Since the start of January, the Nasdaq Composite Index is down about 11% amid some ugly double-digit declines in big-cap tech stocks. Apple Inc. (NASDAQ: AAPL) has dropped 18%, eBay Inc. (NASDAQ: EBAY) 16%, Microsoft Corp. (NASDAQ: MSFT) 5%, Yahoo Inc. (NASDAQ: YHOO) 8%, Amazon.com Inc. (NASDAQ:AMZN) 15%, Google Inc. (NASDAQ: GOOG) 12% and IAC/InterActiveCorp (NASDAQ: IACI) 10%. Even IBM Corp. (NYSE: IBM), which surprised Wall Street when it announced better than-expected fourth quarter results, is down for the year as is Intel Corp. (NASDAQ: INTC) despite optimistic pronouncements from its CEO.
How did Wall Street's darlings become dogs? People are scared about everything from subprime mortgages to the horrible real estate market, so they may be selling their tech stocks and burying the money in shoe boxes in their back yard. Maybe there was some profit taking. I'll entertain all theories, but the issue for investors today is whether Wall Street has thrown the baby out with the bath water. In some cases, the answer is yes. Below is a run-down of the major tech companies set to report over the next two weeks.
Apple -- January 22
- Analysts' Estimates: Earnings $1.46; Revenue $9.46 billion
- Good News: People continue to love their iPhones and iPods. iTunes leads the way in digital media. Even the Mac is gaining sales thanks in part to the clever ad campaign. Overseas sales should be strong.
- Bad News: Steve Jobs & Co. may be vulnerable to a slowdown in the economy. Gadget freaks may not be able to afford the latest gizmos if they are worried about paying their mortgages. Like Google investors, Apple shareholders will bolt at the first sign of trouble.
- Analysts' estimates: Earnings 41 cents, Revenue $2.14 billion
- Good News: Cash-strapped consumers are looking for bargains; The StubHub deal is much smarter than Skype; Fears of Google taking share from PayPal may be overblown
- Bad News: Core business growth remains a challenge; Rumors about Meg Whitman's future abound; Wall Street remains very skeptical about prospects.
- Analysts' Estimates: Earnings 46 cents, Revenue $15.95 billion
- Good News: Overseas sales should be strong. Businesses continue to spend on tech though perhaps not as robustly as in early years. xBox sales were also solid.
- Bad News: Big companies are starting to wonder why they need to pay Microsoft big licensing fees for software they can get for free from Google.
- Analysts' Estimates: Earnings 11 cents, Revenue $1.41 billion
- Good News: Expectations are pretty low that the company may just hit them; As with Google, advertisers worried about their bottom line will cut spending with traditional media before Yahoo
- Bad News: Company's search business will never be Google, losing traffic to Facebook and MySpace; The Jerry Yang magic has yet to take hold.
- Analysts' Estimates: Earnings 48 cents, Revenue $5.38 billion
- Good News: Online retail sales remain strong even as the overall picture remains weak, company continues to pull rabbits out of its hat with new services such as video
- Bad News: Margins will be key, especially given the lackluster holiday season; Macroeconomic picture isn't helpful
- Analysts' Estimates: Earnings $4.43, Revenue $4.44 billion
- Good News: No one has come close to taking market share in search, non-search products gaining traction; budget-conscious advertisers will cut spending with the company only as a last resort.
- Bad News: Spoiled investors will head for the exits unless the company beats Wall Street consensus estimates considerably.
- Analysts Estimates: Earnings 55 cents: Revenue $1.83 billion
- Good News: Barry Diller has finally decided to break up this extremely confusing company which has some well-known businesses such as TicketMaster, Evite and Ask.com
- Bad News: Economy won't do much good for LendingTree; Clever ads haven't really helped Ask.com much
Reader Comments (Page 1 of 1)
1-21-2008 @ 5:23PM
johnclrdsprn said...
Buy,Buy,Buy TECH........remember analysts are always late and safe.... No clue until the obvious!!
1-21-2008 @ 5:48PM
Richard Trabucco said...
IBM's Jan 17 & Jan 18 2008 SEC filings (Press Release) start with the following statements:
Press Release:
The following statement on Page 1: “Revenues were flat excluding the year-to-year impact of the Printing Systems Division divestiture in June 2007.”
Slides:
On Slide 3 (4Q 2007 Summary), the following information: “Revenue flat*”
Comment - Considering revenue was flat for the 4th quarter (excluding printer div. divestiture), approx. 5% of revenue was attributable to currency exchange (not growth), and the Asian and European economies and markets are slowing and/or falling respectively, (which constitute 50% of IBM's business), it's hard to see how IBM can forecast such a rosy outlook for 2008.