Wall Street Beat: Tech earnings continue to be mixed

LinkedIn results skyrocket, Yelp earnings decline, Broadcom exceeds forecasts

As the earnings season wanes, quarterly financial reports from the tech sector continue to be mixed, though shares in IT companies are still up for the year.

Professional social networking site LinkedIn wowed market watchers with a strong earnings report after the market closed Thursday, causing company shares to spike by US$8.39 to $117.90 in Friday morning trading. Revenue for its first quarter skyrocketed year-over-year by 101 percent to $188.5 million, while net income more than doubled to $5 million.

The company has had strong growth internationally, reporting that revenue from international markets represented 36 percent of total sales in the first quarter.

Earlier in the week, online consumer-review site Yelp announced that revenue for the first quarter increased 66 percent year-over-year to $24.7 million. It was Yelp's first quarter as a public company. The company's net loss increased year-over-year to $9.8 million, from $2.8 million, but increasing costs have been expected as the company ramps up research, development and marketing expenses.

In the chip sector, Broadcom on Tuesday reported first-quarter revenue of $1.83 billion, up 0.4 percent from a year earlier. Net income plunged year-over-year to $88 million from $254 million. However, market watchers were expecting a tough quarter for the chip industry, and Broadcom ended up exceeding analyst expectations.

With its focus on semiconductors for mobile devices, Broadcom is in a good position, according to Canaccord Genuity technology analyst Bobby Burleson, who reiterated his "buy" rating on the company.

"In our view, investors should own Broadcom ahead of a strengthening ramp for Mobile & Wireless in the H2 as headwinds from 2G ease and customers introduce new products (iPhone5, additional entry-level smartphones using platform solution)," Burleson wrote in a research note.

For the long term, the smartphone market will drive growth for mobile devices, according to a report issued by Ovum Thursday. Smartphone shipments will increase at a compound annual growth rate of 24.9 percent to reach 1.7 billion units in 2017, Ovum said.

"Android will dominate the smartphone market over the next five years," said Adam Leach, principal analyst at Ovum. "While Apple has defined the smartphone market since it introduced the iPhone in 2007, we're now seeing a sharp rise in the shipment volumes of Android, signaling its appeal to leading handset manufacturers."

In the short term, the hardware and components sector is recovering from, among other things, floods in Thailand that crippled component supplies for the hardware market last quarter.

The Semiconductor Industry Association (SIA) this week said that worldwide sales of semiconductors were $23.3 billion for the month of March 2012, a 1.5 percent increase from the prior month.

Still, sales in March were down 7.9 percent from March 2011, the SIA said. Despite the month-to-month recovery in sales, there remain big questions about the economy that may affect the tech as a whole.

"We are encouraged to see that sequential growth resumed across all regions, especially in Europe and Japan, in March," said Brian Toohey, SIA president, in the report. "We look for seasonal moderate growth to continue in the second quarter and build momentum as 2012 progresses. However, while forecasts for global economic growth are improving, macroeconomic and geopolitical uncertainties remain."

Friday morning, the U.S. Department of Labor reported that 115,000 jobs were created last month, short of forecasts for 165,000. The unemployment rate fell to 8.1 percent from 8.2 percent in March, but analysts said the statistical decline must have been caused by people giving up looking for work.

The report sparked a decline in U.S. markets Friday morning. The broad Standard and Poor's 500 index declined 20.11 points to 1,371.46. The tech sector was not immune to concerns about the economy, with the Nasdaq index for computer stocks dropping 33.56 points to 1611.96. Nasdaq computer stocks are still up by about 20 percent for the year, however. Next week, all eyes will be on networking giant Cisco, one of the main IT bellwethers.

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.
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

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Jack Jeffries

MSI GS75

As the Maserati or BMW of laptops, it would fit perfectly in the hands of a professional needing firepower under the hood, sophistication and class on the surface, and gaming prowess (sports mode if you will) in between.

Taylor Carr

MSI PS63

The MSI PS63 is an amazing laptop and I would definitely consider buying one in the future.

Christopher Low

Brother RJ-4230B

This small mobile printer is exactly what I need for invoicing and other jobs such as sending fellow tradesman details or step-by-step instructions that I can easily print off from my phone or the Web.

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

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!

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?