News and Analysis to 17th September 2003
News in summary
Hardware
q
3Com reduces costs
q
Optimism in PC market
Software
q
Oracle appears to disappoint
q
Operating system settlement
q
Microsoft doubles dividend
Services
q
Offshore market hotting up
Consumer
q
Video game shock
q
Smart furniture
News in Detail
Lion’s share stays with Microsoft
Microsoft is reaching middle age since paying dividends is
not a characteristic associated with a growth company. However it is sitting on
$50bn of cash and is generating circa £13bn free cash flow per year. Having
shocked the world by announcing a dividend payment back in January, it is
planning to double the payment in November. If it keeps up this doubling theme
then dividends will soon start to look very attractive. But that aside by
doubling the payment this time around it is only eating into £1.7bn of its cash
mountain.
Video game got very nasty
A couple of bored kids in Tennessee decided to extend a
video game to real life by opening fire on traffic on Interstate 40. The two
boys aged 16 and 14 claimed that they were acting out scenes from the video
game Grand Theft Auto. Their actions resulted in one death and one person badly
injured. Possibly a move from ‘high kill’ to ‘high skill’ might not only help
recover the games industry’s reputation, but might also widen the product
appeal beyond testosterone-fuelled teenagers.
Oracle punished for good CRM
Despite a 28% rise in profits for Q1, Oracle has been
penalised by the market leading to a 4% fall in its share price. The reason for
the punishment is the quarter on quarter 7% decrease in new licence sales,
despite a 14% rise in software/support sales. Given that Oracle operates at the
‘big ticket’ end of the market and that good customer relationship management
is about squeezing money out of existing clients rather than chasing new ones,
it is surprising that the market has been so harsh.
3Com to become 2Com?
Network equipment maker 3Com plans to outsource all its
manufacturing operations in a bid to get the company back on the growth curve
following 17 quarters of declining sales. A third of the workforce will be
liberated. The hardest hit will be 3Com’s manufacturing plant in Dublin, which
will close early next year.
PC – The only way is up
Research firm IDC is in bullish mood as far as PCs are
concerned. Because second quarter shipments were better than expected, it was
upping its annual shipments forecast. The growth appears to stem from consumer
and Public Sector demand. Independently Merrill Lynch upgraded its forecasts
for the market and Intel raised it third quarter expectations. Possibly
thin-client computing is taking hold in the business arena and the day of the
high spec office PC is over.
Recruiters – Go East
To India to be precise. Wipro Technologies is planning to
hire 9,000 staff to complement its 24,000 workforce. Wipro is India’s third
largest exporter of software and services. It intends to bolster its workforce
in the areas of software services and business process outsourcing. Do they
know something we don’t about the future of IT services in the West?
BElated settlement
Be (“I could have been a contender”) Incorporated has
settled with Microsoft over a private lawsuit that claimed the software giant
destroyed its business. Apparently Microsoft leaned on both Hitachi and Compaq,
who were planning to incorporate BeOS, a multi-media handling operating system,
into their product range. This anti-competitive behaviour effectively
extinguished Be, which is on life support waiting for a buyer. It will now look
$23.25m more attractive post settlement.
Furniture of the future to use chip board
You thought smart furniture meant matching colour schemes,
well fashion victims be on alert. Scientists from a variety of European
universities are investigating the integration of digital technology into home
furnishings. Look forward to sofas that use your weight as a means of
authentication. So from the flight deck you can wirelessly issue edicts to your
TV and any other number of household appliances. If the furnishings industry doesn’t
buy this then perhaps the business market will. Current attempts at security
seem unnecessarily complicated. What could be simpler than sitting on your
keyboard first thing in the morning? I was reliably informed at one office
Christmas party that the photocopying industry has had this facility for a
number of years.
