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Tech Check
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] opened things up with a strong quarterly earnings report, and a far more optimistic outlook than analysts were expecting. The news started tongues wagging that maybe things weren't as bad as we thought, that 2009 might hold some turnaround possibilities for the sector.
A day later, Apple Inc. [AAPL
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] soothed the naysayers with a far better-than-expected earnings report of its own. The company beat on the bottom line, posted its first $10 billion quarter ever, a robust 34.7 percent gross margin, and strong sales for Macs and iPods. The iPhone number was a little light, but certainly in the ball park of estimates. And the reason the Apple news was so extraordinary was that it covered the quarter that turned out to be the worst holiday shopping season this country has seen in almost 40 years. So much hand-wringing about just how badly Apple would be hurt, despite so much anecdotal evidence during the quarter of packed stores nationwide, and the company turns in its best sales ever.
Interestingly, Apple said that its 251 retail stores sold a staggering 515,000 Macs during the quarter and half were bought by new Apple customers. Seems the Mac faithful customer base is getting a lot bigger.
Apple and IBM offered a powerful one-two punch of tech sector optimism until Thursday morning when Microsoft [GOOG
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] stunned the Street by pre-announcing earnings before the market opened, instead of waiting for its scheduled release time: After the bell.
The news was bad.
Microsoft missed EPS by two cents and revenue by more than a half billion dollars. It would lay off 5,000 staffers, as many as another 5,000 contractors, offer no meaningless guidance for 2009. It was ugly. Worse, during its conference call, Microsoft disclosed that it was modeling for 10 - 12 percent growth in PC sales during the fourth quarter. They came in flat instead and Microsoft employees and investors are paying the price. The news hung over the market all day long. And any warm and fuzzies from Apple and IBM were quickly forgotten.
Then came Google [
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]to the rescue!
A better than expected report on the top and bottom lines, an 18-percent pop in paid clicks, capex spending down significantly, only 99 new employees hired on the quarter, and the surprising news of a stock options re-pricing program. What do you do when 14,000 workers are underwater on their options? Do over! Which is what the company will do, and take a $460 million charge to cover the expenses. Good for employees only. The rest of you who bought Google stock these last few years will have to wait for the shares to recover the old fashioned way.
So now we look ahead to next week: Texas Instruments [TXN
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]on Monday, Yahoo [YHOO
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] on Tuesday and Amazon [AMZN
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] on Wednesday.
TI is caught in the maelstrom of big and bad news in the chip sector. Intel [INTC
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] may or may not swing to a loss in the current quarter for the first time in 87 quarters; Advanced Micro Devices [AMD
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] posted a far wider loss than Wall Street was anticipating -- and that's saying something! Samsung's handset sales were lousy, Nokia's [NOK
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] under pressure. Same with Sony Ericsson [SNE
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] and LG [LG
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] . I don't see a huge market for big screen TV's nowadays with the country still plagued by Depression. None of this bodes well for TI.
As for Yahoo? We broke the news yesterday that the company is suspending all pay increases for its employees and Google's report yesterday suggests its widening its leadership in Search advertising. To say expectations for Yahoo are muted right now is an understatement. It'll be new CEO Carol Bartz's first conference call. Analysts expect 13 cents a share in profit on $1.37 billion in net revenue. The stock's a mess, losing 30 percent in the fourth quarter, 48 percent in 2008. They now sit at a 5-year low. Remember that $33 offer from Microsoft? (Sorry, couldn't resist.)
And then Amazon: If eBay's [EBAY
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] numbers were any indication this week, Amazon could end up being next week's bright spot.
The fourth quarter is always the company's busiest, and with eBay copping to the fact that half its business now comes from fixed-pricing, the Buy-it-Now feature, the two companies have never competed this head-to-head before. Analysts I'm talking to say the Amazon pack-and-ship model, rather than relying on a hodge podge of millions of individual vendors, might be more compelling for consumers who'd rather deal with a corporation than an individual when spending their hard-earned cash. comScore tracked a big 7.4 percent increase in visitors to Amazon during the fourth quarter. Analysts expect 40 cents a share in profit, down from the 48 cents Amazon reported during the same period a year earlier on $6.5 billion in revenue. Hardly a stellar quarter with such a drop-off in profit, but if the company can show it's gaining ground against eBay, and can meet or beat those expectations, the company would declare the quarter a win.
This was a busy week. Rest up. It's another busy week ahead.
Questions? Comments?
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