A Dry Spell For The Technology Industry

Between a shaky global economy and diminishing demand for personal computers, hardware and software, investors in the tech industry are preparing for a wave of diminishing returns on account of weak earnings reports among companies in this field.

Facebook has announced that its revenue growth slowed down in the second quarter of 2012 and Yahoo’s performance has been affected by the firing of CEO Scott Thompson for lying on his resume. Projections for E-Bay also seem grim, as Macquarie Equities analyst Ben Schachter speculates that the decreasing value of the euro may affect E-Bay’s PayPal payments business plan.

The personal computer sector has also been affected. Hewlett-Packard, IBM and Dell have experienced a decreasing number of consumers opting for tablet computers instead of more traditional laptop and desktop models, and fewer corporations and government agencies have been eager to sign off on multimillion-dollar contracts with these companies to supply PCs, servers, data storage equipment and software. Component manufacturers such as Advanced Micro Devices, Seagate Technologies and Applied Materials each have given warnings that their sales figures would be lower than projected, with AMD in particular citing economic troubles in Europe and China and the reduced demand for personal computers.

However, despite the projected downturn, analysts say that the figures are not as bad as those reported in 2008. In addition, multi-national enterprise software manufacturer SAP reported that its second-quarter earnings jumped up eighteen per cent from 2011. Because SAP, headquartered in Germany, sells to companies worldwide, many investors and analysts were relieved by the company’s reports.

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