Tech earnings: IBM wows, Microsoft and Google disappoint

Posted Jul 17th 2008 5:37PM by Peter Cohan
Filed under: Earnings Reports, Google (GOOG), Microsoft (MSFT), International Business Machines (IBM)

The Wall Street Journal reports a mixed picture on technology earnings. Google Inc. (NASDAQ: GOOG) and Microsoft Corporation (NASDAQ: MSFT) disappointed investors but International Business Machines (NYSE: IBM) put impressive numbers on the board.

Here are the details:

Google. The Journal reports that Google's net was up 35%, but investors expected it to make $4.74 excluding stock options -- 11 cents more than the $4.63 it reported -- Google lost 10% of ita market value after-hours.
Microsoft. The Journal reported that Microsoft's net was up 42%, it reported EPS of 46 cents a share. But investors did not like its guidance. Microsoft's guidance of $2.12 to $2.18 per share on revenue from $67.3 billion to $68.1 billion was less than the $2.16 on revenue of $67.3 billion that analysts expected. Microsoft lost 5.7% of ots market value after-hours.
IBM. The Journal reports that IBM's net was up 22% to $1.98. Investors had expected it to make $1.82 -- its stock was up slightly in after-hours trading.

What do these results tell us about the companies and the economy? It could be that for the time being the consumer is hurting more than business buyers of technology. IBM's solid earnings suggest that businesses are in better financial shape than cash-strapped consumers.

Microsoft's disappointing outlook is somewhat of a concern but the 10% drop in Google's stock suggests its shareholders would be better off if its started offering guidance to Wall Street. But for a company of IBM's size to post 22% growth in these dire economic times is an eloquent statement of its strength.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Tags: google, ibm, ibmcorp, microsoft

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Reader Comments (Page 1 of 1)

7-20-2008 @ 9:02AM

barry said...

I wasn't so dissapointed. Especially considering the state of the economy. These companies are making money hand over fist!

For those interested, I found the full earnings call transcripts for all the stocks online here:

http://snipurl.com/30ms3