Roundup: Tech sector earnings robust as Apple, Microsoft lead way
Monday, July 26, 2021 5:10 PM

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SAN FRANCISCO, Jul. 26, 2010 (Xinhua News Agency) -- The past week saw several key earnings calls from big players in the technology industry including Apple, Amazon, AT&T (NYSE:SBT) (NYSE:T) , Microsoft (NASDAQ:MSFT) and Verizon (NYSE:VZ) , with both Apple and Microsoft announcing record quarterly sales.

Overall robust earnings reports from the high-tech sector contributed to a strong finish in U.S. stocks in the past week.

The Nasdaq composite index, home to many technology heavyweights, was up nearly four percent for the week, closing at 2,269.47 points by the end of the trading bell on Friday.

In addition, the Dow Jones industrial average was up more than 326 points, closing at 10,424.62 points. The Standard & Poor's 500 index treaded into 1,110-plus points territory for the first time this month, closing at 1,102.66 points.

Apple last Tuesday reported third quarter revenue of 15.7 billion U.S. dollars, an increase of more than 60 percent compared to the same time last year, representing a record quarterly high in Apple's history.

Following Apple's after-hours call on Tuesday, the company's stock price jumped more than five percent, opening at 265.09 U.S. dollars on Wednesday morning.

Apple's sales were driven by healthy demand of the company's line of Macintosh computers, iPhones, and the company's newest product line, the iPad. Since its launch in April, more than one billion dollars worth of iPads and iPad accessories have been sold, accounting for approximately eight percent of Apple's total sales this quarter.

"We're selling them as fast as we can make them," said Apple's chief operating officer Tim Cook, signaling continuing demand for the product.

The launch of the iPhone 4 also contributed to the company's earnings this quarter. More than 1.7 million units were sold before results for the quarter closed on June 27, just three days after the phone's launch.

Apple's net income for the quarter totaled 3.25 billion dollars, or 3.51 dollars per share. Analysts had expected earnings of 3.11 dollars per share for the quarter.

On Thursday, software giant Microsoft also announced record revenue for its fiscal fourth-quarter, based primarily on strong sales of the company's Windows 7 operating system.

On its call with investors, Microsoft posted 16.04 billion dollars in sales for the most recent quarter, representing a 22- percent increase from the same period last year and beating analysts' expectations by nearly 11 percent.

The company's "strong revenue performance was both broad and deep," Peter Klein , Microsoft's chief financial officer, said on the conference call.

Microsoft's net income for the quarter totaled 4.52 billion dollars, or 51 cents per share. Analysts had expected earnings of 46 cents per share for the quarter.

Despite these numbers, Microsoft's stock price remained essentially flat in after-hours trading following the announcement. It opened the next morning at 25.84 dollars, down half a percent from its high the day before and peaking at 26.02 dollars during trading hours on Friday.

"Part of it is simply the law of large numbers. It's hard to meaningfully grow revenue from a base of 60 billion dollars (of annual sales)," said Matt Rosoff, an industry analyst with Directions on Microsoft, in an interview with USA Today.

"Part of it is Windows and Office are mature products, and Microsoft hasn't demonstrated spectacular earnings growth from its newer businesses," said Rosoff.

While Apple and Microsoft's record earnings stole headlines in tech this past week, telecommunications corporations AT&T and Verizon also reported earnings that beat expectations, boosted largely by the growing demand for smart phones.

AT&T management reported a 26-percent increase in profits over the same time last year, reporting net income of 4.02 billion dollars, during a conference call on Thursday.

This translated into earnings of 68 cents per share, beating analyst expectations of 57 cents per share. The company's stock was up nearly two percent at its peak and closed at 25.51 dollars on Thursday.

Verizon's quarterly sales of 26.8 billion dollars fell slightly short of Wall Street expectations of 27 billion dollars, but the telecom giant reported adjusted net income figures that placed its earnings at 58 cents per share, ahead of the analyst estimates of 56 cents per share.

Following management's conference call on Friday morning, Verizon's stock price rose 1.3 percent and closed at 28.02 dollars.

Earnings, however, proved disappointing for e-commerce giant Amazon.com, which reported profit of 45 cents per share on Thursday. The number fell short of analyst expectations of 54 cents per share and sent the stock trending downward.

Amazon reported a 41-percent increase in sales over the same period last year, raking in 6.57 billion dollars in revenue during its second quarter, slightly beating analyst predictions of 6.54 billion dollars.

Following its after-markets call, Amazon's stock price tumbled 13.3 percent, opening at 105.93 dollars on Friday morning. Investors, however, showed signs of increased confidence throughout trading on Friday and the stock closed the week at 118. 87 dollars, up slightly from its 118.38 dollars open at the start of the week.

 

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