- 22 Jan 09, 17:50 GMT
It's been a dreadful 24 hours for companies in the technology industry - with just a couple of exceptions. Microsoft, Sony and Nokia have all announced poor results. The tech giants who appeared confident six months ago that they would ride out a recession are now rushing to blame the global downturn for their individual problems
Microsoft says 5,000 jobs are going worldwide in departments ranging from HR to IT. This is the first time in its history that the company has cut its workforce (other than a bit of natural wastage).
The cuts follow an 11% fall in net profits, and Microsoft blames "the further deterioration of global economic conditions". So how did that make itself felt? Microsoft had been expecting the PC market on which it depends for Windows revenues to grow by more than 10%. Instead it was flat, with a fall in sales of desktops only partly offset by the surge in netbook sales.
Steve Ballmer is not underplaying the seriousness of the situation - he told analysts on a conference call that the economy was "resetting", and he didn't expect a quick rebound. Hard-pressed consumers who couldn't afford to refinance their homes weren't going to rush to buy PCs.
He also came out fighting, saying that Microsoft had come from a zero share of the netbook market to 80%, and suggested that customers would look far more critically at the kind of price premiums that they paid for a Macintosh compared with a PC.
Nokia also had some chilling news for the whole mobile phone industry. This was not so much a 69% fall in profits as its forecast that the global handset market would shrink by 10% in 2009 - this in an industry which has had nearly a quarter of a century of continuous growth, apart from a small fall back in 2001.
Nokia saw sales of its own handsets fall around the world. In China sales were down 36% compared to the same quarter in 2007. With companies pinning their hopes for growth on developing countries, this is very scary.
Sony appears to be in an even grimmer position. It had already announced job cuts and warned of a record loss this year. The company is keen to blame the strong yen for its woes, but it's clear that it also has problems competing in some key product areas. Its TV division keeps losing money, and the PlayStation 3 has been bested by Nintendo's Wii and by the Xbox 360.
The idea was that gamers would pay a premium for a console which was technically more advanced than its rivals. That strategy was already in question and as the recession hits consmer spending it looks even more dubious.
So amidst this gloom who is still prospering? Well, Apple of course as we mentioned earlier, though I still think there's a question over whether consumers will carry on paying a premium for its products through the recession. Another business defying the gloom is Britain's Autonomy, a database-search company which more than doubled its profits in the last quarter - and promptly announced it was spending $750m buying another software firm.
This is not a great time to be running a technology company - but for just a few, it's a chance to grow bigger while their rivals hide under the table and wait for the recovery.
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