EMC (NYSE: EMC) announced that third quarter performance was slightly worse than they expected at the beginning of the year, but better than analysts had feared. Remember that the wheels really didn't start coming off of the economic bus until mid-September. Nevertheless, the we saw significant economic turmoil during July (oil and gas prices) and August (Fannie Mae & Freddie Mac). Perhaps these kinds of events weren't seen having a severe impact on commercial markets, but finance companies are some of the biggest customers of big data storage products.
In my view, companies like EMC are lagging indicators of economic conditions. That's because the bulk of their revenue comes from large infrastructure initiatives that are planned out several months in advance.
On the other hand, Apple (NASDAQ: APPL) is more of a current indicator. They announced a 26% increase in profit for the quarter. For a company that relies relatively heavily on the consumer market, this is a remarkable result. Again, we're talking about a quarter that featured $4 gasoline and all manner of dire economic prognosticating in the main-stream media. AT&T (NYSE: T) also got a boost from Apple's sales, which will help them weather the current storm.
So what does this mean? To me, it means that the real situation is bad, but not as bad as some might think. The 4th quarter will be worse than the 3rd quarter, but the 1st quarter will look better than the 4th. And when we look back at the period from July 08 to July 09, we'll see a bottoming out and the start of slow recovery. At least, that's my opinion.
WSJ Article - Apple (link requires subscription)
WSJ Article - EMC (link requires subscription)
WSJ Article - AT&T (link requires subscription)
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