Strap in because next week is going to be big for the biggest names in technology. We'll get earnings news on Tuesday from Inteland Yahoo ; IBM and eBay on Wednesday; Microsoft , Google , Motorola and AMDon Thursday. Did you get all that?
That means this will be a huge week for the net sector, already seeing a boatload of news these last several weeks: Yahoo's management turmoil that cost Terry Semel his job; the bitch-fest between Google and eBay over the eBay Live! event in Boston when Google planned a competing event to showcase its "Checkout" payment system that ultimately led to eBay pulling out of its U.S. AdSense deal with Google; and Google itself hitting an all-time high with at least one analyst now offering up a $700 target.
The Google/eBay squabble could actually rear its ugly head during earnings news and maybe not in the way you might expect. eBay is one of Google's top advertisers, and the company pulled out of its deal with Google for a full ten days on the quarter. If Google misses on the topline, or the topline growth doesn't measure up to already rosey expectations, that could be one reason.
At the same time, analysts said that Google was far more important to eBay and its users than the other way around. So you'd think a ten-day break from its deal with Google would hurt eBay in some way. Yet eBay's spokesman Hani Durzy called me the day his company's "experiment," as he called it, was concluded, with some surprising findings: That eBay was not nearly as dependent on Google as the company and its users thought they were. That's a bold and important statement, Citigroup's Mark Mahaney tells me. For analysts and investors who factored in a ten-day departure from the Google as a negative for eBay, they may get a surprise.
Yahoo? Well, this company has an enormous job ahead of it. While rival Google enjoys 60% revenue growth, Yahoo sees something closer to 10%, yet it trades at a competitive multiple. Either Yahoo is ridiculously expensive, or Google is amazingly cheap. Maybe a little of both, but Yahoo's numbers will serve as a nice barometer to Google's numbers a couple of days later. And that makes Yahoo's conference call not merely important for its own investors, but those putting money into Google as well.
And that's just net companies.
Intel got a big bump Thursdayafter an analyst upgrade and that could portend something pretty significant, not just for the world's largest chipmaker, but for broader technology as well. The Street is looking for 19 cents a share on $8.5 billion in revenue. But there's the growing suggestion that PC sales may actually be picking up steam, and Intel's numbers on Tuesday could telegraph what to expect from AMD and Microsoft just two days later.
Stifel Niclaus' Cody Acree told me yesterday afternoon that there might be a nice run still ahead of Intel. He says he's looking for a fairly robust improvement in the company's margins, and that's the one lynchpin Intel investors have been waiting for. Shares got a big bump yesterday, along with the rest of Wall Street, but he still sees what could be another 30% growth for these shares. Not bad for a company already up 28% during the second quarter, and the Dow's single best performer.
And then of course there's Microsoft. We already have the news of the $1 billion pre-tax charge connected the Xbox mess. Now the focus will be on Vista adoption. The process has been slower than expected, according to some key Street analysts, but Kevin Landis at FirstHand Funds, the San Jose, Calif.-based technology mutual fund, says he anticipates a strong uptick in Vista adoption during the next couple of quarters that hasn't necessarily been baked into Microsoft shares yet. If that's true, that's not only good news for Microsoft, but material news for the likes of Intel, AMD, Dell and HP.
And good news on the PC sales side comes not a moment too soon for AMD desperate for any kind of good news. The Street anticipating an 85-cent a share loss on $1.25 billion in revenue. Acree sees the 80-20 split in the chip industry as continuing for some time, but with news that inexpensive Dell computers running AMD chips are selling surprisingly well at Wal-Mart , that could be a little silver-lining to AMD's financial storm clouds. Still, a true turnaround of any measure is several quarters out, and the strategy could include massive divestitures and layoffs the get its business plan back on track.
"With regards to what they need to do to execute, I believe some of the roadmap that is necessary is the Barcelona chip, but also taking advantage of leveraging the ATI Graphics acquisition," says Jefferies' John Lau. "Putting in the bundle strategy that Intel has been doing for quite some time. AMD will finally be able to get that bundle in place because of the acquisition of ATI. So they need to do that bundling and create greater value to PC manufacturers."
But in the meantime, Lau's overall assessment is blunt: "We think there is still a lot of uncertainty and the easier bet would be on Intel."
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