AllThingsD » forecasts

IDC Says PC Shipments Are Slowing Down Again

Arik Hesseldahl — Mon, 06 Jun 2011 14:05:46 +0000

The market research firm IDC is out with its latest forecast on PC sales growth in 2011, and as has been the case so many times before, the predictions are worsening for the year.

The firm has cut its growth estimate on PC sales in 2011 almost in half. In February, it said PC shipments would grow more than 7 percent. Now it says shipments will grow by only a little more than 4 percent. The reasons are a combination of things you can probably guess: A tightening economic outlook, a saturation in developed markets, and, well, the iPad. IDC uses the phrase “competing products,” but we all know that the competing product of the moment is tablets, and when you talk tablets, you’re talking about Apple’s iPad. Even so, IDC says 2011 will be a down year compared to 2012 through 2015, when growth is expected to head north of 10 percent.

The 2009 consumer-driven boom cycle in notebooks and mini-notebooks has faded. And shipments in the first quarter of 2011 declined by more than 4 percent versus the same period a year ago. That drop was only offset a little by a 3 percent growth in shipments to companies. The consumer slowdown was worst in the U.S., Canada and Europe, IDC says. Add to that the Japanese earthquake, the Arab Spring, and a dour economics outlook, and you end up with a market that’s going to grow a lot slower than previously expected.

As we’ve seen, these forecasts initially tend to impact the share prices of companies in the PC ecosystem like Intel, Advanced Micro Devices, hard drive makers like Seagate, not to mention the PC makers themselves like Hewlett-Packard and Dell. But remember what happened when Intel last reported its quarterly earnings. CEO Paul Otellini slapped down the market research firms in comments made on a conference call with analysts.

At the time, he said, “Our views differ from the views of the analysts,” and that, “Our projection for 2011 remains in the low double-digit range.” If you see Intel cutting its estimates ahead of its next earnings call–and there’s no evidence of that happening–you know it’s getting serious.

Update:An Intel spokeswoman says the company is standing by the forecast it gave in the second quarter. For the record the company said last month that it expects PC unit shipments to grow 11 percent this year notwithstanding any impact from tablet sales. It also said it expects revenue to be flat in the second quarter versus the first quarter, which would be an improvement over the usual decline the company sees at this time of year. I talked briefly with Intel about this today, but Don Clark at The Wall Street Journal has more on it.

Clearly it still sees a different market than IDC does, and wants the market to know it. We’ll see how it all turns out soon, as the second quarter comes to a close in about three weeks.

Analysts After Intel's Home Run Quarter: Never Mind!

Arik Hesseldahl — Thu, 21 Apr 2011 00:30:51 +0000

It felt like the punchline of Gilda Radner’s Emily Litella sketches from the old days of Saturday Night Live. After setting the table with forecasts that Intel, the world’s largest maker of computer chips, would be lucky to report quarterly earnings that would meet the consensus of the professional Wall Street prognosticators, Intel showed up and not only outdid those expectations, but blew them away, both for the quarter just ended, and with its confident guidance for the quarter ending in June.

How did the community of analysts–who usually are pretty good about this sort of thing–miss their forecast of Intel’s sales by more than a billion dollars? How did they also miss Intel’s earnings per share by 13 cents? Is it really a case of what Intel CFO Stacy Smith referred to on a conference call last night as two blind people describing different parts of an elephant? Analyst Doug Freedman with Gleacher and Co. tried to explain it in a note to his clients today. He says two things contributed to the mass misjudgement.

First, everyone misjudged the number of chips consumed in the sales channel during the third and fourth quarters of 2010 ahead of Intel’s big launch of its latest Sandy Bridge generation of PC chips in January of this year. Having burned through their inventory of older chips, Intel shipped more of the newer chips than most people had expected, as distributors bulked up their stocks after cutting them down more than usual. Freedman says he thinks the same thing is still going on, which means that the guidance that Intel gave for the second quarter may turn out to be conservative.

Second, there was an extra week during the quarter. If you listened to the conference call, you heard several references to Q1 having 14 weeks. If you add a week’s worth of revenue–about $818 million–plus the additional revenue brought in by Intel’s acquisitions of McAfee and the Infineon wireless unit, which works out to another combined $496 million, you end up with about $1.3 billion, which is almost exactly the difference between the Wall Street consensus revenue number and Intel’s actual revenue.

Whatever the reason for the disconnect between the forecasts and the results, Freedman boosted his price target on Intel to $28 from $27 and maintained his Buy rating. Even so, other analysts weren’t quite so willing to change their stripes. Michael McConnel of Pacific Crest Securities, continued to insist that the slowing market seen by Gartner–who Intel’s Paul Otellini criticized in not-so-veiled comments during the conference call last night–will catch up to Intel sooner or later. Another, Stacy Rasgon of Sanford Bernstein, wrote that he’s not buying Intel’s story, period. Tiernan Ray summarized the day’s scorecard on revisions and recriminations by Intel analysts.

Whatever they said, Intel’s share price roared by nearly 8 percent to close at $21.41, the highest levels it has seen since March. Never mind all that pessimism from yesterday. Come on, analysts, it’s time to work your Emily Litella impersonations. Say it with me now: Never Mind!

Here’s a clip from Saturday Night Live circa 1975, courtesy of Hulu, to get you started. Better luck next quarter.

Sharethrough CEO on Why You Should Care About Social Video Ads (Video)

Liz Gannes — Thu, 17 Feb 2011 18:34:23 +0000

Sharethrough is a new kind of ad platform: One focused exclusively on video and social sharing. It doesn’t make viral videos, but it does help sites create custom ad units that fit with the flavor of their community of sites, like Reddit and BuzzFeed. The company charges on a cost-per-view basis. And yes, it guarantees it can get your funny ad a lot of views.

In advertising speak, San Francisco-based Sharethrough combines earned media and paid media. For example, it helped get this recent short film for Lego by Pereira & O’Dell, which was rather nifty on its own, 1.5 million views in two weeks on various platforms.

Sharethrough competes with companies such as Visible Measures, TubeMogul and Jun Group. And together, they’re competing with more conventional video ad units, like pre-rolls. The various firms are all trying to gain visibility in the emerging social video ad market by releasing stats and forecasts. Visible Measures said social video ad campaigns generated more than 2.7 billion views in 2010, up from 820 million in 2009. And here’s a recent demographic breakdown of Jun Group data.

Sharethrough, for its part, said it is now signing $75,000 campaigns on average, up from $20,000 a year ago. It has also doubled its number of customers to 100 in the last year.

If you count YouTube, according to Sharethrough CEO Dan Greenberg, the social video ad market is worth hundreds of millions of dollars. Everyone else probably counts for about $50 million combined, he said.

Here’s a video of Greenberg explaining Sharethrough and what it does. His company has raised a total of $6 million from investors including North Bridge Venture Partners and Floodgate.

[ See post to watch video ]

2011 Forecast Calls for 76 Million iPhones With Chance of 32 Million iPads

John Paczkowski — Mon, 07 Feb 2011 16:18:23 +0000

With the hard launch of the CDMA iPhone at Verizon now just three days away, analysts are tweaking their sales forecasts to reflect its impact. The latest to issue an upward revision: Susquehanna’s Jeff Fidacaro, who raised his price target on Apple this morning to reflect strong pre-sale demand for the Verizon iPhone and a significant increase in its production.

“Our proprietary checks in Apple’s supply chain suggest slight increases to our production forecasts for CY1Q11,” Fidacaro said in a note to clients today. “Our read on CDMA iPhone production shows a ramp up from prior forecasts and positive revisions for the GSM iPhone as well. Early indications from the Verizon presale of the CDMA iPhone were [also] strong. Thus, we are raising our iPhone shipment estimates substantially.”

Fidacaro had been looking for Apple to ship 17.7 million iPhones in the March quarter and 70.5 million in fiscal 2011. Now he’s forecasting 19.8 million and 76.7 million–a 92 percent increase year-over-year.

That, along with a significant upward revision to his iPad shipment estimates, driven by the presumed debut of iPad 2–32.1 million in fiscal 2011, up from 27.3 million (a 330 percent increase year-over-year)–prompted Fidacaro to raise his price target on Apple to $465 from $445.

Spare change for Apple shares?

Chatter.com's Super Bowl TV Ads Touch Off an Ad Skirmish on Google (Video)

Arik Hesseldahl — Mon, 07 Feb 2011 05:30:11 +0000

If the forecasts for the size of the audience are correct, then some ~~107~~ 111 million people saw the two ads for Chatter.com, the new social enterprise application from Salesforce.com

As you may remember, Salesforce bought “bookend” spots that ran immediately before and after the halftime show, and included Will.i.am and the Black Eyed Peas, who were the main musical act of the show itself. Salesforce claimed that the bookend buy on either side of the halftime show was a first, and that it was the first time that an advertiser involved the halftime show entertainment act in a Super Bowl ad.

While the general verdict on the ads themselves has yet to come down, there’s certainly been some grumbling from other social enterprise players, namely Yammer and Socialcast. Both have taken out text ads on Google against the word “chatter,” in some apparent hope of catching the eye of the millions who may have gone from seeing the ad on TV to googling the word “chatter” on their PCs. (I captured a screen-grab of their ads in the image at the right.) “Chatter Isn’t It” starts the ad for Yammer, while the one for Socialcast says “Superbowl Chattering?” Time will tell if they’re successful.

In the meantime, in case you missed them, here are the TV ads for Chatter.com. Judge for yourself if you think they’ll help Salesforce.com persuade companies to sign on to using it for collaboration.

Intel Says Sandy Bridge Support Chip Has "Design Errors"

Arik Hesseldahl — Mon, 31 Jan 2011 19:02:03 +0000

Shares of Intel are taking a bit of a drubbing today as the company announced it had discovered a design error in a chip supporting its Sandy Bridge generation of microprocessors. The chip is called Cougar Point, and it’s involved with the data connection to other devices within or outside the computer–hard drives or internal optical drives–using SATA connections. Intel says the performance of these connections could degrade over time. The systems affected have Core i5 and Core i7 quad-core chips.

The company has already stopped making the chip with the problem, but as is always the case with the incredibly complex process of semiconductor manufacturing, doing so is a costly process. Intel said it will reduce its revenue forecast for the first quarter by $300 million as it ends production of the old chip and gets volume of the new one ramped up. Total cost to repair and replace affected materials and computers already sold with the problem chip will be $700 million.

Those with long memories will recall Intel’s Pentium bug in the mid-1990s, which caused a big crisis of confidence in Intel chips, jokes from late-night TV hosts and a drop in the company’s stock price. This error is nothing like that. The company says the processor itself is unaffected.

Analysts are telling investors not to overreact. “Assuming pent-up demand for Sandy Bridge and mild competition, we think impact of this problem will be relatively small,” Standard & Poor’s analyst Clyde Montevirgen told clients in a note today. Mark Moskowitz of J.P. Morgan said it is likely that only a small number of end consumers are affected.

Meanwhile, Intel closed its $1.4 billion deal to acquire the wireless chip division of the German chipmaker Infineon, and said it expects to finally close its $7.7 billion acquisition of McAfee by the end of the quarter.

The combination of those two deals plus the chip trouble caused Intel to issue new guidance for the first quarter. It now expects first-quarter sales in the range of $11.3 billion to $12.1 billion, which is slightly higher than previous guidance. However it shaved three points off its gross margin forecast: The mid-point of the range is now 61 percent, down from 64 percent.

Intel shares are down more than one percent at the moment, while shares of rival Advanced Micro Devices are surging by more than five percent.

With iPad Sales, Steve Schools the Street Again

John Paczkowski — Thu, 20 Jan 2011 19:17:34 +0000

In need of a chuckle? Take a look at Wall Street’s first-year iPad sales forecasts. They ranged from 1.1 million at their most conservative to 7 million at their most bullish, and averaged out at 3.3 million. Which is laughably short of the 14.8 million iPads Apple ended up selling in 2010. And, as Horace Dediu notes over at Asymco, indicative of the disruptive change the iPad has initiated in the computing market and the lead Apple has claimed as a result. “If analysts, to a man, fail, you can be sure that competitors are no wiser,” says Dediu. “This collective shrug amounts to the greatest competitive advantage any entrant could ever hope to obtain.”

Indeed. What was it Bill Gates said about the iPad? “It’s a nice reader, but there’s nothing on the iPad I look at and say, ‘Oh, I wish Microsoft had done it.’”

Mmhmm.

Intel Posts Best Quarter Ever

John Paczkowski — Tue, 13 Jul 2010 20:43:46 +0000

Intel kicked off the tech earnings season Tuesday with a record quarter–the company’s best ever.

Posting second-quarter financials after the closing bell, the company reported net income of $2.9 billion on revenue of $10.8 billion, up $3.3 billion and $2.7 billion, respectively, year-over-year. Earnings per share were 51 cents. That’s quite a change from the seven-cents-a-share loss Intel (INTC) reported in the second quarter of 2009, when its results were undermined by a nasty $1.4 billion fine from the European Commission. It’s also significantly better than the 43 cents a share analysts had been expecting, according to Thomson Reuters.

In a statement, CEO Paul Otellini said that strong demand in the enterprise space drove Intel to “the best quarter in the company’s 42-year history.”

“The PC and server segments are healthy and the demand for leading-edge technology will continue to increase for the foreseeable future,” he added

For the third quarter, Intel says it expects revenue of $11.2 billion to $12 billion, surpassing analysts’ forecasts of $10.92 billion in sales for the period. An enthusiastic outlook and one that suggests the tech rebound will continue in the second half of this year.

RIM Stumbles

John Paczkowski — Wed, 31 Mar 2010 20:45:23 +0000

Research in Motion’s struggle to remain relevant in the market it helped create is going better than expected, though there’s certainly room for improvement. Reporting fourth-quarter earnings after market close Wednesday, the company said it added 4.9 million new BlackBerry subscribers during the period, exceeding forecasts of 4.4 million to 4.7 million.

Welcome news given recent concerns about the impact new Apple (AAPL) iPhones headed to market might have on sales. Sadly for RIM (RIMM), the revenue and earnings per share posted today were both below expectations. The company earned $710.1 million, or $1.27 per share, on revenue of $4.08 billion. Analysts were expecting earnings of $1.28 per share on revenue of $4.3 billion, according to consensus estimates from Thomson Reuters.

At $69 RIM shares are down 6.7 percent in after-hours trading.

Apple: Billions of Songs, Billions of Apps, Not Much Profit

Peter Kafka — Thu, 25 Feb 2010 12:53:05 +0000

Apple is patting itself on the back for delivering 10 billion songs from its iTunes Store. And it frequently boasts about the number of apps customers download from iTunes, as well–the tally is now past three billion.

But you won’t hear Apple boast about how much money it’s making from iTunes. Because there’s not much to boast about.

Even at today’s hyper volume, the digital store is still running at “a bit over break-even,” the company reminded analysts during its earnings call last month.

Here’s the relevant excerpt from that call, via Seeking Alpha (thanks to Venrock’s David Pakman for pointing this out yesterday at the Digital Music Forum East):

Maynard Um–UBS
We have seen a number of industry revenue forecasts for applications and just given kind of the expected explosive growth there I am just wondering if that is still a break-evenish type of business as you look forward over the next couple of years?…

[Apple CFO] Peter Oppenheimer
…Regarding the App Store and the iTunes stores, we are running those a bit over break even and that hasn’t changed. We are very excited to be providing our developers with a fabulous opportunity and we think that is helping us a lot with the iPhone and the iPod touch platform.

As Oppenheimer says, this isn’t a new development. Apple (AAPL) has always maintained that iTunes wasn’t a real money maker. It’s supposed to help sell iPods, iPhones, and soon, iPads.

For years, industry observers figured that as the iTunes business scaled, this would change. An alternate theory, held by some of Apple’s media partners–the company was being overly modest about its success.

Apple doesn’t break out iTunes sales, but lumps them into a category called “Other music related products and services,” which generated net sales of $4 billion last year. That’s an increase of 21 percent over 2008, and the company attributed this growth to “increased net sales of third-party digital content and applications from the iTunes Store.”

Nokia's Smart-Phone Slip

John Paczkowski — Thu, 15 Oct 2009 15:23:45 +0000

Nokia CEO Olli-Pekka Kallasvuo says the demand for mobile devices improved in many markets during the third quarter–but you wouldn’t know it to look at the company’s earnings. This morning, Nokia posted an unexpected 559 million euro ($836 million) loss for the period, its first in a decade.

Dragging the company down: A 908 million euro goodwill write-off in the Nokia Siemens Networks venture it co-owns with Siemens (SI). Revenue was 9.8 billion euros, or about $14.6 billion, which was down about 20 percent compared to last year. Worse, smart-phone market share declined to 35 percent from 41 percent in the previous quarter.

Six points gone in three months? That’s a brutal loss and one that demonstrates just how much pressure the company is seeing from Apple (AAPL) and Research in Motion (RIMM), among others.

“Nokia is launching plenty of new high-end smartphone models, such as the N900 and N97 mini,” Strategy Analytics analyst Neil Mawston told Reuters. “But as yet there is no iPhone killer to drive a major revival in its smartphone volumes. Nokia is still struggling in the U.S. smartphone market, and with competition intensifying in China as well, Nokia’s battles can only get tougher in 2010.”

Still, Nokia (NOK) did have some good news to report. It expects mobile device volumes to increase in the fourth quarter of 2009 and it sees the global handset market shrinking less this year than analysts had feared–seven percent instead of 10 percent.

“It is encouraging to see some signs of recovery in our markets,” Kallasvuo said during a conference call. “But let’s be clear, uncertainty in end-consumer demand remains.”

Nokia's Smart-Phone Slip

John Paczkowski — Thu, 15 Oct 2009 15:23:45 +0000

Six points gone in three months? That’s a brutal loss and one that demonstrates just how much pressure the company is seeing from Apple (AAPL) and Research in Motion (RIMM), among others.

“It is encouraging to see some signs of recovery in our markets,” Kallasvuo said during a conference call. “But let’s be clear, uncertainty in end-consumer demand remains.”

What's in Netflix's Queue? 10.6 Million Subscribers.

John Paczkowski — Thu, 23 Jul 2009 21:21:12 +0000

The econalypse has done great things for Netflix, sending recession-addled customers running to embrace its way-cheaper-than-cable DVD-by-mail and streaming-movie service.

The online DVD-rental pioneer said Thursday that its second-quarter profit rose 22 percent on revenue of $408.5 million. It earned $32.4 million, or 54 cents a share, easily surpassing Wall Street’s expectations of 50 cents per share.

Netflix’s (NFLX) subscriber base finished the quarter at 10.6 million, up 26 percent year-over-year and at the high end of the company’s own forecasts.

“We continued to execute very well in the second quarter and are on track to deliver a record 2009,” Netflix CEO Reed Hastings said in a statement. “As our subscriber base and disc shipments continue to expand, and as we offer more opportunities to watch instantly via the Internet, we believe we are striking the right balance between growth, investment and earnings.”

What's in Netflix's Queue? 10.6 Million Subscribers.

John Paczkowski — Thu, 23 Jul 2009 21:21:12 +0000

The econalypse has done great things for Netflix, sending recession-addled customers running to embrace its way-cheaper-than-cable DVD-by-mail and streaming-movie service.

Netflix’s (NFLX) subscriber base finished the quarter at 10.6 million, up 26 percent year-over-year and at the high end of the company’s own forecasts.

A "Tough" Quarter? I'll Say…

John Paczkowski — Thu, 16 Jul 2009 12:34:12 +0000

Reporting second-quarter earnings today, Nokia CEO Olli-Pekka Kallasvuo said that the worst may be over. He had better hope so, because the world’s largest handset maker is clearly having a tough time of it. Nokia posted a gruesome 66 percent drop in profit in what the company generously described as a “tough” second quarter, dragged down by sales that fell 25 percent to 9.91 billion euros.

Nokia (NOK) shipped 103.2 million units during the quarter, down about 15 percent year-over-year. Worse, increased competition in the smart-phone market from the likes of Apple (AAPL) and RIM (RIMM) forced the company to reduce forecasts for market share and profitability. Nokia had expected to increase market share in the second half of the year, but now it expects it to remain flat. And the company expects handset shipments for 2009 to be around 10 percent lower than in 2008.

“Nokia put in a solid performance in what was another tough quarter,” Kallasvuo said. “Competition remains intense, but demand in the overall mobile device market appears to be bottoming out.” Good news, because its search for the bottom has been having a calamitous effect on Nokia. Shares in the company are down more than 12 percent at $13.70 in early trading.

A "Tough" Quarter? I'll Say…

John Paczkowski — Thu, 16 Jul 2009 12:34:12 +0000

So Much for Those Better-Than-Expected HP Earnings [UPDATED]

John Paczkowski — Tue, 19 May 2009 21:13:49 +0000

Hewlett-Packard’s second-quarter financials may have been in line with forecasts, but they were troubling nonetheless. A number of analysts predicted that the company might report better-than-expected earnings. Sadly, it did not. HP’s net income for the period fell 17 percent to $1.7 billion, or 70 cents per share. Excluding one-time items, the company earned 86 cents a share, compared with a profit of 87 cents a share in the same period last year. The results include charges of 2 cents a share related to a patent dispute. Sales fell three percent to $27.4 billion. Every division of the company, save one, reported a decline in revenue. The lone highlight, Services, posted an increase, but that was due primarily to HP’s acquisition of EDS. The grim details:

Enterprise Storage and Servers: down 28 percent
Software: down 15 percent
Personal Systems Group: down 19 percent (though it claims the leading market position in PCs in every region)
Imaging and Printing Group: down 23 percent
Financial Services: down 6 percent
Services: up 99 percent

Clearly, the decline in consumer and business spending is weighing heavy on HP (HPQ) and will continue to do so. The company expects third-quarter revenue to be approximately flat to down two percent sequentially. And it says full-year revenue will slip approximately four to five percent from the prior-year period.

UPDATE: During a conference call to discuss earnings, HP’s leadership said the company will sack about two percent of the workforce in the months ahead as it looks to trim costs. 6,400 employees will lose their jobs as a result.

Cisco: Expectations Easy to Beat if You Set Them Low Enough

John Paczkowski — Wed, 06 May 2009 21:15:55 +0000

Cisco opened its books this afternoon and what they revealed wasn’t exactly pretty: declining profit and slumping sales. Not the sort of performance you hope for in a tech bellwether. But clearly Cisco has been beaten into submission by the econalypse just like everyone else.

For its third quarter, the company posted a profit Wednesday that fell 24 percent from a year earlier but still beat expectations. Sales slipped 17 percent. The specifics: Revenue topped out at $8.16 billion, down from $9.79 billion for the same period last year but better than the $8.07 billion analysts had expected. Sales were $8.2 billion, topping analysts’ forecasts of $8.1 billion. Excluding one-time charges for acquisition costs, Cisco (CSCO) earned 30 cents per share, a nickel more than the Street had been looking for.

So, overall, a good report that exceeded expectations with numbers that, by any standard, are pretty damn ugly. “Cisco delivered solid financial performance despite a challenging global economy and period of evolving market dynamics,” said CEO John Chambers. “These results demonstrate our ability to drive operational excellence and manage profitability across varying economic cycles.”

One way of putting it, I suppose. Certainly investors are eating it up. Cisco shares rose on the news.

Chapter 11, in Which SGI Sells Itself to Rackable

John Paczkowski — Wed, 01 Apr 2009 17:00:20 +0000

“Lately Silicon Graphics Inc. has had the kind of upward momentum associated with the hit movies produced with its whizzy high-powered work stations, like ‘Terminator 2: Judgment Day’ and ‘Jurassic Park.’ After the company outperformed Wall Street’s earnings estimates last week and the stock jumped 15 percent, analysts scrambled to upgrade ratings and future earnings forecasts.”

– Silicon Graphics’ Hot Run Goes On, New York Times, 1994

Time was, there was a Silicon Graphics (SGIC) workstation on every desk in computationally-intense industries like chemistry and film production. No longer. Cheap Linux boxes have rendered them obsolete and SGI, the company, along with them. This morning, SGI, which recently endured a brace of layoffs, filed for bankruptcy protection for a second time and sold itself to Rackable Systems, which makes server and storage products for midsize and large data centers, for $25 million in cash.

“We have been working very hard to strengthen our company, and today, we’ve taken another big step in that direction,” SGI CEO Robert Ewald said in a statement that would make even the most exuberant of SGI-optimists wince. “This transaction represents a compelling opportunity for Silicon Graphics’ customers, partners and employees, who can all benefit from the emerging stronger company with better technologies, products and markets [sic] reach.”

A sad ending for SGI, which really reinvented computer graphics and made quite a name for itself in the high-performance computing space back in the day.