Wall Street Beat: IT Earnings Down, but Investors Hopeful

IDG News Service — The bad-news tech earnings season rolled on this week with Motorola, Acer, TSMC, STMicroelectronics, Sun and SAP reporting results for the first calendar quarter, but IT investors appear to see signs that certain sectors have bottomed out.

Hardware and chip makers took center stage this week. The recession is hitting the hardware and components sector worse than other areas of IT. Computer purchases are typically the first tech products to be delayed in recessionary times, since software maintenance fees, for example, are hard to avoid.

Motorola, reporting Thursday, said that its loss for the quarter came to US$228 million, compared with a year-earlier loss of $190 million. Sales dropped 28 percent to $5.37 billion from $7.45 billion. Analysts polled by Thomson Reuters expected a $5.55 billion loss. The company is continuing to slide, having shipped 14.7 million handsets in the latest quarter, down 23 percent from the fourth quarter.

The company promised continuing cost controls to improve margins and appears to be pinning hopes on Android-based devices, set to be released later this year.

"Customer feedback on our smartphone roadmap remains very positive, and we plan to have differentiated Android-base devices in stores in time for the fourth quarter holiday season," said Sanjay Jha, co-CEO of Motorola and CEO of its mobile devices unit, in a statement.

Motorola projected a second-quarter loss of $0.03 to $0.05 a share, on the hopeful side of predictions by analysts, who expected a loss of $0.05.

Acer's Aspire One netbook, meanwhile, helped bolster the Taiwan-based company's sales as users looked to low-cost hardware options. Acer said first-quarter sales were NT$119.1 billion (US$3.54 billion), down 7 percent from NT$127.4 billion in the same period last year. Profit was NT$2.03 billion, down from NT$2.95 billion.

Acer executives have been defending its strategy, saying that the company's margins are not that much lower than other major hardware makers. "In fact ours are staying the same, and the other's are coming down to join us," said company CEO Gianfranco Lanci at a product launch earlier this month.

Though chip sales were down for the quarter, several manufacturers see light at the end of the tunnel. Taiwan Semiconductor Manufacturing (TSMC) reported Thursday that profit plunged 95 percent to NT$1.56 billion (US$45.9 million), while revenue declined to NT$39.5 billion from NT$87.5 billion.

But in a statement, the company said it is seeing a "strong rebound" so far this quarter, and that it expects the second half to be "considerably better" than the first half.

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