Another eBay fees increase coming?
- From: "Kelvin" <kelvinyany@xxxxxxxxx>
- Date: 18 Jan 2006 22:18:52 -0800
Apple, eBay outlooks fail to meet expectations
By Daisuke Wakabayashi1 hour, 59 minutes ago
Apple Computer Inc. (Nasdaq:AAPL - news) and eBay Inc. (Nasdaq:EBAY -
news) on Wednesday joined Yahoo and Intel on the list of tech
heavyweights that failed to live up to investor expectations for their
outlooks.
Shares of Apple and eBay fell in after-hours trade.
But component makers Advanced Micro Devices Inc. (NYSE:AMD - news) and
Seagate Technology (NYSE:STX - news) gave strong forecasts.
Investors were hesitant to dismiss the prospects for the entire sector,
instead blaming lofty earnings expectations and rich share price
valuations.
"It's not that tech earnings are specifically weak, but some investors
just got a little ahead of themselves as far as where earnings
estimates were going to go," said Bill Kornitzer, portfolio manager at
Buffalo Funds.
It marked a second straight day for bad news from technology
bellwethers. Investors punished Yahoo Inc. (Nasdaq:YHOO - news) and
Intel Corp. (Nasdaq:INTC - news) on Wednesday after they missed
estimates and made soft projections on Tuesday.
Apple forecast current-quarter results below Wall Street expectations,
saying in the holiday quarter it had seen a small pause in demand for
Mac computers ahead of its shift to Intel microprocessors. Shares of
Apple fell 3 percent in after-hours trading.
Apple's net income in the first fiscal quarter ended in December nearly
doubled from a year earlier to $565 million, or 65 cents per share,
from $295 million, or 35 cents per share, on a split-adjusted basis.
The stock had gained almost 15 percent since the end of 2005,
reflecting the optimism for continued strong demand of its iPod music
player.
"They had to do this to reset expectations -- things had gotten a
little out of hand. I think that it was the prudent thing to do," said
Shaw Wu, analyst at American Technology Research.
For the current quarter, Apple forecast earnings per share before items
of 42 cents on revenue of $4.3 billion. Analysts had expected the
company to earn a profit before items of 51 cents per share, on
average, on revenue of $4.83 billion.
EBay's fourth-quarter results beat analysts' expectations by two cents,
but its decision to stand pat with its 2006 outlook for profit of 96
cents to $1.01 a share worried some investors about its future growth
prospects.
"I am pretty cautious at this point," said Martin Pyykkonen, analyst at
Hoefer & Arnett. "It's not just this quarter, but a belief that the
growth at the core online U.S. auction market will decelerate as we go
through 2006."
Shares of eBay slid 2.6 percent in after-hours trade.
AMD IS BRIGHT SPOT
AMD, the No. 2 maker of microprocessors, posted a 45 percent increase
in fourth-quarter revenue from strong sales of chips for PCs and
servers, while continuing to grab share from rival Intel.
The company also issued a bullish outlook for its first quarter, saying
it expected sales to rise nearly 70 percent from a year earlier.
Hard-disk drive maker Seagate nearly doubled quarterly profit and
lifted its full-year earnings outlook on the back of growing demand for
notebook computers and consumer electronics.
In after-hours trade, shares of AMD rose 11 percent, while Seagate
gained 6 percent.
Investors said the dichotomy between good and bad forecasts underscored
the need for tempered expectations and selectivity within the
technology sector, a shift that could favor more established names like
IBM (NYSE:IBM - news) and Cisco Systems Inc. (Nasdaq:CSCO - news)
"This could be the start of a flight to safety within the sector," said
Tom Mahowald, director of equity research at U.S. Bancorp Asset
Management.
Mahowald expected strong industrial spending this year to spread to the
technology sector, but also favored companies with exposure to mobile
phones and other consumer-targeted products.
Others said technology spending will not lift all boats and that is
causing some concern.
"People are getting are little antsy," said Kornitzer of the Buffalo
Funds. "Spending for technology is going to be very product specific
and very choppy."
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