Technology Stocks Under Pressure as Apple and eBay Temper Expectations

Strategic Insights -

Technology investors on Wall Street were bracing themselves for another difficult day after a string of disappointing results from major tech companies. Apple Computer and eBay tempered expectations for growth in the current quarter, sending their shares plummeting in after-hours trading. The cautious comments from the companies came on the heels of dire results from Intel and Yahoo, which both posted fourth-quarter numbers that fell short of forecasts.

Key Takeaways:

  • Apple's fiscal first-quarter profits nearly doubled to $565 million, with sales rising 64% to $5.7 billion, driven by strong sales of iPods and Macintosh computers.
  • However, the company offered revenue guidance of around $4.3 billion for the current quarter, below the average analyst forecast of $4.8 billion.
  • eBay reported a 36% gain in profits for its fourth quarter to $205 million, with sales rising 42% to $1.3 billion.
  • Yahoo's fourth-quarter profits, excluding one-off gains, came in at $247 million, up from $187 million in the same period a year earlier.
  • Yahoo's revenue was up 36% to almost $1.5 billion in the fourth quarter, with full-year revenue hitting $5.3 billion, a 47% increase on 2004.
  • Intel's shares fell 11% to $22.60 after posting fourth-quarter results that fell short of forecasts.
  • Google's shares dropped 3.5% to $450.64 after a brokerage, Stifel Nicolaus, changed its rating on Google from "hold" to "sell".

Statistics:

  • Apple's fourth-quarter revenue guidance: $4.3 billion
  • Average analyst forecast for Apple's fourth-quarter revenue: $4.8 billion
  • eBay's fourth-quarter profits: $205 million (up 36%)
  • eBay's fourth-quarter revenue: $1.3 billion (up 42%)
  • Yahoo's fourth-quarter profits (excluding one-off gains): $247 million (up 32% from $187 million in the same period a year earlier)
  • Yahoo's fourth-quarter revenue: almost $1.5 billion (up 36%)
  • Yahoo's full-year revenue: $5.3 billion (up 47% from 2004)
  • Intel's fourth-quarter revenue: $10.9 billion (short of analyst forecasts)
  • Intel's fourth-quarter profits: $1.13 billion (short of analyst forecasts)

Sources:

  • Bloomberg
  • The Wall Street Journal
  • Reuters
  • Yahoo! Finance
  • Google Finance
  • Intel's 2005 fourth-quarter earnings report
  • eBay's 2005 fourth-quarter earnings report
  • Apple's 2005 fiscal first-quarter earnings report
  • Yahoo!'s 2005 fourth-quarter earnings report