Wall Street Beat: Positive Earnings News Lifts Tech Shares
Microsoft shares hit a six-year high in an up day for the market
Fri, October 25, 2013
IDG News Service (New York Bureau) — Strong earnings news from Internet and IT vendors gave a boost to tech stocks Friday, with Microsoft shares touching a six-year high.
The Nasdaq Computer Index rose 8.28 points to 1896.93 Friday, less than 4 points shy of a 12-year high. The last time the Nasdaq Computer Index was at this level was October 2000, as tech stocks were in free fall during the dot-com bust.
A strong earnings report from Microsoft, released Thursday, helped fuel the rise in tech shares.
Microsoft reported record fiscal first-quarter sales, up 16 percent year over year to US$18.5 billion, while net income was $5.2 billion, up from $4.5 billion. The report, however, highlighted work the company needs to do in hardware and the consumer market.
Software and services revenue increased 10 percent to $11.2 billion while devices and consumer sales rose 4 percent to $7.46 billion.
The devices and consumer area included some worrying news but also some positive results. In the consumer sector, Windows OEM revenue fell 7 percent year on year, most likely at least partly due to soft PC sales worldwide. Meanwhile, though, sales for Surface tablets increased to $400 million, including a sequential increase in revenue as well as units sold.
Microsoft shares rose to $35.73 Friday, up by $2.01.
Amazon was also a focus for tech investors, after reporting on Thursday an impressive 24 percent jump in revenue year over year, to $17 billion. As it pours money into R&D, marketing and business expansion activities, Amazon, as expected, suffered a $0.12-per-share loss. However, the money appears to be well spent, as Amazon added 9 million customer accounts in the quarter, for a total of 224 million active accounts. The company expanded sales at home and abroad.
Amazon shares rose sharply Friday, increasing by $31.18 to $363.39.
Enterprise software vendors on the whole reported strong results this week. Though SAP's software sales declined, the company reported strong growth in its HANA in-memory database and cloud businesses, which analysts say is important for growth in the future. The company said Monday that quarterly revenue was up 2 percent year on year to a!4 billion (US$5.4 billion), while profit skyrocketed 23 percent to a!762 million.
On the downside, software revenue fell 5 percent from the same quarter last year to a!975 million. SAP shares rose $0.99 to $79.45 Friday.
SAP's much smaller, cloud-based competitor, Netsuite, reported a 34 percent increase in sales, to $106.9 million. The relatively young company still reports losses as it spends money to expand its business and this quarter was no exception. Its net loss for the quarter was $16.8 million, a bigger shortfall than $8 million a year earlier.