Updated from 12 p.m. EST
SAN FRANCISCO -- Entering the current earnings season, investors were sure to get a clearer picture about the state of the business cycle for 2009.
Now that we're a few days into it, wasn't it much more pleasant a couple of weeks ago when we could all still pretend it was going to pick up in a few months?
The string of distressing announcements from tech companies in the past 18 hours has done much to cast a shadow across all of 2009, putting into serious jeopardy the notion that a significant, permanent advance in tech stocks can happen this year.
HOLD. (Detailed Report Here)
And it isn't just the amount of negativity that has spilled forth, but the magnitude of the bleakness. Companies that had never cut jobs were doing so, companies were throwing up their hands on giving a financial projection for the rest of the year -- oh, wait, that's just
The software maker
wasted no time with its bad news
on Thursday, telling investors in a rare pre-open press release that it missed analysts' revenue and earnings estimates and would slash 5,000 jobs (about 5% of its workforce) over the next 18 months -- the first significant workforce reduction in the company's nearly 35-year history.
Microsoft also said it would abstain from offering any financial estimates for the rest of the year, other than to deliver the pearl that "uncertainty" was certain to continue, which would likely lead to "lower revenue and earnings for the second half relative to the previous year."
Shares of Microsoft were down nearly 9% to $17.64 in recent trading, contributing to the Nasdaq's 1.4% decline.
Speaking of job cuts, how about the 180-degree turnaround by
late Wednesday? Just 10 days after the chipmaker suggested the job-slashing it did in 2006 put the company in a solid position to weather the current economic turmoil, it announced it would streamline certain manufacturing operations in a move that could affect between 5,000 and 6,000 employees.
Intel did say some employees would be offered new positions, but I'm wondering about the likelihood that workers in Penang, Malaysia, for example, will think it's wise to move their families on to the next Intel plant.
The lousiness didn't stop there:
were off more than 12% on Thursday after the company offered a weak forecast for the current first quarter, saying it is getting killed by the strong dollar. (Well, yes, that and
The company also called the macro-economic environment "extremely challenging," preventing it from giving any meaningful outlook for the fiscal year.
slumped, taking the rest of telecom with it, after the Finnish handset maker said it expected industrywide mobile device volume to decline more sequentially in the first quarter than it had in years.
said it would post its first loss in 14 years -- to the tune of $1.65 billion. The company also plans to scale back its television production in Japan.
Last, but certainly not least, was the wreckage that is now
, the storage device maker that has seen its stock fall by about 80% in less than five months. Late Wednesday, the company turned in an awful earnings report and forecast and announced it would slash its dividend to preserve cash.
Investment bank Collins Stewart noted on Thursday that the company finished 2008 with net debt of more than $1 billion. Its nearest principal payments are $300 million later his year and $135 million in early 2010, and the firm said Seagate's coverage ratio of 2x is barely above covenant threshold levels of 1.5x.
At least investors still had
, as guiding tech lights, yes?
OK, yes, they did. But one didn't have to squint too hard to find some murkiness in those two companies. For IBM, it turns out that a nice run-up in quarterly earnings per share
from a lower tax rate and stock repurchases, while one was forced to wonder how much higher the company could take margin improvement without huge job cuts.
Wall Street Journal
reported Thursday that employee message boards have been full of speculation over major layoff plans, with postings citing numbers as high as 10,000 to 16,000 workers. The company has maintained that any coming cuts will be within normal ranges.
Even good ole' Apple stumbled in providing any upside to expectations for quarterly shipments of the iPhone, the company's most important growth product. The solid performance of the company's lower-priced iPod touch (essentially, the iPhone without the phone) in the latest quarter suggests that early fears about cannibalization of the iPhone aren't without merit. Expectations of an iPhone price cut -- or the introduction of a lower-priced model -- have grown exponentially.
Beneath all of this angst lies the ultimate good news, however: The sooner the economic realities are
baked into shares, the sooner the market can work its way higher -- and stay there.