This story was written by Keith Dawson for the Media Unspun email newsletter and is Copyright 2002 by Keith Dawson.
M E D I A   U N S P U N
Notes From a Dry Earnings Season
2002-10-17

We're deep into the quarterly earnings season. Intel's downbeat report on Tuesday cut short a Wall Street rally. Yesterday IBM and Apple announced near-flat quarters, and today Microsoft and Sun will unveil their figures.

The New York Times and the Wall Street Journal played good cop, bad cop with the Apple and IBM reports. The Times said Apple is "fighting off a deepening technology recession" and characterized its revenues as "essentially flat." The Journal stressed Apple's "swing to loss" after profitable quarters since early 2001, and described the company as "sinking back toward the technology slump that it escaped once before." The Times headlined that IBM's numbers "defy the slump in technology" while the Journal chose to emphasize the flat revenue and decline in net sales.

What the papers agreed on is that any signs of improving IT spending remain hard to discern. The Times did allow that IBM's CFO's "comfort" with analysts' fourth-quarter estimates might "suggest some year-end pickup in technology investment." That was as good as it got.

The Journal quoted an analyst's opinion on exactly why Apple's results were so unspectacular: PC users "remain in a perilously high state of satisfaction" and see no need to buy machines that "continue to bound farther and farther ahead of what the vast majority of buyers need." The Times noted the success of Apple's chain of retail stores and quoted CEO Steve Jobs crowing, "We've built a $400 million business from scratch in a year."

The Times took a look at Microsoft's new enterprise pricing program for Windows, Office, and other software, in which customers buy a subscription instead of deciding when, or whether, to upgrade. Steve Lohr reported on the squawks of some Microsoft customers at a move that analysts estimated might have added from $600 million to $1 billion to Microsoft's bottom line in the just-ended quarter. Unspoken in Lohr's reporting is the lesson that Microsoft offers to the likes of IBM and Apple on the best way to thrive in down times: milk a monopoly.

TheStreet.com, focused as it is on investors, perhaps tried harder than the general-purpose press to find good news in the earnings reports. Among the bright spots TheStreet.com turned up were RSA Security, which cut its losses and met analysts expectations, and Symantec, which blew by Wall Street's numbers. Another way to thrive when times are tough: sell to fear. -- Keith Dawson

Uncertainty in PC Industry Keeps Apple Earnings Flat
http://www.nytimes.com/2002/10/17/technology/17APPL.html

Results at I.B.M. Defy the Slump in Technology
http://www.nytimes.com/2002/10/17/technology/17BLUE.html

Apple Swings to Loss, Predicts Sales Increase
http://online.wsj.com/article/0,,SB1034798485563901548,00.html
(Paid subscription required)

IBM's Net Declines 18% As Revenue Remains Flat
http://online.wsj.com/article/0,,SB103435045393745956,00.html
(Paid subscription required)

Some Yelp as Microsoft Squeezes
http://www.nytimes.com/2002/10/17/technology/17SOFT.html

Competitors: MS Up to Old Tricks (AP)
http://www.wired.com/news/business/0,1367,55835,00.html

RSA Security Cuts Its Loss, Meets Estimates
http://www.thestreet.com/tech/ronnaabramson/10048367.html

Symantec Blows Past Estimates Again
http://www.thestreet.com/tech/ronnaabramson/10048342.html

Apple posts net loss
http://news.com.com/2100-1040-962325.html

No Signs of Recovery in Tech Earnings (LA Times)
http://tinyurl.com/21eq