IT vendors suffer mixed fortunes

Hopes remain high despite the downturn

A flurry of mixed results from key vendors last week showed a marked downturn in business in the first half of 2001, and no real signs of a revival until the new year.

Microsoft beat expectations with a profit of $11bn for the year ended 30 June 2001. Turnover had risen by 10 per cent to $25.3bn. Chief financial officer John Connors said: "We expect PC demand to be flat in fiscal 2002 and then to improve."

The slowdown has hit PC vendors hard. Direct seller Gateway made a loss of $20.8m on turnover of $1.5bn in the second quarter (Q2) and rival Dell is to take a hit of $700m in Q2 to pay for job cuts.

Apple saw Q3 turnover slump from $200m last year to just $61m in 2001.

Sun Microsystem's sales tumbled by $1bn in Q4, and the company posted a loss of $88m compared with a profit of $720m on the same period last year.

IBM reported a modest 5.4 per cent increase in Q2 profit to $2.04bn, but its turnover was fractionally down at $21.5bn. Chief executive Lou Gerstner warned that slow PC, hard drive and chip sales would continue to make life difficult. In the company's PC division, sales were down by 18 per cent.

But there were positive signs from software vendors. Customer relationship management developer Siebel lifted Q2 sales by 38 per cent to $549.7m and pushed its profit up by 56 per cent to $76.7m.

Veritas also beat expectations in Q2 with a turnover and profit increase of about 40 per cent to $390m and $80m respectively.

Elsewhere, Juniper Networks reported a 79 per cent increase in Q2 turnover to $202.2m, but only a small improvement in profit.