Wall Street Beat: Mixed tech earnings get tepid reaction

IDG News Service - Some of the biggest names in IT reported mixed results this week for the first quarter, leading to a dip in tech stocks Friday even as some major indexes showed gains for other sectors.

The Nasdaq Computer index was down 10.80 points to 1,639.21 at the close of trading Friday. As IT sales results were mixed, so too was market reaction. Of major tech vendors reporting results this week, Microsoft ended up by US$1.41 to $32.42 and Yahoo ticked upward by $0.21 to $15.60. However, Intel was down $0.09 to $27.60; Advanced Micro Devices was down $0.21 to $7.76; EMC dropped $0.20 to $27.90 and Qualcomm was down $0.31 to $62.25.

The tepid reaction to tech came as broad indexes including the Standard and Poor's 500 made gains for the day and the week. Those gains were part of a generally positive mood on the markets at the end of the week, as signs of good news in Europe helped quell fears that recession and sovereign debt default would drag down sales for major U.S. companies.

For example, several major newspapers, attributing Russian Deputy Finance Minister Sergei Storchak, reported that finance officials in the Group of 20 industrial and developing countries are working to aid the International Monetary Fund plans shore up countries that are in danger of defaulting on debt to international lenders. In addition, various surveys from Europe reported that German business confidence rose in April, and that retail sales in the U.K. for March beat expectations.

Microsoft, which reported Thursday that Windows sales to corporations in the first quarter were strong, was one of the major tech vendors that appeared to avoid the downbeat attitude toward tech.

"The business PC is what really drove the Windows business," said CFO Peter Klein, according to a Seeking Alpha transcript of the company's earnings conference call.

"And so if you think about the Windows revenue growth being really on the high end of our estimated PC shipment range, it's really a function of: one, business PC is really doing well relative to consumers. And again, that's consistent with the theme we've seen on businesses investing in their technology," Klein said.

Profit dipped year-on-year to $5.11 billion from $5.23 billion, but mainly as a result of a tax break the company took last year, without which net earnings would have increased this year. Revenue increased 6 percent to US$17.41 billion in the quarter.

Strong enterprise sales did not appear to help other vendors in the stock market, however.

For example EMC, considered a strong indicator for enterprise tech sales because of its strength in industrial-grade storage, Thursday reported its ninth consecutive quarter of year-over-year, double-digit revenue growth. Sales for the quarter jumped 11 percent to $5.1 billion, while net income rose a healthy 23 percent to $587 million.