Two of the biggest names in corporate America, Microsoft and General Motors, yesterday quashed hopes that an early conclusion to the war in Iraq might be a catalyst for a return to profit growth.
Microsoft last night lowered analysts’ expectations for the software group’s next financial year beginning in June.
The warning pushed the prospect of a recovery in the economy back further still and underlined worries that companies have more fundamental problems than the geo-political concerns that have dampened consumer confidence and the markets.
Microsoft forecast that revenues in the next financial year would be between $33,1-billion and $33,8-billion, short of the average analyst expectation of $34,9-billion. A profit forecast given by the company was also lower than the number Wall Street was looking for.
The company’s cautious outlook was made amid lacklustre sales of PCs and continued weakness in spending on IT by corporations.
GM, the world’s largest car maker, had earlier warned that it might miss its $2,5-billion profit target for 2003 because of the faltering economy.
The warning from GM weighed on Wall Street, which looks to the car maker as a key indicator of consumer confidence. Shares in GM fell 95 cents to $35,17. Its US market share fell to 26,6% in the first quarter, down from 28,2% a year earlier.
Despite the gloom, GM’s first quarter profits of $1,48-billion, up from $228-million, comfortably beat Wall Street expectations. – Guardian Unlimited Â