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July 27

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Trending Tech: Disappointing Quarterly Results, Layoffs & Apple-Samsung Patent Trial

July 27, 2012

It’s been a disappointing week as tech companies post quarterly results missing analysts’ estimates: Apple’s earnings fell short of expectations as iPhone sales slowed in advance of iPhone 5. Zynga blamed Facebook for its losses while Facebook surprised Wall Street with its growth in revenue. In other news, the biggest patent trial between Samsung and Apple is slated to start on Monday. RIM faced another setback as The New York Times scrapped its mobile app for BlackBerry phones, and Cisco Systems announced more layoffs.

10. VMware pushes deeper into data center with Nicira buy
VMware purchased networking company Nicira Inc. for $1.26 billion in one of its priciest purchases ever. The acquisition, expected to close in the second half of the year, is considered to be VMware’s smartest move yet. The addition of Nicira will lead VMware into “sustained profitability and relevance in the enterprise and the cloud.”

9. Symantec replaces CEO, shares soar
Symantec replaced CEO Enrique Salem with Chairman Steve Bennett in a move to end the company’s lackluster performance. The announcement sent the shares soaring 14 percent despite the company reporting a 9.9 percent decline in its first-quarter profits.  Analysts said the management shift could lead to a change in Symantec’s structure that could raise its stock price. The company said Bennett will also be taking the role of president while remaining chairman.

8. More layoffs coming at Cisco Systems
Continuing efforts to trim expenses, Cisco announced it will lay off 1,300 employees, a year after announcing 6,500 job cuts. The upcoming layoffs represent the company’s latest austerity measures as it tries to simplify operations and adjust to the changing economic conditions.  Forrester Research analyst Andrew Bartels stated that worldwide computer sales are expected to decline by 2 percent this year and may be the reason Cisco is making cuts.

7. Apple-Amazon war heats up
The two technology giants, Amazon and Apple, are going head to head in an increasing number of areas. The companies are competing in tablets, digital music, apps and video among other businesses.  The competition got intense when it became clear that Amazon was testing its own smartphone, which would be in direct competition with Apple’s iPhone. With Amazon reportedly expected to introduce six new tablets in different sizes and Apple expected to release a ‘mini’ iPad, the stakes are high and competition is heating up.

6. The New York Times scraps its BlackBerry App
RIM took another blow to its Blackberry image as The New York Times dropped its downloadable application for BlackBerry phones. RIM is dealing with the setback as it prepares to introduce a new version of the mobile device early next year. RIM is fighting to stay relevant to the U.S. consumers after sales in the country fell 47 percent. With stock trading 95 percent below its 2008 closing high of $147.55, analysts accused RIM of being “in a death spiral.”

5. Zynga posts loss, stock dives
Zynga plummeted to an all-time low after posting an earnings report that fell short of Wall Street’s expectations.  Shares of Zynga, the biggest developer of Facebook games, fell 40 percent, missing analysts’ second-quarter revenue and profit estimates. The company blamed the shortfall in part on Facebook, saying the changes to the site made it harder for users to find existing games.

4. Amazon delivers on revenue but not on profit
Amazon reported its second quarter results, which slightly missed analysts’ expectations, sending shares down by 3 percent. The company’s earnings fell 96 percent amid a big spending spree as it continued to build out its operations. Amazon also projected a third quarter loss, which the Street wasn’t expecting.

3. Apple v. Samsung: The patent trial of the century
The patent infringement war between Apple and Samsung is one of the biggest trials of the century, as two technology giants and business partners accuse each other of patent infringement. At stake are billions of dollars in penalties, and possible bans on imports of flagship consumer products. Recently, Samsung jumped ahead of Apple as the world’s largest seller of smartphones. But Apple claims it has cheated its way to the top while Samsung accuses Apple of ripping off the mobile giant’s intellectual property to create the iPhone. The lawsuit, which will enter the trial phase next week, is one the most anticipated patent trials in recent times.

2. Rare miss for Apple as iPhone sales cool
Apple delivered a disappointing earnings report on Tuesday, with lower-than-expected iPhone sales dropping its stock by 5 percent. The company sold 26 million iPhones in its third-quarter, missing the analysts’ estimates of 28.4 million. iPhone sales have weakened as customers eagerly await the new version of iPhone expected to be released by the end of the year. The company also said the battered Europe economy is weighing on results there. It’s yet to be seen if Apple will have record-breaking sales with the release of its much anticipated iPhone 5.

1. Facebook revenue beats estimates, but shares slide
Facebook reported its first quarterly earnings as a public company on Thursday. The social networking giant met analysts’ estimates and revenue growth came in a tad better than expectations. But many believe that the company purposely set the bar low for Wall Street’s expectations. Facebook reported a loss of $157 billion and shares were down more than 10 percent in after-hours trading.

Disclosure: Amazon Web Services, Samsung and Symantec are Weber Shandwick clients.