More losses in IT sector

Fourth quarter results showing worsening situation for technology companies across the board

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By  Mark Sutton Published  January 26, 2009

Technology companies across all sectors of the industry continue to post losses and cut jobs as the economic situation worsens.

Quarterly results posted this week showed problems for consumer electronics, mobiles, components and online businesses.

LG Electronics reported a $487 million net loss for fourth quarter. The company said that although sales of flat panels increased by 12.2%, slowing demand and lower prices, plus shrinking margins for mobile handsets was to blame.

The company also received a $400 million fine from the US Department of Justice for its part in a price-fixing racket for liquid crystal displays.

Mobile phone market leader Nokia saw sales in the fourth quarter fall by 19% from the same period last year, and profits dropped 69% to 576 million euros ($751 million).

Nokia said that sales had declines in both the high and low end and emerging markets, with sales in China, the company’s largest handset market, down by 36%.

Also in handsets, Sony Ericsson posted a loss of $245 million Q4, from a $495 million profit for the same period last year. The company reported unit shipments were down 24% on the year, and that it may have to make more layoffs in addition to the 2,000 already announced.

AMD reported a loss of $1.4 billion, although it was an improvement on the $1.8 billion loss it reported in the same quarter of 2007. The loss was also largely down to a $684 million cost of acquisition of graphics processor producer ATI. However, like rival Intel, the company saw a 33% drop in revenue due to a slump in PC sales, with revenues from microprocessor sales down 38%.

Google fared better than other online businesses, reporting 18% growth in fourth-quarter revenue to $5.7 billion, although net income was hit with write-offs of $1.09 billion from investments in AOL and Clearwire, taking net income to $382 million from $1.29 billion in Q3.

Only Apple bucked the trend, posting record revenue and net income, with $10.2 billion revenue, up from $9.6 billion a year ago, and net income of $1.6 billion, as compared with $1.58 billion a year ago.

It was the first time that Apple passed $10 billion in revenue for a quarter, with the company citing strong growth in notebook sales and iPod sales in markets outside the US. The news was tempered however, as it emerged that the US Securities and Exchange Commission may investigate the company over how it handled the disclosure of Steve Job’s ill health.

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