Weekly Digest Issue No. 549
PC sales hit by surging tablet growth | Record Apple results dulled by Jobs' health fears
Tech sector gets major jobs boost
This week marked an exceptional few days for the Irish tech sector, which received a major jobs boost from four US firms. First up, chip giant Intel last Saturday announced it was to invest USD500 million to upgrade one of its plants in Leixlip. The upgrade will create 850 construction jobs. In addition, the investment will initially create 200 technology jobs at the plant, with the potential for more jobs to come on stream once the refit has been completed, within the next two years. News of the investment has been widely welcomed, and offers an indication of Intel's long-term commitment to its Irish facilities.
Separately, Seattle-based games developer PopCap Games on Monday said it planned to double its Dublin workforce to 110 within the next two to three years. PopCap set up its European headquarters in Dublin in 2005 and currently employs 55 people there. PopCap is behind casual games such as Bejeweled and Chuzzle, as well as its recently launched Plants vs Zombies. In a recent interview with Forbes magazine, PopCap CEO Dave Roberts said the firm planned to seek an IPO in the latter half of 2011.
On Wednesday, US firm Quest Software announced it was to establish an international shared services centre in Cork, where it will create 150 new jobs over the next three years. The positions will be in finance, software renewals, sales and software development. Quest, which develops enterprise systems and network management software for businesses, also has a sales office in Dublin.
Finally, multinational car technology firm Valeo is on Friday expected to announce the creation of 100 new Galway jobs, according to a report in the Irish Independent. Valeo develops and manufactures systems that use cameras to make parking easier for drivers. Enterprise Minister Batt O'Keeffe is expected to confirm later this week that recruitment for the high-end jobs will begin immediately, bringing employment at the firm's Tuam plant to over 300.
Intel, IBM results cheer tech sector
It's financial results season once again, and Intel kicked things off last Friday with its best quarterly results ever. The firm, a bellwether for the tech sector, posted fourth quarter profit of USD3.39 billion, or USD0.59 per share, up 48 percent on the year-ago period. It also saw revenue jump 8.4 percent to USD11.46 billion. The chip giant said the impressive set of figures was largely driven by server system sales, highlighting the growing trend of cloud computing. Intel's results, traditionally the first tech sector financials to be released, give a broad indication of the sector in general, given that its chips are prevalent across a spectrum of segments, from PCs to laptops to servers.
The good news kept on coming when on Tuesday IBM topped financial forecasts for its most recent quarter, thanks to a surge in sales from its traditional mainframe hardware business. Big Blue recorded revenue of USD29 billion for the fourth quarter, up 7 percent on the year-ago period, and ahead of the USD28.3 billion estimated by Wall Street analysts. Fourth quarter profit was USD5.3 billion, up 9 percent from a year before, while earnings per share rose 16 percent to USD4.18, compared to expectations of USD4.08. The figures from IBM give a strong signal that corporate tech spending is recovering.
Record Apple results dulled by Jobs' health fears
In more results news this week, sales of the iPad helped Apple report a record profit for its first fiscal quarter of USD6 billion, or USD6.43 per share, up 78 percent on the year-ago period. Revenue for the quarter was USD26.74 billion, up 71 percent year-on-year. During the quarter Apple said it sold a whopping 7.33 million iPads, up from the 4.2 million it sold in the previous quarter. It also shifted 4.13 million Macs, a 23 percent unit increase over the year-ago quarter, and 16.24 million iPhones, representing an impressive 86 percent jump. In its traditional manner of providing cautious outlooks, Apple said it expected revenue of around USD22 billion for its fiscal second quarter, and diluted earnings per share of about USD4.90.
Despite the record profits and revenue, Apple's results were dampened by the news that CEO Steve Jobs is to take a unexpected medical leave of absence. In an email to Apple employees, Jobs wrote that the company's board of directors "has granted me a medical leave of absence so I can focus on my health." Jobs, who has battled pancreatic cancer and received a liver transplant, did not specify what the health issue was or when he might return, although he said he hoped to be back at Apple as soon as possible.
Tim Cook, who took the reins on Jobs' 2009 medical leave of absence, will take over the day-to-day running of the company. The move raises uncertainty over Jobs' health and the future of what is now the world's most valuable technology company.
PC sales hit by surging tablet growth
Although there has been a revival in corporate tech spending of late, the same cannot be said for consumer spending, which hit PC sales during the fourth quarter. Global PC shipments for the three-month period to end of December amounted to 92.1 million, a modest 2.7 percent increase on the year-ago quarter, according to IDC, which had been expecting growth of 5.5 percent. As well as a continued decline in consumer spending, the growing interest in tablet PCs such as the iPad has also made a dent in PC sales.
The popularity of tablets appears to have hit the netbook market most of all, with proponents of that segment being particularly affected in the fourth quarter. Third-placed Acer, which was one of the first PC makers to jump on the netbook train, saw shipments decline by 15 percent in the fourth quarter. Meanwhile, PC market leader HP saw sales decrease by 0.9 percent, a decline that IDC also attributed to the netbook's fall from grace. In second place, Dell recorded growth of 4.2 percent on a strong performance in emerging markets, while fourth-placed Lenovo boasted 21 percent sales growth, and Toshiba posted a 12.1 percent increase in shipments.
A separate report from IDC shows just how popular tablets have become. In the third quarter some 4.8 million tablets were shipped worldwide, up 45.1 percent on the previous quarter. The market is almost completely dominated by Apple, with 4.2 million iPads (87.4 percent market share) being shipped during the three-month period to the end of September. IDC expects that nearly 17 million tablets shipped in 2010, and estimates that 44.6 million will ship in 2011, bearing in mind the wide range of tablets that are poised to enter the market this year.