AMD and Apple lead market gloom over tech stocks.

By Alun Williams

Posted on 19 Jun 2002 at 17:42

Stock exchanges around the world reeled at the news of a number of profit warnings from major high-tech firms such as AMD and Apple. Japan's Nikkei index closed almost 3.5 per cent down. By midday the main London and Frankfurt indexes were down around 1.5 per cent.

Leading the way with the warnings was AMD. The company is now predicting a 'substantial operating loss' for the quarter ending 30 June 2002, due to depressed sales levels. Original projections for revenues to fall between the $820m to $900m range have been revised down to between $620m and $700m. The official figures will be published on 17 July 2002.

'As we have seen in previous statements from a number of other companies, there is broad weakness in the personal computer market and it is adversely affecting AMD,' said AMD's Chief Financial Officer Robert J. Rivet in an official statement. 'The processor business, particularly in Europe and North America, is weak. Our flash memory business is improving and expected to show sequential sales growth.'

With a host of hi-tech firms approaching the close of their financial quarters, companies are hurrying to issue profit warnings rather than risk the wrath of shareholders when the official figures are released.

Another company issuing a profits warning was Apple. With a slow down in sales, its revenue for the current financial quarter is expected to be around ten per cent lower than expected (original projections were for $1.6bn).

As you would expect, Apple CEO Steve Jobs remained upbeat. 'We've got some amazing new products in development, so we're excited about the year ahead. As one of the few companies currently making a profit in the PC business, we remain very optimistic about Apple's prospects for long-term growth.'

Database giant Oracle managed to buck the trend, somewhat, by reporting almost-even results (declaring fourth quarter net income of $760 million, or $0.14 per share, compared to net income of $0.15 per share a year ago).

'The true test of a management team is how well it performs in tough times,' said Oracle CFO Jeff Henley. 'During the worst technology recession I've seen in more than 20 years, Oracle's operating income margins increased to record levels and our operating income declined only 6% this fiscal year. This management team proved it can preserve profits even when times are tough.'

As another sign of the times - cost-cutbacks and trimmings of operations - Intel has announced that it plans to wind down its Intel Online Services (IOS) Web hosting business. The company will, however, continue providing services to existing customers over the next 12 months.

'While IOS has been successful in attracting new customers, market trends and financial projections for the hosting services industry lead us to today's decision,' said Dalibor Vrsalovic, president of Intel Online Services.