While few US companies announced their quarterly results last week, the gloom continued and, if it is not yet affecting Europe, it is certainly affecting the US operations of European companies.
The prime example of the trans-Atlantic effect was Alcatel's announcement that it will cut some 1100 jobs in the US as a reaction to reduced consumer spending and the slowing economy there. Most of the lost positions are for full-time jobs, but overall the cuts equate to less than five per cent of the company's US workforce.
Further shock waves came when Lucent was reported to be drawing on its credit lines, which was interpreted to mean the company has used much of the $US3.8 million cash available to it at the end of 2000. Last week Lucent spun off its micro-electronics arm Agere -- and a slice of debt with it -- but raised only $US3.6 billion in the process, barely half of the amount it had previously expected. Some analysts are now claiming that Lucent will have to sell more operating units in order to survive.
Business might not be so bad at business-to-business commerce specialist Ariba, but the company has still felt obliged to issue a warning to Wall Street and slash its workforce by about one-third. Instead of a small profit, Ariba now expects to lose money in its second quarter on revenue of about $US90 million -- or half of what some market analysts had been expecting.
And in a move that may explain why Australian IT veteran Col Hoschke recently moved to bring some Australian technology back home by buying the Mainpac plant maintenance software from Geac Computers (The Rust Report, March 9), Geac has announced that its efforts to sell itself have fallen through. A statement released by Geac acknowledged that following "an extensive process involving several interested parties", no formal bid was received. The company is now putting together cost cutting plans that will include "a substantial reduction" of its workforce. "We just have to get more cost out of this place to improve our profitability," explained John Caldwell, who joined Geac last October and was appointed CEO a month later. The restructuring is expected to be implemented some time this month, when Geac's financial year ends.
Corel was one of the few companies that did release results last week, and its performance was not encouraging. The Canadian software developer's first quarter revenue slipped from $US44.1 million a year ago to $US32.5 million, and net profit slipped from $US12.4 million to $US534,000. At least it was a profit.
The semiconductor operations of Micro Technology also ended up in the black with a "slightly profitable" performance in its second quarter to March 1, although the company's consolidated operations -- which include Web hosting and other activities -- recorded a net loss of $US88.3 million for the quarter, which was a disastrous turnaround from the profit of $US161.3 million a year earlier.
As for the rest of the market, jitters about the performances of the big players have been dragging down share prices, and the foreign affairs performance of President George Bush is unsettling just about everyone.