IDC Trims Worldwide Semiconductor Revenue Outlook

International Data Corporation (IDC) revised its global semiconductor revenues outlook for 2012 and 2013, cutting its forecast by billions of dollars based on a number of factors. The market research firm now expects global semiconductor sales to grow less than 1 percent to $304 billion in 2012, compared to a previous forecast of 4.6 percent growth to $315 billion. In 2013, IDC said it expects revenues to grow 4.9 percent to $315, down from a previous forecast of $335 billion on 6.2 percent growth.

Reasons for the downward adjusted forecasts are many and include weakness in PC demand, DRAM, and overall memory price deterioration, semiconductor inventory rationalization, global macroeconomic uncertainty from lower global GDP growth, a slowdown in China, the Eurozone debt crisis and recession, Japan's recession, and ongoing fear of the so-called fiscal cliff, which will have an impact on IT spending.

IDC pointed to a handful of bright spots propping up the semiconductor market, including smartphones and tablets, but also set-top boxes and automotive electronics.

"We expect lower, but positive global GDP growth in 2013. Semiconductors for smartphones will see healthy revenue growth as appetite for data, multimedia processing, and multitasking will drive high-end smartphone demand in developed countries while an ongoing transition to 3G networks will accelerate smartphone adoption in developing regions. PC demand will continue to remain in a period of transition next year until more technology and design innovation begin to change the course of demand," said Mali Venkatesan, research manager for Semiconductors at IDC.

For all of the talk about the post-PC era, the segment continues to grow, albeit at a slow pace. Semiconductor revenues for the computing industry segment will log year-over-year growth of 1.7 percent for 2013, IDC said.

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By: Dilusha On 9:11 AM

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Oracle beats outlook, shrugs off fiscal debate

Oracle signage is seen outside Mocsone Center during Oracle OpenWorld 2012 in San Francisco, California October 1, 2012.

Credit: Reuters/Stephen Lam

By Jim Finkle and Noel Randewich

BOSTON/SAN FRANCISCO | Tue Dec 18, 2012 8:39pm EST

BOSTON/SAN FRANCISCO (Reuters) - Technology giant Oracle Corp said software sales growth will stay strong into the new year despite fears that there could be big tax hikes and U.S. government spending cuts that could cause a slump in spending by customers.

Shares of the world's No. 3 software maker rose 1.3 percent after it reported fiscal second-quarter revenue and earnings that surpassed Wall Street forecasts.

Oracle President Safra Catz told investors that businesses were still looking to spend money already allocated to 2012 technology budgets.

"Folks want to close deals," she told analysts on a conference call following the earnings release on Tuesday. There has been "no negative impact on pricing. Pricing remains very good for us."

Oracle said software sales would grow 3 to 13 percent this quarter, which runs through February. It expects fiscal third-quarter hardware products sales to be flat to down 10 percent from a year ago.

The company's software and hardware forecasts were roughly in line with Wall Street expectations, according to FBR Markets analyst Daniel Ives.

Oracle reported that software sales and cloud software subscriptions rose 17 percent from a year earlier to $2.4 billion in its fiscal second quarter ended November 30.

It had forecast that new software sales would climb 5 to 15 percent from a year earlier, when it last reported earnings on September 20.

"I would call it an early Christmas present," Ives said. "It's a positive sign for the overall technology sector."

Investors pay close attention to new software sales because they generate high-margin, long-term maintenance contracts and are an important gauge of the company's future profits.

Oracle posted a second-quarter profit, excluding items, of 64 cents per share, beating the average analyst forecast of 61 cents according to Thomson Reuters I/B/E/S.

Jefferies & Co analyst Ross MacMillan said Oracle's results are encouraging for other makers of business software, many of which end their quarter on December 31.

OFF A CLIFF

Some investors have worried that corporations would postpone spending on technology projects because of uncertainty over the year-end deadline for Congress and U.S. President Barack Obama to reach a compromise to thwart an automatic rise in tax rates and government spending cuts.

Failing to reach a deal, economists say, could lead to another U.S. recession. Catz said Oracle's customers are still spending on software.

"What's going on in Washington - I don't know who it's necessarily influencing today. But I can tell you, our customers have been spending money with us even here in December."

On Tuesday, Oracle forecast earnings per share in the current fiscal third quarter of 64 to 68 cents, excluding items. That was about level with an average forecast for 66 cents.

"It tells you that there's still money being spent by enterprises on software. It's not like the world has ground to a halt," MacMillan said.

The picture was not so bright for Oracle's troubled hardware division, which it acquired with its $5.6 billion purchase of Sun Microsystems in January 2010. The division's revenue has fallen every quarter since it closed that deal.

Hardware systems product sales fell 23 percent from a year earlier to $734 million. Oracle had forecast that hardware sales would drop between 8 and 18 percent.

Chief Executive Larry Ellison told analysts he expected hardware systems revenue to start growing in the fiscal fourth quarter which begins March 1.

Oracle shares rose to $33.30 in extended trade after closing at $32.88 on Nasdaq.

(Reporting by Jim Finkle; Additional reporting by Noel Randewich; Editing by Gary Hill, Richard Chang and Jeremy Laurence)

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By: Dilusha On 9:57 PM

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