Weekly Digest Issue No. 524
iPhone 4 issues bruise Apple | Intel results bode well for tech sector
Mixed week on tech jobs front
It's been a mixed week on the jobs front, with two Irish firms folding and two launching major recruitment plans. Following on from last week when B3 Cable Solutions was looking for a buyer to save it from closure, it was confirmed early this week that the Longford-based cable manufacturer was to shut down. Receiver Alan Flanagan of Deloitte said an exhaustive search had failed to find a buyer for the facility. The closure will result in the loss of 104 jobs. The plant will now be closed and the assets disposed of on a piecemeal basis. B3 Cable Solutions manufactured copper-based cable for Eircom and other customers.
Also this week, online hotel booking engine 1800Hotels.ie was forced into bankruptcy proceedings in the US as it struggled to restructure its debt. The site handles hotel bookings for 70,000 hotels worldwide, and reports suggest that hundreds of Irish people have had their travel plans disrupted as a result of the situation. In a statement on its website the company said that some customers might experience room cancellations and that they were advised to contact the hotels directly before travelling. 1800Hotels, which was founded in Dublin in 2003, had been looking for a buyer over the past couple of weeks but a last-minute deal fell through on Monday night, leading to the bankruptcy action. The company employs 12 people at a call centre in Dublin, and is now primarily based in Tampa, Florida.
On a more positive note, IT services firm Version 1 announced on Wednesday that it plans to create 100 new jobs over the next three years at its facilities in Dublin, Cork and Belfast. Version 1 said it has had a profitable year to date and expects its turnover to increase by around 50 percent to EUR17.5 million this year. The firm recently acquired global project management firm PM Group’s IT services unit, PM Centrix, bringing its customer base to 220. The 100 new jobs will bring its total workforce in Ireland to 200.
In more good news, technology firm PFH said on Thursday that it plans to create 80 new jobs. The first recruitment phase will see 25 new jobs created by the end of December 2010 with the remainder created by mid-2011. The jobs will be based in Dublin and Cork. PFH recently completed the acquisition of the Irish division of Siemens Enterprise Communications.
Irish firms get lucky in US
The US continues to be a fruitful hunting ground for Irish firms. This week, during Taoiseach Brian Cowen’s visit to the States, Irish firms announced contracts worth EUR5 million. Among the successful companies were Accuris Networks, a provider of roaming interworking and convergence solutions, which announced contracts with a combined value of USD2.7 million with three US wireless service providers.
Meanwhile, Airtel ATN, which supplies aeronautical telecommunications network (ATN) software to the global aerospace industry, signed deals that will see it provide key data link software, avionics test equipment and development services to a number of US-based companies and research organisations involved in the design and implementation of the Federal Aviation Administration's (FAA) NextGen Air Transportation System (ATS) program. Airtel said it expects the deals to generate revenue of around USD1 million in 2010.
The Taoiseach also revealed that since the start of the year 32 Irish companies have opened offices in the US. Eight of these were in New York, where 39 other Irish firms have already established a presence. Ireland is the 13th largest investor in the US, and 82,000 Americans are employed by more than 220 Irish-based companies across 50 states. The US accounts for 20 percent of all Irish exports.
Google reaches settlement with China
Google’s battle with China reached a compromise this week, after Beijing granted the internet giant a renewal of its operating licence. Though many commentators had expressed doubt the licence would be renewed, Google itself remained confident. Indeed, last Friday, Google CEO Eric Schmidt told a conference that he was certain the issue would be resolved.
On Monday, Google announced that its licence had been renewed by the Chinese government. In order to guarantee the licence renewal Google had made a concession to Beijing. Instead of automatically redirecting visitors to its Hong Kong site, the internet firm has instead added a prominent link to its Hong Kong site on the Google.cn page. This move apparently appeased the Chinese government, which had warned Google recently that if it continued to redirect Chinese users to the Hong Kong site, it may not renew its licence.
However, despite the apparent detente between Google and Beijing, censorship is still alive and well in China. A report from the Financial Times on Thursday revealed Chinese micro-blogging sites have become the latest target of Beijing's internet police, who have ordered the sites to increase monitoring for politically sensitive terms. Over the past week, many of the largest and most popular micro-blogging sites in China have been shut down for "maintenance" or have switched to "beta" or "testing" versions. These temporary websites are being used while the companies "strengthen their self-censorship systems" and remove all politically sensitive content under orders from Chinese internet authorities, according to employees at some of those companies.
iPhone 4 issues bruise Apple
Despite the initial hype and the record sales, the iPhone 4’s short life thus far has been marred by the high-profile antenna issue. Rumours emerged this week that a recall of the iPhone 4 could be on the cards; Apple, however, is keen to quash such speculation and is to hold a press briefing on Friday to deal with the growing backlash over the poor iPhone 4 reception. It’s not clear just what exactly Apple executives will be saying at the briefing but commentators and analysts believe it may well announce that it will be providing bumper cases to iPhone 4 users in a bid to solve the problem.
The talk of a possible recall took flight this week following a negative review of the iPhone 4 by influential US consumer watchdog Consumer Reports. The watchdog said it cannot recommend the newest Apple iPhone to consumers. It said its tests show a hardware defect causes the iPhone 4 to lose reception when held a certain way, challenging Apple's claims that the problem is rooted in software that can be easily fixed. This is the first time Consumer Reports has failed to give the thumbs-up to an Apple phone.
Following publication of the report Apple drew criticism when it blocked links on its user-support pages to the review, prompting many blogs to say the Apple-hosted forums were being censored by the iPhone maker. Apple hasn’t commented on the deleting of links. In spite of the problems with the antenna and the criticism Apple is currently facing, most Wall Street analysts have said they don’t think the antenna issue would seriously hurt sales of the new handset. We’ll have to wait and see what Apple has to say for itself on Friday.
Intel results bode well for tech sector
Results season is upon us and it’s kicked off with quite a bang. Chip giant Intel posted record second quarter profits, which blew past analyst estimates. Revenue for the quarter to the end of June was USD10.8 billion, higher than the USD10.25 billion Wall Street had been expecting. Profit, meanwhile, was a record USD2.9 billion –- or USD0.51 a share -– compared with a loss in the previous year of USD398 million (this figure included a USD1.4 billion European Commission fine). Analysts' consensus was for profit of USD0.43 per share. Profit margins also exceeded market expectations at 67 percent, and Intel forecasts more of the same for the third quarter. It expects revenues of between USD11.2 billion and USD12 billion, higher than the USD10.9 billion analysts had forecast.
Intel chief Paul Otellini said the company was running ahead of a global economic recovery because of a fundamental shift towards working on the internet (i.e. cloud-based services). He said the firm’s figures were boosted by an increased demand for its chips from PC and server makers. In a conference call, he also said that the signs are there that corporates are starting to renew their IT spending.
Intel is considered a bellwether for the tech sector, and its results often have a knock-on effect on world markets. The impressive second quarter results saw tech stocks rising across the US, Asia and Europe. Intel’s figures mark the start of a slew of tech sectors financials due out over the next couple of weeks: Google and AMD are due out later this week, while IBM, Microsoft and Cisco will be announced next week.