Thursday, January 22, 2009

Apple Beats Earnings and Other Tech Highlights

Forget gold, the only store of value in this market is the iphone.  The economy can't be all bad if consumers are still choosing to spend hundreds of dollars on a fancy iphone when they can get a stripped down cell phone for free.  Apple gave a much-needed boost to the market by posting solid earnings and offering decent guidance for the current fiscal quarter.  The company reported net income for the quarter ended Dec. 27, 2008 of $1.61 billion or $1.78 a share.  Apple noted that it expects earnings of 90 cents to $1 a share on revenue of $7.6 billion to $8 billion, somewhat below consensus estimates, but not horrible, which is considered fabulous news in this economy.  Still, Steve Jobs' health problems are a big risk for investors, particularly as the company is now being prodded by the SEC for disclosure issues related to his health.  More than almost any company, Apple's success hinges on Mr. Jobs' unique vision and leadership skills.    
Meanwhile, over at Ebay, things aren't looking as rosy.  One would think that a brutal recession would cause more and more consumers to buy used crap from random people online rather than anything that's for sale at Neiman Marcus but Ebay shoppers are pulling back.  The company lowered guidance for the first quarter.  Revenues are now expected in the range of $1.8 billion to $2.05 billion, with earnings expected in the $.21 to $.23 range, far below analysts estimates.  Note to analysts:  Throw a few more darts at that dart board and try again. 
Intel and Microsoft announced cost cutting measures.  Intel plans to consolidate manufacturing and close 5 factories which will affect 5,000 to 6,000 employees.  Microsoft, set to report earnings today, is expected to announce cost cutting measures as well.  Analysts expect the company to reduce full-time positions and cut contract workers and outside vendors.  This from a company that has roughly 90% margins and massive cash pile-ups every quarter because it doesn't know what to do with all that money.  But that will be the theme for the year:  Cut some costs, hunker down, and try to survive the brutal downturn.  

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