So much for a “glimmer of hope”.
Wall Street is looking more skeptically at claims from Washington that the economy is getting better. The stock market is down about 45 points in late morning trading, after more layoffs were announced by U.S. companies (Yahoo (YHOO) being one of them – see below).
Also hurting stocks was a lousy US. Labor Department report showing consumer prices unexpectedly declined 0.1 percent last month. The Dow Jones Industrial Average was down 34.41 points, to 7,885.77 minutes after the market opened. Investors were also mulling over earnings news from Intel (INTC) , which came in better than analysts expected amid comments from Intel execs that the “worst may be over”.
Altogether, Intel racked up Q1 revenue of $7.1 billion – slightly higher than average analyst forecasts of $6.98 billion. “We believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns, Intel CEO Paul Otellini said in a statement. Intel benefited from lower costs associated with restructuring during the quarter - $74 million as opposed to the $160 million that analysts thought that Intel would be spending on restructuring.
Sill, revenues were down 13% from the previous quarter, and were down a whopping 26% from the same period in 2008.
Intel also frustrated investors by not issuing any guidance for the second quarter of 2009. Although company insiders did leak word that Intel anticipates revenue in Q2 to be about the same as revenue gained in Q1.
According to the web site, TechTraderDaily.com, Intel insiders expect average selling prices in Q2 to be down from Q1 for mixed reasons; the company expects the enterprise segment to be softer than consumer demand, skewing sales to less expensive processors. TechTrader also says that Intel execs note that the second quarter is typically seasonally weaker than the first quarter.
News also comes from Yahoo, where a new round of layoffs is imminent – perhaps shaping up the company for a takeover by Microsoft. The New York Times is reporting the cuts would be the first since Carol Bartz replaced Jerry Yang as CEO. The Times story pegs the layoffs as in “the hundreds” and could be triggered as early as next week.
Yahoo has already laid off over 2,500 in a massive restructuring campaign, and is looking to keep the company viable while it’s on the auction block.
Some key Yahoo execs are already jumping ship. Dan Foehner, director of the company, has resigned and taken a job at Facebook Inc. And just this week, SuccessFactors Inc. announced that Dmitri Krakovsky, the former VP of business and marketplace operations and sponsored search at Yahoo Inc. has joined the company as vice president of product management.
Rumors are rampant inside Yahoo that new CEO Bartz and Microsoft (MSOFT) CEO Steve Ballmer have even met face-to-face to talk about a merger.
More layoffs are only going to add more fuel to Yahoo takeover rumors.