Wall Street Beat: Financial reports confirm fears for IT

30.10.2008

But analysts on the call questioned whether Motorola would be able to quickly differentiate its own offering on these platforms, especially since Motorola does not plan to come out with an Android phone until the holiday season next year. Its plan to split off the company's manufacturing arm, warmly embraced by analysts, has been postponed beyond next year. Company shares fell by $0.29 to close the day at $5.17.

Sun on Thursday said it suffered a quarterly loss of $1.68 billion due to a sales decline of 7 percent and a goodwill impairment charge of $1.45 billion.

Goodwill represents intangible assets such as a respected company name, customer relations and employee morale, which can render a company's total value to a third party greater than the worth of its concrete assets. Accounting rules require goodwill to be written down over time. Sun's goodwill impairment has been affected by the collapse of Wall Street -- a Sun customer stronghold. Wall Street, including investment banks, accounted for about 6 percent to 8 percent of all U.S. IT spending, according to IDC.

Sun shares fell by $0.01 to $5.28 in after-hours trading within an hour of the announcement.

In the software sector, SAP, the world's largest business applications vendor, on Tuesday reported a 5 percent quarterly decline in earnings, to €388 million (US$485 million). Though profit was down mainly because of charges related to its acquisition of Business Objects, the company pulled back its annual operating margin forecast to 28 percent, down from a prior estimate of 28.5 percent to 29 percent. The company said it will hit the new forecast only if it can increase software and service revenue. But the company also said the economic outlook was too uncertain to give a software sales forecast.