Not all the news from the US IT industry was gloomy last week, just most of it. Oracle managed to meet reduced forecasts for its third quarter, which was almost positive, but Compaq sounded a sour note when it lowered its Q1 outlook and detailed plans to cut staff by 5000. The company reduced its revenue projections for the first quarter to between $US9.0 billion and $US9.2 billion, which is about four per cent below the first quarter of 2000, and said its profit per share was likely to be about the same as the previous first quarter. Michael Capellas, CEO, blamed the sluggish performance on "continued overall weakness in the US economy".
Computer Sciences Corp found a different reason for its decision to eliminate about 900 jobs. While still expected to lift revenue in its fourth quarter (to March 31) by between 11 per cent and 13 per cent, the company said it had encountered a "decline in global commercial customer demand for traditional IT consulting and systems integration services, reduced demand within the healthcare vertical market for software licensing and services, and recent adverse margin performance in some of its commercial businesses". The upshot is that CSC's profit will reach only about one-third of the levels forecast by market analysts.
Oracle's third quarter figures were released last week and proved to be in line with a revised forecast that had been issued two weeks earlier. Net profit rose 16 per cent from $US504 million to $US583 million on revenue that rose from $US2.4 billion to $US2.7 billion. The company's core database business did slightly better than expected, but Oracle's applications business fell a long way short of the high expectations that both analysts and the company had for it.
Things were not anywhere near as cheerful at National Semiconductor, where sales in its third quarter to February 25 fell from $US548.9 million a year ago to $US475.6 million. Net profit fell from $US327.8 million to $US39.2 million. While the company finished the quarter on the right side of the ledger, its CEO Brian Halla acknowledged there would be "a slight sales decline" of as much as 10 per cent in the fourth quarter.
Adobe Systems also had reason to be cheerful. The company lifted revenue from $US282.2 million to $US329.0 million in its first quarter and made a net profit of $US69.8 million, which was slightly ahead of the $US64.6 million a year earlier. However, as an acknowledgement of the tough times out there, the company lowered its second quarter forecast for revenue growth to 15 per cent.
On top of that news it's a bit difficult to know what to make of the figures released by Internet incubator CMGI. In the second quarter the company's revenue rose from $US158.5 million to $US342.7 million, but its loss blew out from $US187.8 million to $US2.56 billion. The company is attempting to arrest the outflow of money by changing its focus to "reduce our dependence on advertising-derived revenue in favour of more stable licensing and enterprise-derived revenues".
And on the other side of the Atlantic Cable & Wireless blamed the US when it said it will retrench 4000 workers within 12 months because its revenue is declining in North America and Japan. "The most severe pricing pressure has been in those two economies. We have seen price reductions in the UK and Europe, but much more along the lines we expected," explained