Why Tomorrow Could Be Tech's Biggest Day of the Quarter
Jan 18th 2012 6:09PM
Updated Jan 18th 2012 6:12PM
Tech earnings are about to flip the switch all the way up to 11. Tomorrow, three of the Dow Jones Industrial Average's (INDEX: ^DJI) five tech stocks are on tap to report earnings after the bell. Much like how banking has been in the spotlight across the past week, tomorrow night technology should steal the show. Let's take a peek at who's set to announce earnings after the bell tomorrow.
Expected Earnings Per Share
Last Year's Earnings Per Share
Expected Growth Rate
|Intel (NAS: INTC)||$0.61||$0.59||3.4%|
|Microsoft (NAS: MSFT)||$0.76||$0.77||(1.3%)|
|IBM (NYS: IBM)||$4.62||$4.18||10.5%|
Source: Thomson Reuters. Earnings per share are adjusted estimates.
We have four respective bellwethers encompassing most of technology. There's Microsoft and Intel, which give a good view into how PC growth (or lack thereof) is holding up. Google will give a view into Internet services and could give further analysis of how its mobile efforts are shaping up. Then there's IBM, which covers the business spending side and could shed a light -- along with Intel -- on whether emerging-market spending has dropped off.
Between the four, investors will get a great cross-section for how technology spending held up last quarter. Together they account for a market cap of nearly $800 billion, or one-third the value of all technology companies in the S&P 500.
Looking at expected quarterly earnings, one thing is clear: Tech is feeling the effect of the global slowdown. Microsoft is expected to see its adjusted earnings per share fall after seeing growth of 33% two quarters ago. Last quarter, Intel saw its earnings jump 25% but expects anemic growth rates this quarter. Part of the reason for these slowdowns is floods in Thailand that ravaged the computer supply chain, but that doesn't fully explain the level of slowdown.
That slowdown is where one final piece of the "technology puzzle" might come into play. I'm talking about the technology titan that's nearly the size of Google and IBM combined: Apple (NAS: AAPL) . The company reports Jan. 24, and expectations for a blowout quarter are high. The company is expected to sell north of 30 million iPhones and more than 13 million iPads in addition to continuing growth in its Mac lineup. Apple's quarter will not only be a better barometer of consumer rather than business technology spending, but it'll also give an improved feel for how much technology spending is transitioning away from traditional spending areas like PCs and into mobile devices.
In any case, buckle up, because tomorrow should reveal quite a bit about the health of the technology world.
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At the time this article was published Eric Bleeker owns shares of no companies listed above. The Motley Fool owns shares of Intel, Apple, IBM, Google, and Microsoft. Motley Fool newsletter services have recommended buying shares of Microsoft, Apple, Google, and Intel and creating bull call spread positions in Apple, Microsoft, and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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