Tech Firms’ Reports Are Worse Than Anticipated

Three of California’s biggest and best-known technology firms gave unexpectedly negative financial reports late Tuesday, showing that spending on high-tech products is recovering more slowly than investors had hoped.

Software giant Oracle Corp. reported dramatically lower fourth-quarter profit and sales as it had warned it would, but added that the quarter just begun would be even worse than analysts were expecting.

Chip maker Advanced Micro Devices Inc. said it would miss sales forecasts and post a substantial operating loss in the second quarter. And Apple Computer Inc. said sales and profit in its fiscal third quarter would be lower than expected.

The reports served as a grim reminder that, despite some signs in recent weeks that the technology slump may be bottoming out, demand for hardware and software remains weak.

“Things are still tough, and it doesn’t look like it will be much different in the summer months,” said analyst Jason Maynard of Wachovia Securities.

Gains in the broader economy might not translate into increased tech spending for six months, Oracle Chief Financial Officer Jeff Henley warned investors during a conference call.

“We expect to see a tough environment that will continue,” Henley said. He predicted that the maker of database programs would earn 6 cents or 7 cents a share in the quarter just begun, shy of Wall Street’s average estimate of 9 cents a share.

In the quarter ended May 31, Oracle’s net income fell to $656 million, or 12 cents a share, from $855 million, or 15 cents, a year earlier. Sales dropped 16% to $2.77 billion, ending the first year of falling revenue in the company’s 25-year history.

Although sales in the most recent period beat estimates, “I don’t think Oracle’s quarter is an indication of an immediate rebound,” Maynard said.

Oracle shares, which fell 27 cents to $8.93 in regular Nasdaq trading, surged to $9.95 in after-hours trading on the greater-than-expected revenue for the quarter just ended. The price then fell back to $9.27 after the Redwood City, Calif.-based firm lowered its projections for the coming quarter.

Advanced Micro, the second-largest maker of semiconductors behind Intel Corp., said revenue for the period ending June 30 is expected to be $620 million to $700 million. In April, it expected sales of $820 million to $900 million. Analysts were expecting second-quarter revenue of $841 million and a net loss of 9 cents a share, according to Thomson First Call.

AMD said sales in its processor business, particularly in Europe and North America, are weak. Sales of its flash memory is improving.

AMD said its research and development spending remains at record levels and its product release plans remain on schedule. Earlier this month, Intel warned that its sales would be lower than expected.

Shares of Sunnyvale, Calif.-based AMD lost 50 cents to close at $10.30 on the New York Stock Exchange. After the warning was released, shares lost $1.57, or 15%.

Apple said revenue in its third quarter ending June 30 would range from $1.4 billion to $1.45 billion, down some 10% from its previous forecast of about $1.6 billion. Earnings per share are expected to be 8 cents to 10 cents, compared with a previous estimate of 11 cents or slightly higher. Analysts were projecting earnings of 13 cents a share on revenue of $1.6 billion, according to a survey by Thomson First Call.

The computer maker said the lower-than-expected sales are due to soft demand in the consumer and creative markets. Revenue in Europe and Japan is particularly weak, Apple said.

Shares of Cupertino, Calif.-based Apple fell 39 cents to $20.15 in regular Nasdaq trading. Apple issued the warning after the market closed, sending shares down $1.68 to $18.47.

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Associated Press was used in compiling this report.