increase from its $499,000 in revenues from the same quarter one year ago. The company attributes the jump in revenue to increased sales of is Linux-based digital television recording devices and program listing subscription revenues. Net loss was in the $49 million range; about $36 million of that loss is attributed to marketing and promotional activities.
IBM edges Sun in server sales
The latest report from International Data Corporation says that the number one server vendor worldwide is IBM. With a four-point market share gain in the last quarter, Big Blue now outranks rival Sun Microsystems by a 60-percent margin. IBM shipped 140,943 servers to Sun’s 66,609.
David Carlucci, general manager of IBM Americas, recently talked with Business Week about the changing attitude of corporations regarding IT purchases:
“I recently held an advisory council with some of our top customers. And the consensus was although there’s always budget pressure, they’re not seeing substantial budget cuts. And in fact, our data says that in the first quarter in the U.S., business investment in hardware and software grew about 11%. So what we’re really seeing is just a much, much tighter focus on applications that will yield the highest rate of return. They’re not investing as widely unless they have a better business case and a better view of what’s going to yield greater return in a shorter period of time.”
Sun spins the numbers
The ink on IDC’s server sales report was barely dry, when Sun Microsystems issued its own report claiming that it was number one in worldwide server sales. The company claims the top spot for the number of Unix shipments and revenue, as well as the top spot for total midrange servers. Sun’s press release helpfully points out that, when the totals for the entire year are taken into account, IBM and HP both posted a 6% decline in growth.
EBIZ gets credit
Open Source vendor EBIZ Enterprises received a much-needed infusion of credit this week from Finova Capital Corporation. The $4 million line of credit allows EBIZ to continue manufacturing its Terian line of enterprise servers, and will fund continued operations of its LinuxMall.com commerce site.
Layoff ticker
An AP item at Yahoo News recaps job cuts that have been announced in the past few months. Computer industry corporations cutting back on employment numbers include Hewlett-Packard (7,700 positions eliminated), Cisco Systems (8,500), Compaq (7,000), Intel (5,000), Ingram Micro (1,000) and Silicon Graphics (1,000).
Here’s how Open Source and related stocks did this week:
