Hardware Corner : Sales Grow Amidst Profit Squeeze

Apple: Revenues Up 42%



Headquartered in Cupertino, California, Apple develops, sells, and supports

a series of personal computers, portable media players, computer software, and

computer hardware accessories. Financial results for its second quarter ended

March 29, 2008, the company posted revenue of $7.51 bn as compared to its

revenue of $5.26 bn for the same quarter the previous year, showing a growth of

42% on an annualized basis. The net profit stood at $1.05 bn as compared to a

net profit of $770 mn for the same quarter of the previous year. Gross margin

was 32.9%, down from 35.1% in the year-ago quarter. International sales

accounted for 44% of the quarters revenue.

Apple shipped 2,289,000 Macintosh computers during the quarter, representing

51% unit growth and 54% revenue growth over the year-ago quarter. The company

sold 10,644,000 iPods during the quarter, representing 1% unit growth and 8%

revenue growth over the year-ago quarter. Quarterly iPhone sales were 1,703,000.

During the quarter, Apple iTunes Store surpassed Wal-Mart to become the

number one music retailer in the US, based on the latest data from the NPD

Group. Apple released Aperture 2.1, which introduces an open plug-in

architecture that makes it easy for photographers to use specialized third party

imaging software right from within Aperture. Similarly, Apple introduced Safari

3.1, for Mac and Windows PCs. Recently, Kleiner Perkins Caufield & Byers (KPCB)

launched the iFund with $100 mn in venture capital to invest in companies

developing applications and services for Apples innovative iPhone and iPod

touch. Apple has unveiled MacBook Air, the worlds thinnest notebook. Similarly,

Apple introduced Xsan 2, a high performance, enterprise class storage area

network (SAN) file system for Mac OS X. Currently the stock trades at $184.73.

Cisco Systems: Encouraging Results



Cisco posted encouraging results for the second quarter ended January 31,

2008. The company reported second quarter net sales of $9.8 bn, compared to $8.4

bn during the corresponding quarter in 2007, a y-o-y growth of 16.5%, and net

profits of $2.1 bn compared to $1.9 bn achieved during the second quarter of

2007, a y-o-y growth of 6.5%.

During the quarter, Cisco completed the acquisition of Navini Networks, a

provider in the mobile WiMax broadband wireless industry, and the acquisition of

Securent, a leading provider of policy management software for enterprises.

Cisco plans to invest up to $1.59 bn on information and communications

technology in the United Arab Emirates (UAE) over the next five years.

Recently, AT&T deployed the Cisco CRS-1 carrier routing system to support

advanced residential and business services, and TELUS became the first Canadian

telecommunications provider to deploy and support Cisco TelePresence. Cisco and

IBM have signed an agreement under which they plan to enhance retail banking

experience, customer interaction, and collaboration across all types of delivery

channels. The company was named a global strategic technology provider for the

Middle East and North Africa (MENA) regions newly launched youth employment

initiative, Silatech. The stock currently trades at $26.28.

Intel: Profits Down



A leader in the chip segments, the technologies and products round performed

well for the first quarter ending March 31, 2008. The companys revenues stood

at $9.7 bn, up 9% y-o-y and the recorded net profit was $1.4 bn, down 12% on an

annualized basis.

During the quarter, Intel Capital, Intels global investment organization,

launched the Intel Capital China Technology Fund II. The new $500 mn fund will

be used for Intel Capital investments in wireless broadband technology, media,

telecommunications, and clean tech that complement Intels corporate

initiatives and help expand technology market segments in China.

Cray and Intel signed a multi-year agreement to advance high-performance

computing (HPC) on Intel microprocessors. EMCORE signed a definitive agreement

with Intel to acquire the enterprise and storage assets of Intels optical

platform division as well as the Intel connects cables business. Recently, Intel

finalized and closed its transaction with ST Microelectronics and Francisco

Partners to create a new independent semiconductor company Numonyx B V that will

design, develop, and manufacture NOR and NAND flash memory products.

Intel also opened a software innovation and support center in Hangzhou, the

capital of East Chinas Zhejiang province. The Intel Zhejiang software

technology innovation support center is expected to become one of the largest

software development, testing and validation centers in Asia. Recently, Intel

and Micron Technology Inc unveiled a high speed NAND flash memory technology

that can enhance the access and transfer of data in devices that use silicon for

storage.

Intel appointed Stacy J Smith as the chief financial officer (CFO),

succeeding Andy Bryant in the role.

For the second quarter of 2008 the company expects revenue around $9.0 bn to

$9.7 bn. Currently the stock changes hands at $23.25.

HP: Moderate sales growth



HP performed moderately for the first quarter ended January 31, 2008. The

companys revenues stood at $28.5 bn, up 13% y-o-y, as compared to $25.1 bn in

the corresponding quarter last year. The net profit was $2.1 bn, up 38% y-o-y

for the quarter ended January 31, 2008, as compared to $1.5 bn achieved a year

ago. Revenues from Americas grew 8% a y-o-y to $11.2 bn. Revenues grew 15% in

Europe, the Middle East and Africa to $12.3 bn, and 22% in Asia Pacific to $4.9

bn.

During the quarter, personal systems group revenue grew 24% y-o-y to $10.8 bn.

Imaging and printing group revenue grew 4% y-o-y to $7.3 bn. Enterprise storage

and servers reported revenue of $4.8 bn, up 9% over the previous year period

fueled by ESS Blades, which grew 81%. HP services revenue increased 11% y-o-y to

$4.4 bn and HP software revenue grew 11% over the year ago revenues to $666 mn.

HP financial services reported revenues of $642 mn, an increase of 17% y-o-y.

Recently, HP signed a pre-bid agreement for HP to acquire Tower software, a

document and records management software company based in Canberra, Australia.

HP estimates second quarter fiscal 2008 revenues to be between $27.7 to 27.9 bn.

The stock currently changes hands at $48.28.

Dell: Profits down despite revenue growth



For Dell the fourth quarter ended February 1, 2008 saw a net profit of $679

mn, which went down significantly from the same quarter in the previous year

that stood at $726 mn, a negative growth of 6%. Total revenues rose about 10%,

from $14.5 bn to $15.9 bn. For the entire fiscal 2008 revenues stood at $61.1 bn

compared to $57.4 bn achieved in the previous year, a growth of 6%. Net profits

stood at $2.9 bn compared to $2.6 bn in the previous year, a growth of 14%. For

the fourth quarter, US sales were up 16% and accounted for 49% of the companys

total revenues. Growth was especially strong in the BRIC (Brazil, Russia, India,

and China) countries, where revenues grew 36% on a 50% increase in units. Growth

was also strong in Asia Pacific and Japan, where revenues grew 28% and unit

shipments were up 41%. Driven by new products, the company increased mobility

revenues by 24% and unit shipments were up 37%. Services revenue was up 7%.

During the quarter, Dell entered into strategic sales partnerships with Best

Buy in the US, Tesco, and Dixons Stores (DSGi) based in the UK, and Carrefour

based in France. Dell added a second manufacturing facility in Europe, located

in Ldz, Poland. Dell is also partnering with Egenera to deliver an integrated

solution for employing dynamic data center environments.

On an acquisition spree during the quarter, Dell completed the acquisition of

MessageOne, a software-as-a-service (SaaS) enabled enterprise-class email

business continuity, compliance, archiving, and disaster recovery service for

approximately $155 mn in cash. In the same direction, Dell signed an agreement

to acquire privately held Everdream, a leading provider of software-as-a-service

(SaaS) solutions for remote-service management.

The company entered into a definitive agreement to acquire EqualLogic, a

provider of storage area network (SAN) solutions. Recently, Dell has completed

the acquisition of The Networked Storage Company (TNWSC), an IT consultancy

company that specializes in transitioning IT data storage solutions. The company

has exercised its option to purchase CITs 30% interest in Dell Financial

Services (DFS), making it the sole owner of the financial services company. The

stock currently trades at US$ 19.1.