Earnings reports from key US technology multinationals this week are expected to underline the challenge the worldwide slowdown in the sector poses to US investments and jobs in Ireland.
Reports will be issued tomorrow by Lucent Technologies, which employs 1,000 people in Dublin and Bray, and on Wednesday by Compaq Computer, with 2,200 employees in Dublin, Galway and Belfast.
Lucent, the world's biggest maker of telecoms equipment, is expected to post its second quarterly loss in succession as it struggles with the industry slowdown and internal problems, including the elimination of debt and ageing products.
The New Jersey-based company, which in April was forced to deny bankruptcy rumours after the stock fell to an all-time low, plans massive job cuts. It employed 104,000 people at the end of March. This will be cut to 87,500, and the sale of two plants and its fibre cable unit will cut a further 12,000 jobs.
Lucent competitor Nortel Networks of Toronto this month reported a $19.4 billion (€22.3 billion) loss, and raised its targeted job cuts to one-third of its global workforce. Nortel has 3,000 employees in Northern Ireland and the Republic.
Two surveys at the weekend showed worldwide sales of personal computers had fallen for the first time since 1986, which bodes ill for the future revenue and sales of Compaq, a PC maker and leading global provider of technology and solutions. Global PC sales fell 1.9 per cent to 30.4 million units in the second quarter, according to Dataquest of San Jose. A separate report by International Data Corp in Farmingham, Massachussetts put the fall at 2 per cent.
Compaq has already seen its market share in PCs plunge to 15 per cent from 21 per cent after aggressive price-cutting by Dell Computer, which has 5,000 employees in Ireland and has increased its market share 10 per cent to 20 per cent in the second quarter. Houston-based Compaq has already lowered sales and earnings forecasts for the second quarter and said it would cut 1,500 jobs worldwide on top of 7,000 planned job cuts. It recently closed a plant in Erskine in Scotland.
Compaq's earnings report follows news that PC maker Gateway, which employs 900 people in Dublin, is reviewing its Irish operation and may move its European headquarters elsewhere following a sharp decline in sales and revenue.
PC sales may not pick up until the fourth quarter, according to analysts who say consumers are waiting for Microsoft's new Windows XP operating system on October 25th.
The drop in PC sales has been matched by a fall in shipments of mobile phones and personal hand-held devices, leaving most big tech firms with excess inventories. This has brought about a collapse in sales of microchips.
