Tech sector earnings robust as Apple, Microsoft lead way (2)

09:57, July 27, 2010      

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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, 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.

Source: Xinhua
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