Google and Apple resist tech stock's downwards spiral
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While profit forecasts have become a luxury of the past, and technology giants Microsoft, Nokia and Sony warn of more pain to come, Apple and Google managed to cheer their investors.
Top technology firms Microsoft, Nokia and Sony warned on Thursday of plummeting demand and pain to come as consumers rein in spending amid a brutal global economic downturn.
Microsoft, raising worries over how it would fare in the economic slowdown, said it would cut up to 5,000 jobs over the next 18 months and that it could no longer offer profit forecasts for the rest of the fiscal year. The stock was among the Dow's biggest drags on Thursday, falling 8 percent.
Richard Sparks, a senior equities analyst at Schaeffer's Investment Research, told Reuters that the announcement “is a negative surprise for the market, certainly from a bellwether technology company. For Microsoft to miss its guidance, it brings home the pervasive fallout from the credit crisis,"
Meanwhile, Intel Corp. announced it would close manufacturing plants in Malaysia, the Philippines and Oregon as part of a restructuring that affects as many as 6,000 employees. The announcement comes a day after the world's largest maker of microprocessors slashed prices on a number of its products, and a week after it reported a decline in fourth-quarter revenue amid slower global demand.
Adding to the gloomy picture, Nokia, the world's leading mobile phone maker, on reported a more than 60-percent drop in its fourth quarter net profit to 576 million euros (749 million dollars) amid falling sales and lower prices for its handsets. This is the fist time in more than six years that cell phone sales have contracted. Japan's Sony, maker of Bravia flat TVs, Cyber-shot digital cameras and PlayStation games machines, said it would post a bigger-than-expected $2.9 billion operating loss this business year.
By contrast, Apple Inc's quarterly profit beat expectations on strong iPod and Mac computer sales, and the company gave an outlook that cheered investors, sending its shares up 9.5 percent on Wednesday.
The results cap a tumultuous few weeks for Apple, which is facing increased headwinds from slumping consumer spending, as well as investor concerns about management succession after Chief Executive Steve Jobs said he would take a medical leave of absence until the end of June.
Google Inc posted strong fourth-quarter earnings on Thursday, beating Wall Street forecasts, as its Web search advertising business remained strong despite a bleak economy. Excluding one-time charges, profit rose to $5.10 a share,
compared with Wall Street's target of $4.95 according to Reuters Estimates. Most significantly, Paid clicks -- a measure of how often Google gets paid for advertisements alongside its Web search results -- rose 18 percent from the year-ago quarter and 10 percent from the third quarter.
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