Feeds

And so we begin the tech sector's journey into the Heart of Darkness

Can the nerds save the economy?

Boost IT visibility and business value

Comment Does anyone else remember when technology companies were propping up this economy?

Yeah, that's right. Oil prices were surging. Housing prices were plummeting. But there was the resilient technology sector, making us think things might be okay. No companies missing earnings. No layoffs. Hope at the end of the fab.

Um, well, I don't know how to put this, but the technology sector - as one of my Wall Street friends likes to put it - has blown up.

As this story goes to print, Sun Microsystems stands as a $6.9bn company, trading at $8.81 per share. Less than a year ago, Sun performed a 1-for-4 reverse stock split, kicking its shares from $5.14 to $20.56. It hoped that move would placate some institutional investors who demand a meatier share price and give the stock, long hovering between $4-$6, a psychological boost. Instead, Sun is nearing pre-split levels, and its reduced stock market value means that some funds dealing only in large market capitalization stocks will likely have to begin selling Sun.

AMD - the great David to Intel's Goliath - is valued at $2.78bn. Remember, this is the same company that bought ATI in 2006 for $5.4bn. So, David may still have a slingshot, but he's on his way to the pawn shop to see how much it's worth.

(Incidentally, if anyone out there can explain how Hector Ruiz has managed to remain CEO of that company, I'd love you to fly out here and negotiate some property deals for me.)

AMD's rival Nvidia is hurting too. Nvidia shares have dumped down to $11.36 from $40 last October. It's now a $6bn company, apparently making it worth twice as much as AMD, but who would want either one?

And what of the one-time darling VMware? It was up there at about $40bn in market capitalization only a few months ago, making the software giants who had come before it look like amateurs. At $38.98 per share (down from $125), it's now just a $15bn company.

EMC's CEO Joe Tucci decided to make sure you all knew exactly how bad this situation was by unexpectedly firing VMware's CEO Diane Greene and lowering VMware's full-year revenue expectations on the same day, using the precise language of "modestly" reduced earnings. Investors love it when CEO swaps come out of nowhere. It makes a company look very stable and like it had a succession plan or something. Oops.

Well, that's EMC in the tank too. At $12.73 per share, it's right around a 52-week low and valued at less than half what it was this time last year.

Google's looking pretty sickly. Its shares - $526 - are way off the year ago $747 highs. Worst of all, people are starting to try and understand Google's business. Just wait and see what happens when Google really misses a quarter, and everyone figures out that they have no idea how Google's money machine works. That'll go over well.

Cisco may have more money than God in the bank, but it's considered a lousy investment. It hit a new 52-week low this morning at $20.72 per share.

And what about HP? I mean, it just makes money and then makes more money under CEO Mark Hurd. Superstar. Fiscal wunderkind. A hero of printing and imaging.

Nah, it's near a 52-week low too at $42.06 per share.

If you're not depressed yet, then you will be after thinking about who buys the products made by these companies and what kind of financial health they're showing. Heaven help you if your company is at all dependent on the financial services sector where your clients are being propped up by the government or enjoying a good old-fashioned run on the bank.

Then there's that stalwart GM. It's almost dead.

That marvel of efficiency and technology know-how Federal Express is trading at $73.90 - waaaay off the $118 it flashed at this time last year.

Even the mighty Exxon Mobil with high oil prices leading to record profits is trading at $84 per share, down from $96.

And, dear lord, this is all with a weak dollar propping up US companies' financial results. That's left a company like IBM as a beacon of hope, but how long will even its good run last?

Unless just about every technology company going has an "iPod moment," then we're looking at a grim scenario where layoff reports will become rather common. That's especially painful news for people already being worked over by rising gas prices and overbearing mortgages.

We'll know just how bad things are for the technology sector, starting today when Intel reports second quarter financial figures. Intel's report will kick off three weeks of earnings releases - a journey that's starting to look like a dive into the heart of darkness. ®

Maximizing your infrastructure through virtualization

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.