The coming week is going to be very interesting for anyone interested in the stock markets tech. heavyweights. IBM, Intel, Microsoft, and Apple will be posting their results, which is sure to move markets and force investors to take another look at fundamentals like earnings, sales, and profit margins... at least for awhile, until we revert back to panic trading on the least bit of financial news coming out of Europe.
IBM is releasing its numbers first. On Monday, it will probably report expectantly dull, but healthy and sustainable revenue and earnings growth. This company has been doing everything right recently and analysts and investors alike will generally sing its praises. Investors like dependability and predictability, it helps them to sleep at night. IBM has achieved well on both counts. In the past eight quarters it has exceeded per share profit expectations by about 2.4%, nothing spectacular, but helps an investor know what he is buying. If IBM says it will make a certain amount of money, they can generally deliver.
Intel has been a little more difficult for investors. Performance wise, it has not been all bad. It has a steady and attractive dividend above 4%, almost unheard of in the tech arena, and it has largely avoided the collapse taking place in financials and many other areas of the market. The difficulty for Intel and its investors is the lackluster performance of PC sales, which are the bread and butter of Intel's chip business. This company needs more avenues of distribution, as PC's are being left in the dust by mobile and tablet sales as of late. Is this transition impossible for Intel, no! But they need to speed up the process.
According to Barron's Online, "consumer PCs have been steadily under-performing this year... tablet computers might be eating away at new purchases." And this is where our discussion of Microsoft kicks in. Microsoft has been increasing revenues at double digit paces, and profits are very healthy. Windows 7 was an effective operating system and sales were brisk. Coming online for Microsoft is Windows 7.5 for mobile devices and tablet computers, which should help give sales a kick as well.
Apple news, however, is most likely to be what excites investors when they report on Tuesday. Sales of the IPhone 4S are extraordinary, and the halo effect that their phones will continue to have on their computer business will be very positive. The more people that buy Apple phones and other gadgets, the more computers and media they continue to sell. This snowball effect for Apple has been going on for some time, and with the release of the IPhone 4S, and then the IPhone 5, it does not seem to be stopping.
Full Disclosure: My company or I own shares in Intel. (INTC).
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