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Wall Street Beat: Tech earnings bring some relief
By Marc Ferranti

IT company earnings announcements this week are shining some light on a gloomy technology-investment market, reeling from the poor financial reports that were issued earlier this month. The heartening thing about this week's reports was that upbeat company news came from various sectors. Company heavyweights in the processor, telecommunications, storage and Internet markets did well.

Acquisition news, which often spurs heavy trading in the sector involved, set the stage for the week.

Macromedia Inc. shares (ticker symbol: MACR) spiked US$3.27 to $36.72 Monday after the announcement that it would be acquired by Adobe Systems Inc. for $3.4 billion in stock. The acquisition merges companies that together will have a range of software to distribute all sorts of media to desktop and mobile devices. The games sector was brightened by Monday's other acquisition announcement: Electronics Boutique Holdings Corp. (ELBO) skyrocketed $14.09 to $55.21 after it was announced Monday that GameStop Corp. would buy it in a $1.44 billion cash-and-stock deal.

Sector bellwethers including Intel Corp. and EMC Corp. and Yahoo Inc. kept the momentum going Tuesday, though fresh fears about inflation, sparked by U.S. Department of Labor figures showing a spike in March consumer prices, exerted some downward pressure on share prices.

Intel quarterly earnings, fueled by sales of chips for mobile devices, included net income of $2.2 billion, up 25 percent from 2004's first-quarter net income of $1.7 billion, coming out to earnings per share of $0.34 and handily beating analyst estimates of $0.31. An especially good omen was that the company also forecast better profit margins, which means that it expects strong user demand for higher-priced chips. Though Intel shares (INTC) Wednesday went as high as $23.44, they settled down to close at $22.66, up $0.03.

Data storage company EMC (EMC), meanwhile, closed Wednesday at $12.99, up $1.52, after it reported that first quarter profits nearly doubled on growth across its data systems, software and services units.

One of the more interesting harbingers of things to come, however, was Yahoo's quarterly report. The company reported net income of $205 million, or $0.14 per share, beating analyst forecasts by $0.02 per share. The exciting thing for company watchers, and anyone interested in online business models, was that Yahoo said that not only are more visitors hitting the site, but that they spend more time there as well. Site visitors called up more than 100 billion page views in March, a hike of 34 percent from the year-earlier figure. Yahoo shares (YHOO) rose $1.43 to close at $34.65 Wednesday.

Yahoo put pressure on archrival Google Inc., which on Thursday did not disappoint. Citing strong interest from advertisers, the company announced net income of $369 million, or $1.29 a share, compared with $64 million, or $0.24 cents a share, in the same quarter last year. Analysts had expected first-quarter earnings of $0.92 a share. In anticipation of the news, company shares (GOOG) rose $6.12 to close at $202.22. The strong report also pushed shares up Friday morning, when the company share price rose again, to $219.53, shortly after the market opened.

The good news helped drive the Nasdaq Composite Index (COMPX) up by 48.65 points to close Thursday at 1962.41, the biggest leap since March last year, though it showed signs of wavering yet again Friday morning, dropping 15 points to about 1947 after opening.

In a week jammed with earnings action, other highlights included:

-- EBay Inc. Wednesday reported net income growth of 28 percent to $256.3 million, or $0.19 per share. Excluding one-time items the figure was $0.20, $0.02 per share above analyst expectations. Though the company raised earnings guidance for the year, analysts had hoped for an even faster pace of growth, and thus company shares (EBAY) slipped by $0.03 Thursday to close at $33.08.

-- Helped by cost-cutting measures, Lucent Technologies Inc. Tuesday reported income of $282 million for earnings of $0.06 per share, beating analyst expectations of $0.04 per share. Wednesday company shares (LU) rose $0.25 Wednesday to $2.62.

-- AT&T Corp. Thursday reported net income of $304 million, with earnings per share of $0.66, beating analyst expectations of $0.59 per share. Cost cuts also played a part for AT&T. Company shares (T) closed the day at $18.75, up $0.32.

Posted April 22, 2005 05:24 PM |