HP’s Glad Fourth-Quarter Tidings

Hewlett-Packard gave Wall Street some much needed cheer by revealing that its next results will exceed analysts’ estimates

Hewlett-Packard CEO Mark Hurd has a simple credo: Follow the numbers. His insistence that employees focus on the bottom line is beginning to pay off.

On Nov. 18, the tech giant countered a spate of recent dour warnings from tech bellwethers, saying fiscal fourth-quarter results would beat analysts’ forecasts. HP also issued a surprisingly upbeat outlook for fiscal 2009. “It’s surprising, and not,” says John Madden, a research director at Ovum in Boston. “This is a company with great financial discipline, and that certainly helps when the economy takes a tumble.”

Palo Alto (Calif.)-based HP (HPQ) said profit for the quarter ended Oct. 31 was $1.03 a share, excluding items such as restructuring and acquisition charges related to its recent takeover of tech outsourcing firm Electronic Data Systems. Wall Street was expecting earnings of $1.00 a share, excluding items. “HP delivered another solid quarter as it continues to benefit from its global reach, diverse customer base, broad portfolio, and numerous cost initiatives,” Hurd said in a statement. “Our ability to execute in a challenging marketplace differentiates HP, enabling it to increase share, expand earnings, and emerge from the current economic environment as a stronger force.”
Cost-Cutting Pays Off

HP didn’t elaborate which areas of its sprawling tech empire, ranging from PCs and printers to services and software, were doing well. The company is due to report full results on Nov. 24. Yet the preliminary results stood in stark contrast to announcements from tech giants Intel (INTC) and Cisco Systems (CSCO), which earlier this month pointed to a sharp slowdown (BusinessWeek.com, 11/12/08) in virtually all sectors of the PC and server markets. Retailers Best Buy (BBY), Circuit City, and Target (TGT) also have indicated consumers are conserving cash amid credit market turmoil. “There is just enough demand out there to feed some of the vendors who positioned themselves well ahead of time,” says Roger Kay, president of tech analyst firm Endpoint Technologies Associates.

While tech stocks surged on Nov. 18, led by HP’s 14.5% gain, much of the rest of the industry isn’t faring nearly as well. HP is benefiting from Hurd’s near-obsessive cost-cutting and what analysts consider world-class management of sales and supply chain. In what Hurd calls “data-driven decision-making,” every segment of the company now uses metrics regularly to determine which hardware, software, and services merit the most attention. Research and development has been aligned closely with product planning, while a revamped sales organization has been given greater incentive to succeed, with “specialists” bearing responsibility for growth in their particular area of interest. HP also attributed some of its performance to global reach. About 70% of revenue comes from outside the U.S.

Looking ahead, analysts say HP stands to benefit from Hurd’s strategic investments in areas such as managing corporate computer networks, which offer new sources of recurring revenue. The company in September completed its purchase of EDS, which specializes in providing IT services to corporations.

Source: Businessweek

TSMC says PC chip shipments down 20 percent

Posted by Brooke Crothers

On the heels of comments from a chip industry watchdog group last week saying the chip equipment business is “on hold,” Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chip manufacturer, said PC-related chip shipments are expected to be off 20 percent in the fourth quarter.

This bodes ill for PC makers, which appear to be cutting way back on chip orders.

“(For) our fourth quarter computer-related wafer shipments…we expect to see over a 20 percent decline. Which is very severe…compared to a seasonal mid-teens percentage growth,” said CEO Rick Tsai on Thursday, speaking during the company’s earnings announcement.

TSMC is considered an industry bellwether because it makes graphics chips for both Advanced Micro Devices and Nvidia and manufactures a variety of chips that go into cell phones and consumer electronics devices as well as other chips for PCs.

The “supply chain”–the myriad of companies that order chips from TSMC–is “reducing inventory very aggressively,” he said.

Because of the state of the world’s financial markets, “most our customers are aggressively paring their inventories and have thus reduced significantly their wafer demand,” said Lora Ho, VP and chief financial officer of TSMC.

“We believe the foundry sector will likely underperform the overall semiconductor industry in 2009,” he said. Foundry refers to a contract chip manufacturer. “In 2009, we now expect the semiconductor industry to decline by mid-to high single digit in 2009. With very little visibility.”

TSMC reported a net profit of NT$30.574 billion ($930 million) in the July-September quarter, the company said Thursday. That was slightly higher than NT$30.4 billion reported a year ago.

Chartered Semiconductor, another large contract chip manufacturer, also said on Thursday that it “started to see orders declining from the middle of August, followed by some customer requests to reschedule deliveries forward. The weakness is expected to deepen into the fourth quarter.”

The prepared comments continued: “Based on current outlook, we are guiding for Chartered revenues to be down approximately 21 percent sequentially…in the fourth quarter. In line with the demand outlook, we are also reducing our capital expenditure for 2008 to $650 million, which is $100 million lower than the amount we had earlier anticipated.”

Psystar slaps Apple around, releases Mac clones with Blu-ray / GeForce 9800GT

Posted by Darren Murph

While suits from Psystar and Apple are currently attempting to work things out via alternative dispute resolution, the former company is doing something the latter company won’t: offer OS X-capable machines with built-in Blu-ray and NVIDIA’s GeForce 9800GT

Showing no mercy whatsoever in a recent release, Psystar calls Steve Jobs out for his controversial “bag of hurt” comment and proceeds to inform the general public that it’s “now shipping” OS X-compatible PCs (better known as Open Computers) with Blu-ray optical drives and the GeForce 9800GT GPU. Based on pricing figures gathered from the company’s website, a 6x Blu-ray writer is a $310 upgrade over a dual-layer DVD burner, while the 512MB GeForce 9800GT will set you back $200 more than the 8600GT. Whatcha got to say now, Steve? Huh? Huh?