Second-quarter profit at US computer-related companies tumbled about 66 percent because these businesses couldn't make up demand lost when the Internet boom finally crashed, First Call/Thomson Financial said.
Intel Corp, the biggest chipmaker, said second-quarter profit fell 94 percent on a slump in personal-computer sales. Sun Microsystems Inc had a loss last quarter on its first sales decline in at least nine years. JDS Uniphase Corp, the largest maker of fiber-optics equipment, issued results that made a full-year loss of US$50.6 billion, the largest in US history.
Producers of computers, software, chips and communications equipment took a double hit in the period. They suffered as most businesses did, because companies and consumers cut spending. Yet, they're also stuck with extra capacity after spending heavily to meet demand that vanished when the dotcom bubble burst.
"It was a brutal quarter," said Todd Ahlsten, research head at Parnassus Investments, which manages about US$475 million. "The third quarter is going to be even worse, and fourth-quarter estimates are still too optimistic." First Call gave its projected per-share fall in computer-related profit after almost 80 percent of US companies in the Standard & Poor's 500 index had released second-quarter results.
The computer industry's problems likely pulled down overall second-quarter US corporate profit by 17 percent, said Joe Cooper, a First Call analyst.
While corporate profit declined, the economy didn't start to shrink last quarter. The US government said Friday that the economy grew in the period, though at a less-than-forecast 0.7 percent annualized rate.
That may be about as bad as things will get, some investors said. They expect that sales will pick up in the next quarter or so, after the government moved to stimulate demand beginning in January.
US Federal Reserve interest-rate cuts -- six this year so far -- generally take about six months to a year to penetrate the economy deeply enough to help corporate profits, investors said.
They expect tax rebates from Washington to boost spending as well.
"Economies do respond to monetary stimulation like the kind we've seen for the past 10 months," said James Grefenstette, a money manager at Federated Investors Inc. "This time won't be different than what we've seen for the past few decades. Economies around the world will respond."
Still, analysts have slashed earnings forecasts during the past month.
The average forecasts now call for computer-industry profits to plunge 63 percent in the third quarter. A 49 percent decline was predicted July 1, according to First Call surveys.
Overall US corporate profit, as tracked by First Call earnings estimates for companies in the S&P 500, now is expected to drop about 12 percent in the current period, compared with the 6 percent average decline forecast July 1.
DEFENDING DEMOCRACY: Taiwan shares the same values as those that fought in WWII, and nations must unite to halt the expansion of a new authoritarian bloc, Lai said The government yesterday held a commemoration ceremony for Victory in Europe (V-E) Day, joining the rest of the world for the first time to mark the anniversary of the end of World War II in Europe. Taiwan honoring V-E Day signifies “our growing connections with the international community,” President William Lai (賴清德) said at a reception in Taipei on the 80th anniversary of V-E Day. One of the major lessons of World War II is that “authoritarianism and aggression lead only to slaughter, tragedy and greater inequality,” Lai said. Even more importantly, the war also taught people that “those who cherish peace cannot
STEADFAST FRIEND: The bills encourage increased Taiwan-US engagement and address China’s distortion of UN Resolution 2758 to isolate Taiwan internationally The Presidential Office yesterday thanked the US House of Representatives for unanimously passing two Taiwan-related bills highlighting its solid support for Taiwan’s democracy and global participation, and for deepening bilateral relations. One of the bills, the Taiwan Assurance Implementation Act, requires the US Department of State to periodically review its guidelines for engagement with Taiwan, and report to the US Congress on the guidelines and plans to lift self-imposed limitations on US-Taiwan engagement. The other bill is the Taiwan International Solidarity Act, which clarifies that UN Resolution 2758 does not address the issue of the representation of Taiwan or its people in
The Philippines yesterday criticized a “high-risk” maneuver by a Chinese vessel near the disputed Scarborough Shoal (Huangyan Island, 黃岩島) in a rare incident involving warships from the two navies. The Scarborough Shoal — a triangular chain of reefs and rocks in the contested South China Sea — has been a flash point between the countries since China seized it from the Philippines in 2012. Taiwan also claims the shoal. Monday’s encounter took place approximately 11.8 nautical miles (22km) southeast” of the Scarborough Shoal, the Philippine military said, during ongoing US-Philippine military exercises that Beijing has criticized as destabilizing. “The Chinese frigate BN 554 was
Taiwanese Olympic badminton men’s doubles gold medalist Wang Chi-lin (王齊麟) and his new partner, Chiu Hsiang-chieh (邱相榤), clinched the men’s doubles title at the Yonex Taipei Open yesterday, becoming the second Taiwanese team to win a title in the tournament. Ranked 19th in the world, the Taiwanese duo defeated Kang Min-hyuk and Ki Dong-ju of South Korea 21-18, 21-15 in a pulsating 43-minute final to clinch their first doubles title after teaming up last year. Wang, the men’s doubles gold medalist at the 2020 and 2024 Olympics, partnered with Chiu in August last year after the retirement of his teammate Lee Yang
RSS