Mixed Results for Tech Stocks
By Lindsay Hochberg
On Friday tech stocks were mixed after the closing bell. However, Microsoft and Google beat analyst estimates for quarterly earnings, which helped the Dow turn around and gain 10 points before closing at 14,547.51. IBM and Dell fell after lackluster earnings and reports. Strong earnings from Microsoft and Google helped lift the indices.
Microsoft shares rose 3.4% after it reported better than expected results. This was the first full quarter report that included sales of its Windows 8 system, and the report did not disappoint. Earnings were up 19% from where they were a year ago. The company reported growth in all of its divisions. Yet, Microsoft also reported that CFO Peter Klein will resign from his position at the end of the year. Despite the positive economic data, this news did not sit well with some investors. Although much of the data was positive, it is no secret that Microsoft has been struggling with its main frame computer business. In fact, if reports did not include “deferred revenue”, Microsoft would have reported zero growth in the last quarter. Investors worry that the struggle to pick up sales may result in the CEO’s departure in the coming months. Following Microsoft’s lead, Google’s stock rose 3% to $799.97 reported strong revenue from increasing the price of advertisements on smartphones and tablets.
On the other hand, IBM dropped 8.3% to $190 per share on Friday; its most dramatic loss in eight years. The drop wiped away previous gains to the stock price during 2013. Analysts expected $3.05 profit per share, although first quarter results missed with a reported at $3.00 profit per share. Due to IBM’s large weight on the Dow, it initially pushed it down 130 points. However, this was offset by gains in other tech giants and performance in other sectors.
Dell fell upon the news that Blackstone would not place a bid for the company, as Blackstone was previously expected to do. Shares fell below the $13.65 target price initially presented by Silver Lake partners back in January. Blackstone ultimately decided to not proceed with negotiations after it realized that Dell was not doing as well as it thought. During the first quarter of this year, it experienced at 14% market decline in PC sales, and this casts an ominous cloud on opportunities for future growth.
Sources: http://dealbook.nytimes.com/2013/04/18/blackstone-seen-abandoning-bid-for-dell/
http://www.nj.com/business/index.ssf/2013/04/stock_market_recovers_microsof.html