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Wall Street Beat: Tech treads water as confidence wanes

Server revenue is weak as HP gets hit with lawsuits related to the Autonomy acquisition

By Marc Ferranti
November 30, 2012 03:30 PM ET

IDG News Service - News of weak server sales, continuing turmoil at Hewlett-Packard and the ongoing U.S. political impasse over the so-called "fiscal cliff" have not given tech industry watchers much to cheer about this week.

Major IT companies including Microsoft, IBM, Intel, Apple and SAP reported mixed results for the past quarter, during a time of economic uncertainty. The revenue picture for tech remains gloomy.

Though worldwide server shipments went up in the third quarter of 2012 from the same period a year earlier, revenue declined due to economic uncertainty in some parts of the world, research firm Gartner said Wednesday.

Server units shipped worldwide increased year over year by 3.6% to 2.46 million Gartner said. Revenue from those units, however, declined by 2.8% to $12.6 billion.

"The third quarter of 2012 again produced shipment growth on a worldwide level, but server revenue was weak due to ongoing economic weakness and market segment differences," said Jeffrey Hewitt, research vice president at Gartner, in the report. Only North America and Asia/Pacific managed revenue growth, while sales in Europe remained weak, Gartner said.

HP managed to hang on to the top spot in terms of server units shipped, moving 634,793 servers, Gartner said. However, its shipments suffered an 8.4% year-over-year decline, while Dell shipped 9% more units than it did a year ago, maintaining its number two spot in terms of units shipped. In terms of revenue, HP came in second to IBM after experiencing a 12.4% year-over-year decline to $3.33 billion.

HP continues to suffer fallout from its revelation last week that it was taking an $8.8 billion charge largely as a result of what it called serious accounting improprieties that occurred at U.K. software company Autonomy before it acquired the firm for $11.1 billion in 2011.

Taking the charge into account, HP suffered a $6.9 billion loss in its fourth fiscal quarter, the company said in conjunction with its earnings report. The report set off a fresh round of criticism that HP spent too much on Autonomy, a maker of business intelligence software geared toward analysis of so-called big data.

HP watchers in the last week have also been trying to figure out how HP arrived at its figure for the write-down, which appears large relative to Autonomy's revenue.

The write-down also brought to light a feud between Autonomy founder Mike Lynch and Hewlett-Packard's leadership over the alleged accounting fraud.

In a letter to the HP board issued Tuesday, Lynch blasted HP's claims that he was responsible for fraud.

"It was shocking that HP put non-specific but highly damaging allegations into the public domain without prior notification or contact with me, as former CEO of Autonomy," he wrote. "I utterly reject all allegations of impropriety. "

Reprinted with permission from Story copyright 2014 International Data Group. All rights reserved.
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