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Byline: Cynthia L. Webb

Some of technology's biggest players are logging higher sales and bigger profits, and there's news that worldwide shipments of personal computers are on the up -- all signs that things are looking brighter for the tech sector. But a few analysts, along with IBM's chief executive, aren't willing to concede that the tech bust is over.

On the bullish side of the ledger, Apple Computer announced yesterday that its fourth-quarter net income and revenue rose. Apple earned $44 million (12 cents per share) on revenue of $1.7 billion, compared with a net loss of $45 million (13 cents) on revenue of $1.44 billion during the same year-ago period. Excluding a $6 million post-tax investment gain and $9 million from a stock repurchasing deal, Apple would have had $29 million in profits (8 cents a share), a penny more than analysts expected.

Some of the reasons for Apple's bright quarter? "Apple chief financial officer Fred Anderson attributed the increase in revenue -- the company's highest level for a quarter in three years --to record sales of the iPod music player and strong sales of its new 15-inch laptop and Power Mac G5 computers," The Associated Press reported. "During the quarter, Apple said it shipped 787,000 Macintosh computers, up 7 percent from a year ago, and 336,000 iPod players, up 140 percent from the year-ago quarter. Anderson also said Apple's retail stores -- now totaling 65 after a two-year build up -- became profitable for the first time, earning $1 million on $193 million in sales." Today, the company is expected to launch the Windows-based version of its popular iTunes pay-for-play service. * The Associated Press via washingtonpost.com: Apple Narrowly Beats 4Q Expectations

And like Intel , which reported stellar sales and profits earlier this week, Apple indicated that brisk sales are expected to continue. Anderson said he expects Apple's revenue will climb to $1.9 billion for next year's fourth quarter, The San Francisco Chronicle reported. Gartner analyst Martin Reynolds "called Apple's results a precursor of a continuing recovery by the computer industry," The Chronicle noted. "We're kind of looking at everybody being happy again," Reynolds said.

The Chronicle reported that Apple's "strong numbers show the long-time computer-maker is surviving with a multipronged strategy, propping up its minuscule desktop computing market share with a successful line of sleek portable tech products. Needham & Co. financial analyst Charles R. Wolf told The New York Times: "You're seeing the transformation of a company." * The San Francisco Chronicle: Apple Beats Forecast

* The New York Times: Apple Reports $44 Million Profit For The Quarter (Registration required)

Big Blue's Cautious Outlook

Like Apple, IBM yesterday reported positive numbers for its third quarter. But the company shied away from saying a tech recovery was in sight. "Although it is too early to say that a rebound is at hand, we are confident that we will benefit from a pick up in IT spending and an economic recovery," IBM chief executive Sam Palmisano said in a statement about the company's quarterly results. Palmisano suggested some hope for the economy overall earlier in the same statement: "We are beginning to see signs that the economy has stabilized. As we look to 2004, more customers are expected to increase their investments in information technology. While demand is not yet across the board, it is strongest in the areas where we have positioned the company and strengthened our capabilities. Next year, in fact, we see the need for approximately 10,000 new positions in key skill areas, including high-value services, middleware technologies, Linux and open standards-based hardware and software."

The Financial Times offered a recap of some of Big Blue's numbers: "Third quarter revenue from continuing operations was $21.5bn and income rose 5 percent to $1.8bn. Its strongest growth was in its IT services group which rose 11 percent at constant currency to $10.4bn. Its software group performed well, growing 5 per cent at constant currency. Its hardware revenues dropped 5 percent and Personal Systems fell 2 percent, all at constant currency. Its worst performer was its Technology Group, which plunged 33 percent to $695m as it divested some businesses [sic]. It also continued to struggle with its chip making business." IBM's revenue climbed to $21.5 billion from $19.8 billion compared with last year's third quarter. * The Financial Times: IBM Hints At Rebound As Revenues Rise 4%

The New York Times noted that IBM's numbers, "coming a day after Intel confirmed that its business was rebounding sharply, ... were received on Wall Street as a bit disappointing. Many analysts had been looking for a sure signal from IBM, the world's largest computer company, that a real recovery in technology was under way." Goldman Sachs analyst Laura Conigliaro told the Times: "People had been looking for IBM to make a statement that things are improving faster, but it didn't. This is another reminder that while the technology sector is improving gradually, it is the gradualism that stands out." * New York Times: I.B.M. Earnings Don't Impress Wall Street (Registration required)

But Sunil Reddy of the Fifth Third Technology Fund , owner of IBM shares, offered a different take on IBM's numbers: "The comment is actually cautiously optimistic. That's my read," Reddy said. "The expectation seems to be building up for a pickup." * Reuters via The Washington Post: IBM Profits Rise; CEO Awaits Sector Rise

An Acquisition A Day ...

...means the tech recovery is on the way? Add this to the good news pile for the tech sector. Struggling software company Siebel Systems yesterday said it was acquiring UpShot in a deal worth up to $70 million. "Siebel itself is fighting for a share of the small- and medium- business market. With UpShot, it eliminates a competitor and gains about 1,000 customers. Siebel will combine UpShot's software with its own CRM OnDemand product," The San Francisco Chronicle reported. "Siebel paid $50 million in cash in this deal, which has already been approved by the companies' boards and is expected to close by early November. Siebel will pay up to $20 million to privately held UpShot's owners during 2003 and 2004, based on earnings generated by UpShot. Siebel also said Wednesday that it has purchased the assets of Motiva , a Pleasanton maker of software for handling employee compensation, for an undisclosed amount." * The San Francisco Chronicle: Siebel To Buy UpShot

The Associated Press said Siebel's purchase of Upshot and Motiva "continue a recent wave of acquisitions sweeping through the software industry. Some of the takeover talk has revolved around a possible bid for Siebel by a larger rival, but the company's chief executive officer, Tom Siebel , has consistently dismissed the idea. Siebel's acquisitions were disclosed along with the company's third-quarter results , which were in line with preliminary estimates released two weeks ago. The company lost $59.3 million, or 12 cents a share, compared with a loss of $92.1 million, or 19 cents a share, last year." * The Associated Press via The San Jose Mercury News: Siebel To Acquire Two Software Makers

PC Shipments Hint at Return of Happy Days

Another positive indicator: Roughly 15 percent more personal computers were shipped between July and September of this year compared with the same period of 2002, according to research from Gartner and IDC . Shipments were buoyed by brisk laptop computer sales.

" Dell , which has embarked on an aggressive cost-cutting strategy, narrowly retained its position as the world's largest manufacturer of computers, continuing to outstrip its close rival Hewlett Packard ," BBC News reported. "The research ... confirmed the recent trend that PC sales are finally beginning to take-off after the technology slump. But the growth was driven by consumers snapping up notebook computers rather than businesses." * BBC News Online: Global PC Sales Take Off

The Wall Street Journal noted that the "new reports from market-research firms suggest that demand for notebook computers and the acceptance of wireless networks in the home are driving world-wide PC sales at the fastest rate since the third quarter of 2000." IDC analyst Roger Kay told CNET's News.com: "I'm expecting Q4 to be pretty good with more of the same. Consumers are probably going to have a pretty normal fourth quarter, which means they'll buy more PCs (for the holiday season), but I think that businesses are going to come in more strongly in the fourth quarter because of budget flushing." * The Wall Street Journal: PC Shipments Rise 14% to 16% On PC Notebook Sales (Subscription required) * CNET's News.com: PC Shipments Surge In Third Quarter