11 February 2008
If there was a theme to the markets last week it was around the areas of telecoms and networking, with both BT and Cisco reporting figures.
BT reported a 30 per cent fall in pre-tax profits, and only a 1 per cent rise in group revenue to £5.15bn in the third quarter ending December. Analyst expectations had been slightly higher. Pre-tax profit for the period fell to £447m, from £639m in the same period last year. The worst performer in the BT Group was the wholesale division, where revenues fell 11 per cent to £1.2bn, as prices for broadband services dropped and rivals started to use unbundled local networks to take market share.
BT’s Global Services division, which provides IT services to companies, provided revenues up 6 per cent to £1.97bn.
Cisco’s CEO John Chambers was talking up the industry last week (MicroScope 4 February) and had to send out some more positive messages to investors after having to admit January had not been the month he had hoped for. Results for the second quarter ended 26 January saw net sales of $9.8bn, net income on a generally accepted accounting principles (GAAP) basis of $2.1bn, and non-GAAP net income of $2.4bn.
Operating in many markets can be a strength but it can also be a source of weakness, with Hitachi, the Japanese conglomerate, being forced to reduce its annual net profit forecast by 75 per cent because of restructuring costs in its television business. The company, whose manufacturing operations range from nuclear reactors to hairdryers, has struggled to turn round its core consumer electronics unit. The vendor’s operating loss for its digital media and consumer products division was Y15bn ($140m) in the third quarter to the end of December.
Hitachi is examining ways to reorganise its overseas flat-panel TV business in the face of an expected loss for its financial year ending March in its digital media and consumer products division.
