Vendors' Q1 Sales: No Recovery Yet

Quarterly Revenue Roundup

Signs of an economic recovery were slight during the first quarter, according to a roundup of the revenue performance of 32 vendors.





Only nine of the 32 saw sales increase from the year-ago quarter and nearly half of the companies surveyed saw revenue decline by a double-digit percentage. Here's a closer look at the 32 companies, from best to worst.

Compellent Technologies

2009: $28.1 million

2008: $18.3 million

Percent Change: 53.3 percent

Phil Soran, president and CEO, said the company has seen the effects of the economic slowdown, but there is still demand for storage innovation.



"In addition, our channel-assisted sales model and virtual manufacturing enable us to run a very lean, efficient operation and positions us well in this challenging market," Soran said.

McAfee

2009: $447.7 million

2008: $369.6 million



Percent Change: 21.1 percent



McAfee reported its 13th consecutive quarter of double-digit, year-over-year revenue growth. Secure Computing contributed $41 million to revenue, while foreign currency negatively impacted revenue by approximately $15 million year over year.

Websense

2009: $81.0 million

2008: $57.0 million

Percent Change: 20.9 percent



Websense noted good renewal performance and ongoing expense management were a help meeting its financial goals.



"We continue to extend our technology and product leadership, and the results were evident in the growth of new and add-on business in the first quarter," said Websense CEO Gene Hodges in a statement.

Red Hat

2009: $162.2 million

2008: $141.5 million



Percent Change: 14.6 percent



Red Hat was able to "demonstrate real value and deliver cost savings to our customers," according to Jim Whitehurst, president and CEO.



The company reported billings in excess of $200 million and more than 100 deals in excess of $250,000.



"Our value proposition is even more compelling in a challenging economic environment, and we believe that's a key driver to our solid financial results and market-share gains," Whitehurst said in a statement.

Apple

2009: $8.16 billion

2008: $7.51 billion

Percent Change: 8.7 percent



Apple reported its best non-holiday quarter in history despite the economy, CFO Peter Oppenheimer told Reuters.



The company shipped 3.79 million iPhones in the quarter, better than the 3.3 million units analysts were expecting, but down from 4.4 million in the December period. The company sold 11.01 million iPods during the quarter vs. the roughly 10 million units forecast by analysts. Mac computer shipments totaled 2.22 million units, in line with expectations.

Oracle

2009: $5.45 billion

2008: $5.35 billion

Percent Change: 1.9 percent

Oracle's revenue would have been up 11 percent, instead of almost 2 percent, with a constant foreign currency rate, the company noted.



"If you look past the effect of exchange rates, our new software license revenues for this quarter [fiscal Q3] were higher than our new software license revenues for Q3 of last year," said Oracle President Charles Phillips in a statement.

Check Point Software Technologies

2009: $195 million

2008: $191.6 million

Percent Change: 1.8 percent



Check Point's quarter was helped by the introduction of its software blade architecture, according to the company. The company didn't detail results for the products, but said the architecture allows customers to configure their security solutions by choosing from a library of more than 20 security software blades.

Hewlett-Packard

2009: $28.80 billion

2008: $28.47 billion

Percent Change: 1.2 percent



Hewlett-Packard's mid-2008 acquisition of Electronic Data Systems (EDS) helped propel 116 percent year-over-year revenue growth for HP Services in the just-completed first quarter, even as the computing giant's five other main business groups all saw sales shrink against the year-ago period. "I'm especially proud of our services segment. The EDS integration is ahead of the operational plans we shared with you last year," HP CEO Mark Hurd told analysts during a conference call.

Advanced Micro Devices

2009: $1.17 billion



2008: $1.16 billion



Percent Change: 0.7 percent



"AMD's sequential microprocessor unit and revenue growth in difficult economic conditions demonstrate we can grow in an environment where customers are looking for maximum value," said Dirk Meyer, AMD president and CEO, in a statement. "We delivered on a number of important priorities in the first quarter."

SAP

2009: $2.40 billion

2008: $2.46 billion



Percent Change: (2.4 percent)



"While visibility for software revenues remains limited, we continue to take the necessary steps to protect our margin in this tough operating environment," said Lo Apotheker, co-CEO of SAP. "Customers now more than ever need clarity in their businesses, but they also need solutions that are quick to implement and provide a fast return on investment. We are providing customers with both with solutions from SAP BusinessObjects to our new SAP Business Suite 7, which gives customers the ability to quickly address critical pain points with preconfigured industry best practices in a modern and open architecture."

3Com

2009: $324.7 million



2008: $336.4 million



Percent Change: (3.5 percent)



"I am very pleased with 3Com's performance in the quarter, especially given the current economic conditions," said Bob Mao, 3Com CEO, in a statement. "Our China business remained strong in the quarter. Our TippingPoint segment achieved record revenue. The strength in these two segments, combined with stringent cost management, allowed us to offset weaknesses in other geographies and deliver substantially higher year-over-year profit."

CA

2009: $1.04 billion



2008: $1.09 billion



Percent Change: (4.6 percent)



"CA executed well in the face of a difficult economy," said John Swainson, CEO, in a statement. "While we are assuming a continuing downturn into at least the early part of fiscal year 2010, we are making significant investments in new and improved products and sales resources and we again are forecasting growth in revenues and earnings on a constant currency basis."

Symantec

2009: $1.47 billion

2008: $1.54 billion



Percent Change: (4.7 percent)



Symantec's storage and server management segment represented 36 percent of total non-GAAP revenue and declined 4 percent year over year (increased 1 percent, adjusting for currency). The consumer business represented 30 percent of total non-GAAP revenue and declined 1 percent year-over-year (increased 4 percent, adjusting for currency). The security and compliance segment represented 25 percent of total non-GAAP revenue and declined 14 percent year over year (declined 9 percent, adjusting for currency). Services represented 9 percent of total non-GAAP revenue and grew 27 percent year over year (increased 41 percent, adjusting for currency).

Microsoft

2009: $13.65 billion



2008: $14.45 billion



Percent Change: (5.6 percent)





Hammered by weakness in the PC and server industries, Microsoft this week stumbled to its first-ever year-over-year quarterly revenue decline. But Microsoft partners are confident that when viewed through the lens of time, this will come to be seen as an aberration resulting from the most challenging economy in decades.





Still, there's no denying that Microsoft's Q3 results were grim: Profit fell 32 percent during the quarter, overall revenue fell 6 percent and Microsoft's Client division revenue fell 15.4 percent year-over-year, the third consecutive decline for what had for years been a trusty revenue engine. Microsoft Chief Financial Officer Chris Liddell said the company expects the weakness to last at least through the next quarter, calling the situation "the most difficult economic environment the company has faced in our history."

Novell

2009: $215.6 million



2008: $235.7 million



Percent Change: (8.5 percent)



Novell reported $39 million of product revenue from open platform solutions, of which $37 million was from Linux platform products, up 25 percent compared to the same period last year. Product revenue from Identity and Security Management was $30 million, up 2 percent compared to the same period last year. Product revenue from Systems and Resource Management was $40 million, down 2 percent compared to the same period last year. Workgroup product revenue of $79 million decreased 14 percent compared to the same period last year.

"Our Linux and Identity businesses have the greatest potential to continue to expand operating margins, and we plan to attain profitability within these businesses no later than 12 to 18 months from today, barring unforeseen circumstances," said Ron Hovsepian, president and CEO of Novell, in a statement.







Revenue from maintenance and subscriptions increased in the first quarter of fiscal 2009 compared to the same quarter of fiscal 2008 primarily due to increased revenue from Linux Platform Products, which increased $6.7 million, or 24 percent, over the prior year, and $2.3 million of revenue from the acquisitions of PlateSpin and Managed Objects.

Juniper Networks

2009: $764.2 million



2008: $822.9 million



Percent Change: (7.1 percent)



"During the March quarter, we took aggressive steps to reduce expenses," stated Robyn Denholm, chief financial officer of Juniper Networks. "The reduction in revenue was a reflection of the current macroeconomic environment and I am pleased with how quickly the team was able to implement cost reductions and deliver on our operating margin and EPS targets," she said. "In addition, we posted strong cash flows from operations and maintained a strong balance sheet. We will continue to take the actions needed in order to align our cost structure with anticipated revenue levels."

EMC

2009: $3.15 billion



2008: $3.47 billion



Percent Change: (9.2 percent)



EMC's sales and earnings are down from last year, but according to the company, the economy is ready for an upturn and the company's channels are helping mitigate the economic impact. Joe Tucci, EMC's chairman, president and CEO, said that the economy is at or very near the bottom from an IT spending point of view, and that the second half of 2009, especially the fourth quarter, holds much promise for a recovery.

IBM

2009: $21.71 billion



2008: $24.50 billion



Percent Change: (11.4 percent)



A big slide in systems and technology revenue hurt IBM's first fiscal quarter. Sales in that category fell 23 percent to $3.23 billion. Global Business Services sales fell 10.5 percent compared to the year-ago quarter, while software sales fell just 6.3 percent to $4.53 billion.

SonicWall

2009: $47.1 million

2008: $55.3 million



Percent Change: (14.8 percent)



"Our operational results demonstrate our strong commitment to improving profitability," said Matt Medeiros, CEO of SonicWall. "The progress we have made in our cost structure, cash generation, subscription billings and deferred revenue, while continuing our investment in product innovation, position the company to capitalize on growth when demand conditions improve."

Cisco Systems

2009: $8.16 billion



2008: $9.79 billion



Percent Change: (16.6 percent)



President and CEO John Chambers said that despite a rocky third quarter, which saw Cisco's revenue drop roughly 17 percent year over year, customers are starting to see the market stabilize and level off.



"They are finally beginning to have something reasonably solid under their feet," Chambers said during Cisco's third-quarter earnings call.



The rocky third fiscal quarter prompted the networking giant to chop its fourth-quarter guidance. Chambers predicted Cisco's fourth fiscal quarter revenue will plummet 17 percent to 20 percent year over year.

Xerox

2009: $3.55 billion

2008: $4.34 billion



Percent Change: (18 percent)



Xerox put its revenue fall squarely on the struggling economy, saying that constraints in the overall business environment delayed purchasing decisions while the company's distributors held lower inventory levels as well. Post-sale and financing revenue was down 14 percent or 8 percent in constant currency. Equipment sale revenue declined 30 percent or 26 percent in constant currency.

Lexmark

2009: $944.1 million

2008: $1.18 billion

Percent Change: (19.7 percent)



Breaking out its revenue, Lexmark said quarterly Printing Solutions and Services Division revenue declined 19 percent year over year to $599 million. Imaging Solutions Division revenue was $345 million, down 20 percent compared to a year ago.

Sun Microsystems

2009: $2.61 billion



2008: $3.27 billion



Percent Change: (20.0 percent)



Sun Microsystems, which has announced it plans to be sold to Oracle, didn't detail much in its earnings, saying only that it grew billings nearly 4 percent year over year in combined key growth categories of Total Software, Open Storage, Solaris-based SPARC CMT Servers and X64 Servers.

Dell

2009: $12.34 billion



2008: $16.08 billion



Percent Change: (23.2 percent)



Revenue fell across all customer segments, according to the company. Large Enterprise sales totaled $3.4 billion, a 31-percent decrease from the year-ago quarter. Sales to SMB customers totaled $3.0 billion, a 30-percent decrease from a year ago. Public sector sales accounted for $3.2 billion, an 11-percent decrease, while consumer sales were down 16 percent to $2.8 billion.

Netgear

2009: $152.0 million



2008: $198.2 million



Percent Change: (23.3 percent)



Patrick Lo, chairman and CEO of Netgear, said the weak macroeconomic environment curtailed sales.



"In light of this economic slowdown, we achieved net revenue of $152 million, a slight decline from the fourth quarter of 2008, but above our initial guidance of $135 million to $145 million," Lo said in a statement.



During the quarter, Netgear said it had experienced stabilization in consumer retail sales and an incremental decline in SMB sales.

Western Digital

2009: $1.59 billion



2008: $2.11 billion



Percent Change: (24.6 percent)



With its revenue down by nearly 25 percent, Western Digital has undertaken a restructuring to right-size the business, said John Coyne, president and CEO.



"We managed our market segment participation, product mix and costs to optimize our returns in a challenging environment," he said in a statement.

Lenovo

2009: $2.77 billion

2008: $3.73 billion



Percent Change: (25.8 percent)



During the fourth quarter, Lenovo's worldwide PC shipments declined 8.2 percent year over year, due to a continued decrease in commercial PC shipments worldwide, and the company's under-representation in consumer markets, according to Lenovo Chairman Liu Chuanzhi.



"We remain committed to growing our business profitably worldwide, and while our performance in the fourth fiscal quarter did not meet our expectations, we are confident that we have the right pieces in place to hit our financial targets and be ready to take advantage as economic conditions improve," he said in a statement.

Intel

2009: $7.15 billion



2008: $9.67 billion



Percent Change: (26.1 percent)



Intel, with first-quarter revenue falling slightly less than Wall Street had projected, has proclaimed that "the worst is behind us" in terms of the sharply contracting market for its microprocessors and other computing products.





"We believe that PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns," said Intel CEO Paul Otellini during the company's first-quarter earnings report in April.

Quantum

2009: $168.1 million



2008: $228.9 million



Percent Change: (26.6 percent)



Quantum's revenue decline was due more to its product sales than to services. Product revenue fell to $111.8 million from $163.1 million, down 31 percent. Services revenue was more stable at $40.1 million, down from $41.2 million.

Motorola

2009: $5.37 billion



2008: $7.45 billion



Percent Change: (27.9 percent)



Motorola was hit hard by a sharp, 45-percent decline in mobile devices revenue to $1.8 billion. During the quarter, the company shipped 14.7 million handsets and estimates its share of the global handset market was 6 percent.

Seagate Technology

2009: $2.15 billion

2008: $3.10 billion



Percent Change: (30.7 percent)



Seagate shipped 38 million disk drive units in the quarter and lost $273 million, or 56 cents per share. The loss included $54 million in charges as the company underwent a restructuring plan to adjust to the economy.

Nortel

2009: $1.73 billion

2008: $2.76 billion



Percent Change: (37.3 percent)



Nortel said its revenue decline and lower margins were expected due to the severe economic downturn and its filings for creditor protection.



"However, despite the declines we saw this quarter, revenue has stabilized and our cash balance is stable from year-end 2008," said Mike Zafirovski, president and CEO.