Microsoft's latest productivity suite's first few weeks on the market have been disappointing, according to Stephen Baker, NPD Group's VP of industry analysis. The market research firm's Weekly Tracking Service found Office 2010 trailing its predecessor, both in terms of unit sales and revenue, when only the first two weeks were considered.
Baker blamed Office 2010's lackluster start to the fact that it was “launched into a saturated market” and that too in the middle of a “seasonally slow period for PC purchases which have, over time, proven to be a have a strong impact on Office sales.” However, Microsoft can take heart from that fact that Office 2010 has improved upon Office 2007's sales pattern so far this year.
“Office 2007 was a radical new design that certainly helped deliver a lot of curious buyers and it was launched nearly parallel with Vista, adding a good deal of promotional activity in the software aisle, both of which likely helped drive initial sales of Office 2007,” Baker wrote in a blog post. “While Office 2010 has many compelling new features, it is always an uphill battle to sell a high installed base product based on new features alone.”
The analyst sees tremendous promise in the key card program, which lets users activate Office 2010 on preloaded machines using a product key (no disc required). Baker revealed that the key card program currently accounts for “about one-third of the unit volume.”
Baker does not foresee web-based productivity applications posing any real threat to Office 2010 in the immediate future: “Over time it is certainly likely that we will see some slowdown in retail sales as consumers alter their productivity software habits, but that time is not now. Mainstream consumers have not embraced the concept of the cloud, nor are they likely in the short to mid-term, making most of the questions around free software moot.”
It's shaping up to be a great year for semiconductor foundries, says market research firm iSuppli, which predicts that revenue will reach $29.8 billion by the end of 2010. If it does, that will represent a 42.3 percent increase from last year, when revenue settled in at $22.1 billion.
Semiconductor foundries are adjusting to the growing demand for consumer products, following a rough recession in which spending slowed way down starting in 2008. The landscape is decidedly different now, however, and iSuppli says foundries will likely spend 123 percent more on capital equipment this year than they did in 2009.
China, which hasn't expanded aggressively as it should have and hasn't come up with many technological advancements, has forfeited its role as a leader in contract manufacturing, a position which now belongs to Taiwan, iSuppli added.
Most first-tier motherboard makers started off the year with lofty shipments goals, but it looks as though all of them will have to play catch-up after a disappointing month of sales. Asus, Pegatron, MSI, and Gigabyte each saw over 10 percent on-month revenue drops in the month of May, the mobo makers said.
Waning demand in Europe and China are largely to blame for the slumping sales, which the companies hope is only temporary. Asus was hit particularly hard, noting revenues of $674.12 million for May, a decrease of 22 percent on the month. However, Asus is still up by a whopping 79.71 percent on the year, and up over 80 percent in combined revenues for the first five months of 2010.
The same trend holds true for Gigabyte, though to a lesser extent. Gigabyte's revenues for May were down almost 11 percent, but up nearly 6 percent on the year, while accumulated revenues from January through May were up 17.63 percent on the year.
MSI's numbers are down, both for May (17.88 percent) and on the year (0.07 percent), though combined revenues were up for the first five months (21.74 percent).
NetApp was another top gainer with a massive 47.4% year-over-year increase in revenues. It is now within touching distance of second-ranked IBM. In fact, the first quarter proved fruitful for the entire industry. The total disk storage market witnessed year-over-year growth of 18.8% in factory revenues, which rose to $6.7 billion .
"The worldwide disk storage systems market is off to a strong start in Q1 2010, based on year-over-year growth, although annual comparisons are less indicative of market performance given the 2009 economic crisis," said Natalya Yezhkova, research manager, Storage Systems at IDC. "As such, sequential comparisons can provide more information on a market recovery. Although the market declined in Q1 2010 compared to Q4 2009, the decline was lower than usual. This is a positive sign, suggesting increased storage budgets and continued demand for storage solutions."
Networking specialist Cisco this week reported its third quarter earnings for the period ended May 1, 2010, noting third quarter net sales of $10.4 billion. Net income (GAAP) came out to $2.2 billion, or $0.37 per share, while non-GAAP net income reached $2.5 billion, or $0.42 per share.
"Our financial results were outstanding, achieving record level revenue and earnings per share results. We witnessed a return to strong balanced growth across geographies, products and customer segments that we haven't seen since before the global economic challenges began. We emerge from this downturn gaining market share, a larger share of the total wallet spend of our customers, dramatically improved customer relations as a trusted technology and business partner, and having next-generation products in almost every product category. It is clear that our game plan for how to handle economic downturns is hitting on all cylinders," said John Chambers, chairman and CEO of Cisco.
Chambers went on to say that Cisco's operations exceeded expectations in every measurement perspective, including revenues, earnings per share, new products, successful acquisitions, and internal startups. In other words, it was a heck of a quarter for Cisco.
According to research firm IDC, PC microprocessor shipments were up 39% in the first quarter, when compared to last year. The quarter by quarter numbers were better than expected as well. There is usually a decline from the holiday season into the first quarter, but it was more modest than most years. This could be yet another sign of a recovering tech sector.
This jives nicely with Intel's recently reported profits. The chip maker managed to pull in $2.4 billion in Q1. That's a 288% improvement over last year. Additionally, Intel inched up another 0.5% in market share to 81%. AMD on the other hand lost market share in all form factors.
IDC is predicting continued growth in the CPU market as the year goes on. They base this on expected IT spending, which makes up a sizable proportion of computer sales. Have you noticed new hardware rolling out in your place of business?
In a time long ago, Amazon was a book seller. They've continued to sell paper books while becoming the leader in ebooks, but they also sell a multitude of other products. In the past, most of Amazon's business was selling media like books, music, and movies. Now those "other" products make up the majority of the online retailer's sales. The news came in Amazon's earnings call today when it was also announced that they smashed projections by rocking a 46% revenue increase over last year.
Overall, Amazon took in $3.43 billion in sales from media, and $3.51 billion from everything else. Many analysts have expected this so-called "inversion point" to occur eventually. Amazon benefits from this in that they have a solid buffer in the face of the changing media landscape. It's no secret that Amazon liked having the eBook business all to themselves, but they'll never have that kind of comfortable perch again.
Certainly people are buying all sorts of things from Amazon. What are getting there? Still just books and DVDs? Or have you started buying your electronics from Amazon as well?
IT specialist and Fortune 500 company EMC on Wednesday reported record financial results for the second quarter in a row. According to EMC, first-quarter consolidated revenue was $3.9 billion, an increase of 23 percent compared to one year ago, while GAAP net income rose 92 percent year-over-year.
"EMC is off to a strong start in 2010, turning in the best first quarter in company history with record first-quarter revenue, high double-digit profit growth and all-time record free cash flow," said Joe Tucci, EMC Chairman and Chief Executive Officer. "Our private cloud strategy and focus on four multi-billion dollar markets—each expected to experience rapid growth for many years to come—are resonating very well with customers. We are confident in our ability to lead the next major wave of IT, maintain a long-term double-digit revenue growth rate and continue to take share."
EMC's Information Infrastructure business was particularly robust, rising 22 percent year-over-year to settle at $3.3 billion. The company also cited strong demand and double-digit revenue growth for its Symmetrix storage product portfolio. VMware, for which EMC owns a majority stake, contributed $632 million in revenue to pot.
IBM on Monday posted better than expected earnings and sales numbers along with double digit revenue growth. Diluted earnings of $1.70 per share in the first quarter represented a 16 percent increase over the first quarter of 2009.
"In the first quarter, we drove significantly improved revenue growth rates from the fourth quarter across our businesses and geographies. We had strong results in strategic investment areas including growth markets, business analytics and Smarter Planet solutions," said Samuel J. Palmisano, IBM chairman, president and chief executive officer.
"Looking ahead, we are confident in our ability to grow revenue, and given our mix of higher-value business and productivity we will expand margins, grow profit, cash and EPS, and increase returns to shareholders. Thus, we expect full-year 2010 diluted earnings per share of at least $11.20."
IBM said it ended the quarter with $14 billion of cash on hand and generated free cash flow of $1.4 billion, up about $400 million from one year ago. In other words, life is good at IBM.
"Strong product offerings and solid operating performance resulted in record first quarter revenue,” said Dirk Meyer, AMD President and CEO. “We continue to strengthen our product offerings. We launched our latest generation of server platforms, expanded our family of DirectX 11-compatible graphics offerings, and commenced shipments of our next-generation notebook platforms to customers.”
AMD's net profit climbed to $257 million on a GAAP (generally accepted accounting principles) basis for the first quarter, which is a dramatic turnaround from the net loss of $416 million the company report in Q1 2009.
Coming as somewhat of a surprise, AMD's graphics segment revenue decreased 3 percent sequentially for the quarter, though it did increase 88 percent year-over-year. AMD said the sequential decrease was primarily the result of seasonal decline in royalties received in connection with the sale of game consoles, while the year-over-year increase was driving by an increase in GPU shipments.