Wall Street Beat: Google, strong sales boost tech

But the PC market expands more slowly than expected

Strong results for tech companies, especially Google, and an easing of concerns about the economy boosted confidence in the computer sector, as markets closed Friday on a positive note.

Companies as diverse as Google, SAP, Computer Services Inc. (CSI) and Fairchild Semiconductor turned in positive earnings this week. Computer company stocks on the Nasdaq were up by 1.9 percent in aggregate Friday, as the exchange as a whole rose 47.61 points to close at 266.85. Google rose US$32.69 to close at $591.68, leading the markets up.

Google's results point to its continued dominance in search, while CEO and co-founder Larry Page on a conference call Thursday highlighted the growth of the company's recently launched social networking site, Google+, which he said now has 40 million members.

Google said it ended the quarter with revenue of $9.72 billion, up 33 percent year on year, and net income of $2.73 billion, up from $2.17 billion. Both sales and profit handily exceeded the forecasts of analysts.

While Google took the headlines, other companies confirmed some key trends, including rising sales for enterprise software and services.

ERP (enterprise resource planning) giant SAP, for example, said its third-quarter revenue rose 14 percent year on year, while operating profit more than doubled, helped by a revision of the sum reserved to settle litigation with Oracle over SAP's former TomorrowNow subsidiary. But even excluding the recalculation, third-quarter revenue rose 12 percent to €3.41 billion (US$4.69 billion) and operating profit jumped 23 percent to €1.127 billion. SAP shares on the New York Stock Exchange rose Friday $1.49 to close at $57.66.

CSI also on Friday reported record revenue and net income for the August quarter, as sales rose 3.8 percent to $43.5 million and profit increased 3.4 percent to $6.4 million. It was the company's 29th quarter of sales growth.

There was even good news in the embattled semiconductor sector, as Fairchild Semiconductor earnings came in at $0.34 per share on revenue of $403.2 million, beating the expectations of analysts. Canaccord Genuity technology analyst Bobby Burleson noted the company should benefit from "normalizing channel inventories in early 2012, following a brutal H2/11 that has distributors working down inventories to unsustainably low levels."

The hardware market is in general expanding more slowly than expected, according to both Gartner and IDC this week. In a research note, IDC said that worldwide PC shipments increased by 3.6 percent in the third quarter compared to the same quarter in 2010, up slightly from the 2.7 percent growth experienced in the second quarter but below August projections for 4.5 percent growth. The Americas and EMEA were slightly below expectations, IDC said.

"Most vendors continue to struggle with the slow market environment and product changes," said Loren Loverde, an IDC vice president, in a research release. "Although we don't see media tablets and other devices replacing PCs, questions on how products will evolve and consumer interest in these and other categories are providing a distraction. "

Meanwhile, not all smartphone makers are reaping benefits from the exploding uptake of the devices. Sony Ericsson on Friday said an increase in the average selling price of its phones just barely offset a 9 percent fall in mobile phone shipments. It barely broke even in the third quarter, generating sales of €1.59 billion, compared to €1.6 billion a year earlier.

Though the hardware sector is in turmoil, the software arena, especially enterprise applications, appears to be instilling an underlying confidence in tech. With Friday's gains, computer makers are up more than 4 percent for the year on the Nasdaq.

An easing of economic worries also helped fuel shares this week. French and German officials are putting the finishing touches on a plan to deal with the sovereign debt of Greece, and potentially Italy and Spain, in time for an E.U. meeting Oct. 23. Meanwhile the U.S. Commerce Department said Friday that U.S. retail sales rose 1.1 percent in September from a month earlier. Sales growth during August was revised upward to 0.3 percent.

While strong earnings for the software sector are expected through this earnings season, overall investor confidence will likely depend more on an optimistic resolution to the E.U. meeting.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags smartphonesBlackberryGartnertabletsbusiness issuesGoogleservicesiPhoneIDCSAPfinancial resultshardware systemsconsumer electronicsSony Ericssondesktop pcsComputer Services Inc.Fairchild Semiconductor

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Marc Ferranti

IDG News Service
Show Comments

Brand Post

Bitdefender 2019

Shop safely with our award-winning security solution. Protect yourself this Black Friday and get the exclusive Black Friday discount for Bitdefender 2019!

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?