Wall Street Beat: Tech shares hit by slump

Investors flee RIM, but Intel, Google and Apple shares also lose ground

Concerns about the slowing economic recovery and European debt problems continue to weigh on U.S. stock markets, and tech companies are not immune from the general erosion of confidence.

This year's share price gains for computer companies on the Nasdaq have been wiped out in the past few weeks. In aggregate, Nasdaq tech stocks were down 3.76 percent for the year by Thursday's close. The Nasdaq inched downward again in Friday afternoon trading even though the other major exchanges were up for the day.

One of the biggest losers of the day was Research In Motion, which Thursday announced that it not only missed analysts' sales forecasts for its fiscal first quarter but also lowered its guidance for the current quarter. Generating US$4.9 billion in sales for the quarter, company revenue was below the consensus forecast of $5.1 billion from analysts polled by Thomson Financial, even though the analysts had already lowered their expectations due to prior warnings from RIM.

RIM shares are in free fall. Even before Thursday's announcement, its share price was half of what it was in February. On Friday afternoon, it was trading at $27.74, down by $7.55.

For the current quarter, RIM said it expects earnings per share of $0.75 to $1.05 on sales of $4.2 billion to $4.8 billion. This is drastically below analysts' forecasts of $1.40 and $5.5 billion, respectively, according to a Thomson Reuters poll. Though updates to RIM's PlayBook tablet device are due over the next quarter, early reviews panned the device for missing critical applications that business users have counted on, such as a built-in e-mail program. The tablet's interface, based on software acquired from QNX, has been praised, but other devices built around the QNX software are not due until next year, and meanwhile users have been frustrated with delays for a touchscreen BlackBerry Bold.

"While management remains bullish on its prospects for the PlayBook combined with its new BlackBerry 7.0 smartphones launching in volume by Q3/F2012, we maintain our more cautious view as we do not believe RIM is accurately portraying the increasingly competitive smartphone environment," according to a report from Canaccord Genuity analysts T. Michael Walkley, Charles John and Matthew Ramsay.

The bottom line for RIM is that as Apple's iPhone and devices built on Google's Android OS gain traction even with professionals, the aging BlackBerry line appears to be losing out.

RIM, however, was not the only tech loser Friday. Some of the biggest tech sector leaders, including Intel, Google and Apple, were also trading down Friday afternoon. These tech companies all have some exposure to the consumer market and retail climate. On Tuesday, Best Buy, the largest consumer electronics retailer in the U.S., reported that for its latest fiscal quarter ending May 28, net earnings were $136 million, down from $155 million a year earlier.

Despite fears that a slowing economy will dampen consumer spending, not all tech leaders are being hit equally. Vendors with strong portfolios for enterprise customers such as IBM, Oracle and Microsoft were trading up Friday afternoon.

Recent trends for enterprise spending still bode well for the corporate IT sector. Sales in the global systems-management software market jumped 8.2 percent to $7.3 billion in the second half of 2010, according to a report released Thursday by IDC.

Among the top 10 vendors, five (Microsoft, Hitachi, NEC, VMware and Symantec) achieved double-digit year-over-year growth rates globally.

"With virtualization and cloud development among the top priorities for most enterprises, IDC expects the systems management software market will continue to experience strong demand," said Tim Grieser, program vice president, Enterprise System Management Software, in the report.

Despite fears about retail sales, Gartner on Thursday said it expects mobile advertising revenue to reach $3.3 billion in 2011, more than double the $1.6 billion generated in 2010, a figure bound to put revenue in the coffers of some tech companies.

"As the adoption of smartphones and media tablets extends to more consumers, the audience for mobile advertising will increase and become easier to segment and target, driving the growth of mobile advertising spend for brands and advertisers," said Andrew Frank, research vice president at Gartner, in the report.

Despite the upbeat sector reports, until third-quarter sales figures come out from a broad range of vendors, economic uncertainty is bound to make for a rocky few months for tech vendors in the markets.

Join the Good Gear Guide newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags business issuesadvertisingresearch in motionsoftwareinternetsystem management

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Marc Ferranti

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Matthew Stivala

HP OfficeJet 250 Mobile Printer

The HP OfficeJet 250 Mobile Printer is a great device that fits perfectly into my fast paced and mobile lifestyle. My first impression of the printer itself was how incredibly compact and sleek the device was.

Armand Abogado

HP OfficeJet 250 Mobile Printer

Wireless printing from my iPhone was also a handy feature, the whole experience was quick and seamless with no setup requirements - accessed through the default iOS printing menu options.

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?