Weekly Digest
Weekly Digest Issue No. 525
22-07-2010
by Deirdre McArdle
Irish R&D gets adrenalin shot | Mixed bag of results for tech firms
New software jobs on the cards
As the shackles of recession loosen, growth and expansion are words that are drifting into companies' vocabulary again. This week, security software developer Lumension, which set up a global research and development centre in Galway last October, has announced it will create 20 software jobs by the end of the year. When it set up its Galway hub it said it would recruit 30 software engineers, but having met its targets earlier than expected the firm is to almost double its current workforce to 50. Enterprise Minister Batt O'Keeffe described Lumension's expansion plans as "very encouraging for Ireland's information communications technology sector".
Expansion is also on the mind of Web Reservations International. The firm handles online bookings for hostels through its flagship brand Hostelworld.com. It said this week that it plans to add 50 new jobs over the next two years as it continues to grow its business. The bulk of the new jobs will be based in Dublin and the roles include software programmers, internet content specialists and senior management positions. WRI currently employs around 100 people. The Irish firm, which was founded in 1999 by Ray Nolan, was bought by US private equity firm Hellman and Friedman for USD340 million last year.
Meanwhile, online videogame company Riot Games announced this week that it was to set up its European headquarters in Dublin. The LA-based firm was founded in 2006 and specialises in free online video games, including role-playing fantasy game 'League of Legends Season One'. The company is currently recruiting for roles in marketing and production for the new Dublin base.
Also this week, US insurer UnitedHealth confirmed it would create 200 new jobs in Donegal. The Minneapolis-based health insurance group already employs 340 people in IT and medical claims processing at its Letterkenny site. The 200 new positions will be split evenly between IT technicians and medical claims associates.
There was also some bad news jobs-wise this week, with mobile operator Vodafone announcing last Friday that it would be seeking 130 redundancies following a review of its business. The firm said it hoped to make the cuts through a combination of voluntary redundancies and early retirement.
Irish R&D gets adrenalin shot
There was good news in research and development circles in Ireland this week, with the Government announcing cycle 5 of its Programme for Research in Third Level Institutions (PRTLI), in which EUR359 million will be ploughed into third-level research. The Government will invest EUR296.1 million, with EUR62.6 million coming from private sector sources. PRTLI Cycle 5 will run between 2011 and 2016. Speaking at the launch of the fund, Taoiseach Brian Cowen said the research projects will create 379 direct jobs and a significant number of research studentships.
Under the programme TCD will receive more than EUR75 million in capital funding for Biomedical Sciences Development, while UCD has secured over EUR50 million to develop a new science centre. NUI Galway is to get EUR31.5 million for a project named Advancing Medicine through Discovery, and UCC will receive EUR19 million for a project entitled Translating Bio Sciences into Health. DCU will receive over EUR16 million for a nano-bioanalytical research facility, NUI Maynooth will receive EUR4.6 million for ICT infrastructure development, while UL will get more than EUR12 million for a national centre for applied materials research.
Separately, it was revealed this week that Irish firms and higher level education institutes have received EUR213 million in funding since the beginning of EU Framework Programme 7 to April 2010. FP7 commenced in 2007 and will run until 2013. In the three year-period to date, 2,965 applicants from Ireland submitted proposals requesting funding. Of those, 720 were successful, representing a success rate of 24.28 percent for Ireland, above the European average of 22.28 percent.
"The Irish success rates ahead of the overall EU average are very positive indications of the prospects for Irish participation in FP7 and are ahead of our national targets. The new ideas and innovations generated from these research collaborations will help create new high quality jobs," said Maire Geogheghan Quinn, EU Commissioner for Research, Innovation and Science.
The call is now being put out for new research funding proposals. Companies can apply for funding through FP7 to do research in areas including health, environment, nanotechnology, energy and ICT.
Apple results impress, iPad hits new markets
Just as a bad week settled for Apple, ending with the announcement that it would be giving free bumper cases to iPhone 4 owners in order to alleviate the antennae problem, the company released an impressive set of quarterly figures. Revenue for Apple’s first fiscal quarter jumped 61 percent from USD9.73 billion in 2009 to a record USD15.7 billion on the back of strong iPhone and Mac sales. Profits for the quarter soared 78 percent to USD3.25 billion, or USD3.51 per share, compared to the year-ago figures of USD1.83 billion, or USD2.01 per share.
The company sold 8.4 million iPhones in the quarter, representing 61 percent unit growth over the year-ago quarter. It also shifted 3.47 million Macs during the quarter, representing a new quarterly record and a 33 percent increase over the year-ago quarter. Unsurprisingly perhaps, iPod sales declined by 8 percent to 9.41 million for the quarter. Apple's newest product line made quite an impact on quarterly figures: total iPad sales for the period were 3.27 million.
And iPad sales are likely to make even more of an impact in the upcoming quarter as Apple expands its availability into nine new markets. This coming Friday the tablet device will go on sale in Austria, Belgium, Hong Kong, Ireland, Luxembourg, Mexico, the Netherlands, New Zealand and Singapore. Prices for the device will begin at EUR499 through the Apple store and authorised Apple re-sellers in Ireland.
Mobile operators O2 Ireland and Vodafone Ireland have released similar data plans for the device: Vodafone will charge EUR3.99 per day for 500MB, EUR20 per month for 5GB; O2 is to charge EUR3.97 per day for 500MB and EUR19.90 per month for 5GB. Meanwhile, Three Ireland is doing things a little differently: it will offer two monthly price plans – EUR9.99 for 1GB and EUR19.99 for 15GB. Meteor has yet to release its data plans.
Yahoo, Google results disappoint
Tech sector results were released thick and fast this week. Though Intel’s stellar financials last week brought good cheer, results from internet players Yahoo and Google didn’t have the same effect. Despite the fact that Yahoo posted second quarter profit of USD213 million, or USD0.15 per share, up from USD141 million, or USD0.10 per share in the year-ago quarter, the firm’s revenue figures were less inspiring. Revenue rose just 2 percent to USD1.6 billion, and the company said it was hit by an unexpected pullback by some advertisers in display advertising in June. Yahoo said it expects revenue for the current quarter to be in the region of USD1.57 billion to USD1.65 billion.
Meanwhile, last Friday, Google posted a fairly moderate set of results (by its standards). Net income for the second quarter was USD1.84 billion, up 24 percent from the year-earlier period. Revenue came in at USD6.82 billion, up 24 percent from USD5.52 billion in 2009. However, the search giant's profit margins disappointed Wall Street, with earnings per share of USD6.45 coming in below analysts’ expectations of USD6.52. This led to Google stock falling 4 percent in after-hours trading last Thursday.
It was just last week that Google’s tug of war with China reached an agreement of sorts. The internet giant’s licence was renewed by Beijing after Google made an amendment to its Google.cn site. However, latest figures reveal that its share of the Chinese search market fell to 24.2 percent in the quarter to June, compared to a 30.9 percent share in the first quarter. Analysts blamed the to-ing and fro-ing with the Chinese government, the redirecting of its search traffic to Hong Kong and the subsequent uncertainty for the drop in market share, and predicted that it would claw back some of its share now that the situation has been resolved.
In other news of Google, the firm said on Tuesday that it would be discontinuing sales of its Nexus One smartphone in the US. Back in May, Google said it would close the webstore that sells the handset when supplies were exhausted; it now says it has received its last shipment of the devices and once they are sold they would not be re-stocked. In a blog post Google said the Nexus One still will be sold through mobile retailers in Europe, Korea and possibly elsewhere.
Mixed bag of results for tech firms
Three heavyweights in the tech sector also released their quarterly figures this week, and it was a pretty mixed bag of results. First up, IBM saw second quarter profit rise to USD3.4 billion, or USD2.61 a share, from USD3.1 billion, or USD2.32 a share, in the year-ago period, beating Wall Street’s forecast for a profit of USD2.58 a share. However, IBM's total revenue of USD23.72 billion fell short of analysts' predictions of USD24.17 billion. Big Blue was quick to deny that the figures pointed to any faltering in the market's recovery, and chief financial officer Mark Loughridge put most of the shortfall down to the translation effects of a stronger US dollar. IBM said it believed the steady recovery was likely to pick up steam in the second half of the year. Indeed, the company put its money where its mouth is and raised its full-year earnings forecast to USD11.25 a share from USD11.20 a share.
Chipmaker Texas Instruments had a similar story to IBM in that it posted a solid increase in earnings but light revenue growth. The firm saw its profit jump 42 percent to USD769 million, or USD0.62 a share, up from USD260 million, or USD0.20 a share, a year ago. Revenue rose to USD3.5 billion from USD2.5 billion. Both revenue and profit were just below what analysts had predicted, and Wall Street reacted with TI’s shares dropping 5.5 percent in after-hours trading on Monday. Still, like IBM, the chipmaker was bullish in its third quarter forecast. It predicts third-quarter earnings of USD0.64 to USD0.74 a share on revenue of USD3.55 billion to USD3.85 billion. This beats Wall Street expectations of USD0.64 a share on USD3.59 billion in revenue.
Meanwhile, AMD posted an interesting set of quarterly figures last Thursday. The chipmaker saw revenue surge by 40 percent from USD1.18 billion in 2009 to USD1.65 billion in the quarter to end of June. Net losses for the quarter were USD43 million, or USD0.06 per share, compared to a year-ago net loss of USD330 million, or USD0.49 per share. However, second quarter losses take into account costs associated with the spin-off of AMD’s manufacturing unit, which has been rolled into a new company called Globalfoundries, which is financed by a group of Abu Dhabi investors. AMD cited strong demand for graphics processing units (GPU) for the laptop market, and chief executive Dirk Meyer said he expects that demand to continue in the current quarter.
Caped Koala Studios has built a virtual world for kids, combining education and social networking 