Wall Street Beat: Tech reaps rewards of market surge

Tech-heavy Nasdaq hits 11 year high in wake of strong earnings season

Tech companies, coming off a strong earnings season, were big winners Thursday as markets rose to multiyear highs on reports of a strengthening economy.

Though tech bellwethers during the last month have reported strong earnings, market watchers have feared that spending on IT could be curbed this year by slow economic growth and the specter of a sovereign debt default in Greece, which would likely send financial markets into a tailspin.

But positive economic news pushed markets up Thursday. The Dow Jones Industrial Average closed at 12,904.08, up by 123.13, hitting its highest point in four years, before the implosion of Wall Street in the third quarter of 2008. The tech-heavy Nasdaq ended up at 2,959.85, up 44.04, its highest point in 11 years. The S&P rose by 14.81 to close at 1,358.04, its highest point in nine months. At the start of trading Friday some major indexes were up, though the Nasdaq slipped somewhat -- not unusual after a day of big gains.

The U.S. Labor Department Thursday said initial jobless claims for the week ended Feb. 11 were 348,000, less than the prior week's total of 361,000. Meanwhile, European central banks are ready to convert their holdings of Greek bonds into new bond issues in a move to pave the way for a private sector debt deal, according to reports from Reuters and other news organizations.

Tech companies grabbed a lion's share of the rewards on the good news. The Nasdaq Computer stock index Thursday was up by 30.29 points to 1,598.83. Four of the top five most actively traded companies on the exchange were tech vendors, all of which experienced share price increases: Microsoft shares rose 4.11 percent; Nvidia closed up by 1.37 percent; Cisco shares rose 1.4 percent and Intel shares increased 0.92 percent.

Another winner was Apple, experiencing a 0.91 percent uptick in its share price, which closed at US$502.21. Apple shares crossed the $500 mark earlier in the week, for the first time in its history. Last year it became the most valued company on the planet in terms of market capitalization (share price multiplied by number of shares on the market), passing Exxon Mobil. Apple jumped $3.00 in early morning trading Friday.

The jump in tech shares indicates that tech investors have confidence that, underlying worries about the economy, there is strong demand for technology. Despite concerns that the fourth quarter, plagued among other things by natural disasters that crimped the supply of hard drives, would be tough for tech, bellwether IT companies on the whole did well.

Apple was the star of earnings season, posting record quarterly revenue of $46.33 billion and record net profit of $13.06 billion, compared to revenue of $26.74 billion and net quarterly profit of $6 billion in the year-earlier quarter. But market leaders in other sectors of IT had good quarters as well.

Cisco, which came under fire last year when its sales slipped, reported that cost-cutting efforts had paid off. Cisco's net sales for its second fiscal quarter were up 10.8 percent year over year to $11.5 billion, while earnings rose 43.5 percent to $2.2 billion. On the software front, SAP said it has its best year ever, supported analyst forecasts for a strong year for enterprise software.

With most of the large tech vendors having already reported quarterly earnings, results this week came from second-tier players. Though results were mixed, tech investors appeared to stress the positive aspects of the reports.

On Wednesday, for example, graphics chip maker Nvidia said revenue for the fourth quarter of its fiscal 2012 was $953.2 million, up 7.5 percent from $886.4 million in the same period a year earlier. However, net income declined to $116.0 million from $178.3 million. Sales of the company's Tegra 3 processor have failed to live of up to expectations, partly as a result of the lingering impact of the hard disk-drive shortage caused by Thailand floods.

Many analysts looked past the current problems and remained optimistic.

"We expect continued graphics share gain in the coming year, reflecting design wins on new notebook platforms," ThinkEquity analyst Suji De Silva wrote in a research note.

Nvidia shares rose by $0.27 Thursday to close at $16.45.

Though market analysts have predicted that hardware will have a tougher year than software, in part because of component shortages that may not clear up for several months, the boom in tablet computers has injected excitement into the personal computing market. Tablet sales will exceed sales of traditional desktop and notebook PCs by 2015, according to a report this week from BI Intelligence. The report forecast that the tablets will generate a market valued more than $100 million by 2015, achieving a sales run rate 500 million per year.

Tech investors also appeared to take the long view on storage vendor NetApp, which Wednesday said that for the quarter ending Jan. 27 profit was less than a year earlier, but that sales rose. NetApp had net earnings of $120 million on revenue of $1.57 billion, compared with earnings of $186 million on $1.29 billion in sales in the same period a year ago. Its guidance for the current quarter was for revenue of $1.65 billion to $1.73 billion, on earnings of $0.60 to $0.65 (excluding one-time items). On the high end of the guidance, the results would beat expectations of analysts, who are forecasting earnings per share of $0.63 on sales of $1.69 billion. NetApp shares rose $2.14 to $42.74 Thursday.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
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

Cool Tech

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Breitling Superocean Heritage Chronographe 44

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?