Tech Giants' Mixed Messages Send Shares Tumbling

Strategic Insights -

Technology conglomerates Hewlett-Packard, Intel, and Cisco Systems delivered mixed messages to analysts, with shareholders responding negatively in the stock market. The discrepancy in their projections affected investor confidence, leading to a decline in their stock prices. H-P's CEO Carly Fiorina addressed speculation about the company's future, while Intel's executives discussed the challenges they faced with product delays and cost savings. Meanwhile, Cisco Systems expressed confidence in meeting Wall Street's revenue growth expectations.

Key Takeaways:

  • H-P's CEO Carly Fiorina confirmed that the company's board considered breaking up the tech giant but decided to keep it intact, rejecting the idea of spinning off its lucrative imaging and printer business.
  • Intel won't meet its cost-saving goals this year, mainly due to product delays and problems, but is expected to recover by 2006 with more-efficient manufacturing facilities.
  • Cisco Systems' CFO Dennis Powell expressed confidence in meeting the average forecast for revenue growth of 13% in its 2005 fiscal year, citing an unchanged broader economy and expected average annual revenue growth of 10% to 15% until 2008.
  • Shareholders were not pleased with the mixed messages, as H-P shares dipped 1.3% and Intel's shares tumbled 2.2%, while Cisco Systems' shares declined 0.5%.
  • H-P's $24.1 billion printer unit was responsible for 30% of the company's revenue in its 2004 fiscal year, making it a significant contributor to the company's bottom line.
  • Intel's executives discussed the future of its communications business, which is seeing increased opportunities in cellphones, handheld computers, and notebook PCs.
  • By 2006, third-generation cell technology and a long-range wireless system called WiMAX will be included as options in many Intel-based notebook computers.

Statistics:

  • H-P shares dipped to $21.08, a 1.3% decline in trading.
  • Intel shares tumbled to $23.48, a 2.2% decrease.
  • Cisco Systems' shares declined to $19.73, a 0.5% loss.
  • Intel's communications business is expected to see opportunities in cellphones, handheld computers, and notebook PCs.
  • By 2006, 3G cell technology and WiMAX will be included in Intel-based notebook computers.

Sources:

  • A Hewlett-Packard news conference and USA Today article.
  • An Intel news conference and USA Today article.
  • A Cisco Systems news conference and USA Today article.