Dell, HP profits rise, wave off slowdown fears

SAN FRANCISCO: Dell Inc and Hewlett-Packard Co dismissed worries about weakening tech demand, reporting broad-based strength from corporate customers and only hints of weakness from consumers.

Both faced questions on Thursday, Aug 19 about the strength of the recovery in spending on TECHNOLOGY [], after Cisco Systems Inc CEO John Chambers' warned about "unusual uncertainty" in the global economy.

Analysts said fears persisted about the strength of any recovery in consumer spending, as growth moderates in Europe and China as well as in the United States.

But executives from the two largest U.S. personal computer makers waved off such fears.

"We saw better-than-normal quarterly seasonality, as well as good balanced performance across all of our three regions," said Cathie Lesjak, HP's interim chief executive, on a conference call with the media.

Dell beat Wall Street's profit and revenue estimates, and said it expected a continued pick-up in demand for PCs from corporate customers for the next several quarters. But the company's gross profit margin lagged Wall Street expectations and its shares fell in after-hours trading.

HP -- posting its first quarterly report since the ouster of CEO Mark Hurd -- said earnings rose 6 percent as expected, helped by strength in servers and personal computers.

Storage and server revenue rose 19 percent, while PC revenue rose 17 percent. Lesjak did not point to any particular weakness in the market, other than in consumer notebooks.

"People were spooked after Cisco cited uncertainty and now people are more concerned about how the rest of the year will play out," said Morningstar analyst Michael Holt.

REFRESH CONTINUES

On the corporate side, Dell Chief Financial Officer Brian Gladden said the refresh cycle was proceeding as forecast, adding that he expects component costs to start to come down in the fiscal third and fourth quarters.

Dell said it expected demand for PCs among corporate customers to continue for the "next several" quarters. It said it expects "seasonal improvements" in the third quarter, thanks to sales to the federal government and business customers, with a resulting "pick-up in the low single digits."

"This is a pretty stretched-out cycle and we think it'll continue for several quarters," he said in an interview with Reuters. For the fiscal second quarter, "commercial growth was really the key for us, servers, networking systems, storage, services. That was up about 43 percent."

Apart from questions about the strength of the global tech recovery, HP executives are also likely to field queries on its CEO search, officially launched Wednesday and encompassing both internal and external candidates.

HP, the world's largest technology company by revenue, forced out Hurd on Aug. 6 for expense account irregularities related to a female contractor. Hurd, CEO since 2005, had been credited with reviving the company's fortunes.

HP shares have fallen about 12 percent since Hurd left. The stock closed at $40.76 on the New York Stock Exchange, and dropped to $40.50 after hours.

Shares of Round Rock, Texas-based Dell, which are down roughly 31 percent since April, fell 2.6 percent to $11.73 in extended trading. - Reuters

Flash Globetronics 2Q net profit jumps 108%

Written by Surin Murugiah Tuesday, 27 July 2010 17:49

KUALA LUMPUR: GLOBETRONICS TECHNOLOGY [] BHD [] net profit jumped 108% to RM7.59 million for the second quarter ended June 30, 2010 from RM3.64 million a year ago, due to mainly to continuous higher volume loadings from its key customers.

Revenue rose 31% to RM69.11 million from RM52.61 million, it said on Tuesday, July 27. Earnings per share rose to 2.87 sen from 1.39 sen a year earlier.

For the six months ended June 30, revenue rose by 41.8% to RM129.32 million from RM90.68 million, while net profit was up 2.6 times to RM13.74 million from RM3.84 million in 2009.

Globetronics said the net profit for the first half of 2009 was partly affected by impairment loss due to the shutdown of the group’s China operations.

On its prospects, it said the global economy was showing sporadic signs of improvement and the group was expected to continue to enjoy healthy volume loadings from its customers.

“Moving forward, the group will focus on escalating up the value chain and riding on the R&D initiatives in new products’ design and development.

“The group will also continue to step up efforts in improving the efficiency and cost reduction measures in its group’s operations to achieve the necessary competitive edge in the market,” it said.

Globetronics was optimistic of achieving better performance and growth in the financial year 2010.

Maybank Investment rates Globetronics Technology (7022.KU) at Firm Buy

Maybank Investment rates Globetronics Technology (7022.KU) at Firm Buy based on charts with upside targets at MYR2.03, then MYR2.40. Technical analyst Lee Cheng Hooi says stock reached Wave 3 high of MYR1.66 in March but has since consolidated within Symmetrical Triangle; positive chart indicators support view that stock will breakout of current consolidation; "has excellent potential to trend higher," says Lee. Stock last +3.8% at MYR1.65; immediate resistance at MYR1.66, then MYR1.83. Support seen at MYR1.59, then MYR1.37; stop-loss at MYR1.35.

LED by growing global demand

Globetronics will spend between RM60 million and RM70 million as part of plans to boost the group's presence in the global light-emitting diode (LED) market

GLOBETRONICS Technology Bhd (7022), an integrated circuit (IC) maker, will spend between RM60 million and RM70 million on technology investment, capacity expansion and research and development (R&D) this year.

The investment is part of plans to boost the group's presence in the global light-emitting diode (LED) market, its chief executive officer Heng Huck Lee said.

This is also in line with Malaysia's aim to replace all traditional light bulbs by 2014 to LED, compact fluorescent lamps and fluorescent tubes due to their energy-efficient and environment-friendly nature.

Globetronics sees LED as its main source of growth, as it already supplies to the world's top five multinational light bulb companies.

It ventured into LED in 2000 when it bought over ISO Technology Sdn Bhd.
Today, the LED business contributes about 20 per cent of the group's revenue, or about RM100 million a year, and it is slated to grow by 15 per cent each year.

By 2012, the global LED market is projected to reach a value of US$10 billion (RM33.2 billion) with an average annual growth of between 20 per cent and 25 per cent. Countries such as Australia and Japan are already putting a ban on incandescent light bulb beginning this year.

Heng said the group is also working with a Swedish company to manufacture specialised LED that will be used in a greenhouse.

"There is demand to replace the entire greenhouse lighting with LED. We are doing the R&D for this niche market with the Swedish group," he said during a visit to Globetronics' factory in Penang recently.

Besides its environment-friendly factor, demand for LED, which is a semiconductor light source, is growing due to its longer lifetime and cost effectiveness as compared to traditional lightbulbs.

For example, LED lightbulb's lifetime can exceed 100,000 hours as compared with 1,000 hours for an incandescent light bulb. It uses less energy, is non-toxic and material used in LED can also be recycled.

For the financial year ended 2009, Globetronics posted RM15.9 million in net profit on revenue of RM217.5 million. The company has cash in hand of about RM90 million.

By Zurinna Raja Adam