High-Tech Stocks Surge as Microsoft and Compaq Exceed Expectations

Strategic Insights -

High-tech companies, led by Microsoft and Compaq, exceeded earnings expectations in the latest quarterly reports, sending stock prices soaring. Microsoft announced a 58% increase in profit, selling seven million copies of its Windows 95 operating system. Compaq reported a 22% jump in income, driven by strong demand for personal computers. Other industry leaders, including Intel and Sun Microsystems, also delivered upbeat earnings reports.

Key Takeaways:

  • Microsoft reported earnings of $499-million, up 58% from $316-million a year ago, with sales jumping 62% to $2.02-billion.
  • Compaq's income jumped 22% to $245-million, with sales swelling to $3.6-billion from $2.8-billion a year ago.
  • Intel reported a 41% increase in profit, with sales rising 46% to $4.2-billion.
  • Sun Microsystems' earnings were nearly a third higher than analysts expected, with the company earning $84.7-million, almost double its earnings from the same period a year ago.
  • IBM's loss was largely due to its acquisition of Lotus Development Corp., with the company reporting a loss of $543-million, or 96 cents a share, after taking a $1.8-billion charge.
  • Microsoft's release of Windows 95 helped fuel Wall Street's enthusiasm for high-tech stocks earlier in the year.
  • Analysts praised the strong earnings reports, citing continued cost reductions and growth in new markets as key drivers of the companies' success.

Statistics:

  • Microsoft sold seven million copies of Windows 95 during the quarter.
  • Compaq's revenue increased more than 16% in the third quarter, with unit shipments growing 9%.
  • Intel's profit increased 41%, with sales rising 46% to $4.2-billion from $2.9-billion a year ago.
  • Sun Microsystems' earnings were nearly a third higher than analysts expected, with the company earning $84.7-million, almost double its earnings from the same period a year ago.
  • IBM's profit rose to $1.3-billion, or $2.30 a share, excluding its purchase of Lotus Development Corp.
  • IBM plans to take an additional charge of $800-million in the fourth quarter to pay for continuing expense reductions.

Sources:

  • Bloomberg: [Microsoft Corp. capping a string of buoyant earnings reports from many of the world's major high-technology companies]
  • Bloomberg: [Compaq says third-quarter income jumped 22%]
  • The Globe and Mail: [Microsoft Windows 95 helps high-tech stocks shrug off earnings worries]
  • The Globe and Mail: [IBM reports loss, but shares rebound after earnings announcement]
  • The Globe and Mail: [Intel's profit jumps 41%]
  • The Globe and Mail: [Sun Microsystems' earnings beat expectations]