Intel issued an earnings warning this morning, and you could pretty much hear the entire tech industry make a giant gulping sound all at once. Investors delivered the obligatory slap across the face, sending Intel shares down 3.61 percent.
But what adds to the nervousness around the Intel announcement is that it appears to be one in a string of wobbly outlooks by big tech companies. What’s unclear is whether this is part of a much larger, catastrophic slowdown in tech spending around the globe. Or whether this is simply circumstances particular to each company, each of which has suffered some issues regarding execution and secular technology shifts.
For instance, last month, Dell reported poor earnings, but worse, it lowered its outlook, citing a pause in sales of PCs as consumers wait on Windows 8.
Cisco Systems reported decent earnings, but then appeared to be a bit wobbly in offering an assessment on their economic outlook, even as analysts pressed them to be clearer. According to a transcript, Rod B. Hall of JPMorgan Chase & Co. asked:
“I also wish you guys could clarify a little bit on the macro commentary you made John, because the guidance doesn’t seem, and it’s a little bit weak, it’s not terribly weak, but you did say that one of the guys you’re talking to are thinking the next 12 months is going to be pretty tough. And I just wonder if you could tell us whether you’re seeing them cutting budgets already, or if they’re waiting to take any further actions until you see more evidence in the economy?”
To which CEO John Chambers replied…well, he didn’t really. CFO Frank A. Calderoni offered a barrage of data points and a lot of on-the-one-hand and on-the-other-hand statements.
Also last month, Hewlett-Packard offered a poor earnings picture, as CEO Meg Whitman noted the “deteriorating macroeconomic environment.”
Now, again, each of these companies has suffered from their own particular ills. HP is, well, lost in the woods somewhere. Cisco is progressing on a turnaround, but still suffers because one of its biggest customers, the federal government, is, as you may have heard, a tad in the red and having some cash flow problems.
But still, it’s hard to not look at this stream of announcements as a sign that darker clouds may be gathering on the horizon.
Oracle has earnings Sept. 20. IBM, not until Oct. 16. That may give us a better picture of whether the industry as a whole is headed for a crash. Or whether a few giants are just feeling the ill effects of disruption.
