Economic Food Chain

"When IBM sneezes it usually means the tech sector gets a cold. Are chip makers going to take a hit?" IBM stocked took a pretty big hit this last week when its stock fell 8%. Tech suppliers are worried that this hit could filter down to them.

IBM blames the sales short coming on the drop in demand for hardware, software, and general computer services. Intel, TI, and other major chip producers are waiting nervously to see the effects on their revenue.

My question is, what would cause such a drop in IBM revenue? This year started out great for IBM yet in March their profits fell.

For more information, refer to the article Chips Slip a Blip.


Dr. Tufte said...

-1 on Meg's post for a spelling error.

There is a lot of confusion in this post.

First off, don't pay much attention to short term movements in stocks - they don't have much economics implication.

Secondly, there is confusion third paragraph about revenue and profits. IBM's sales fell, and so did their profits, suggesting that their costs were static. What does the beginning of the year have to do with anything, other than it was probably a small occurence that got swamped?

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