Tech Q2 results to square up to sober predictions

The companies that will come up short have already disclosed the news with pre-announcements sprinkled over the last few weeks. In May, for example, bellwether Intel Corp. cautioned that its second quarter sales would fall below expectations. Seagate Technology Inc., Gateway 2000 Inc. and Micron Technology Inc. offered similar warnings at around the same time. And earlier this afternoon, Cyrix Corp. cautioned that its revenues in the current quarter would be "significantly" below the $75.6 million it reported a year ago.

Still, analysts don't detect a larger pattern in the making. Instead, they say, the problems are company specific.

The big issue, they say, is not demand: It's price.

Prices for a wide assortment of technology goods have dropped considerably from a year ago. Analysts attribute the deflation to the industry-wide push for smaller, thinner systems. That downward price pressure is expected to continue, which could put a hurt on both margins and profits - at least until volumes pick up.

All told, that should set the stage for an interesting competition later in the year.

"We'll see who the really strong competitors are," said Matt Sargent, analyst at Computer Intelligence, a La Jolla, Calif., research firm. "Financially, everyone's margins will shrink a bit."

According to CI, the average unit price of a retail desktop system dropped more than $300 from May of last year to May of this year. And systems costing under $1,000 made up 29 percent of retail sales in April of this year.