Cisco's (NASDAQ: CSCO) numbers were OK. The company reported net income of $2.1 billion, or 33 cents per share, compared with $1.9 billion, or 31 cents, for the same period a year earlier. But the forecast was soft by Wall Street standards, and shares fell 8% after hours.
Over at big tech out-sourcing company EDS (NYSE: EDS), earnings fell 13% to 36 cents a shares, according to MarketWatch.
The message to the markets was clear. Both in enterprise tech consulting and enterprise tech sales the road ahead is filled with pot holes. The first half of 2008 is a period when a slowing economy is going to swallow up almost the entire technology sector. After that, no one knows.
There was some optimism on Wall Street that tech might escape a downturn because large corporations would not cut capital expenditures on large projects in their advanced data centers. Telecoms and cable companies would not slow build-outs of routers to improve their broadband capacity.
All of that thinking was a victory of hope over reason. Big tech is in for trouble.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
2-07-2008 @ 3:41PM
Mike Sanders said...
Saying that the information-technology sector is going to collapse, is like saying that everything is going to collapse. What part of the body can say to the nervous system, "Ha! You are going to die along with the head!" It's a rather stupid and self-defeating statement. If there is ever a time for investing in infrastructure and stimulating the nervous system, it's when the body appears to be under attack. Yes, hardware vendors will feel the pinch (margins), but diversified global-outsourcers are going to benefit from what will ultimately, dsetroy certain other parts of the body... Would you sacrifice a hand, a leg even, or your nervous system? Let's think, before we start carving!