Investor optimism was high ahead of last week's major tech reports,
although investors may have set themselves up for a fall. "The bar has been
set pretty high for the fourth-quarter earnings, and it has been set pretty
high for the tone for 2004," said Peter Gottlieb, president of Gottlieb
Investment Management Corp., to Reuters News. Software stocks were the early
tumblers, after German software titan SAP posted a 3% drop in quarterly
software revenues, dragging Oracle and Siebel Systems down with it. Then,
further pressure erupted on the back of strong earnings across the sector.
Intel handily beat Street expectations, but some were disappointed that its
current-quarter revenue outlook is not forecast to beat this past quarter's.
The same fate befell Internet titan Yahoo, as investors punished the stock
partly due to a cautious 2004 revenue outlook. Apple Computer also suffered on
lower gross margins. Still, through the slumping stock prices, Big Blue came
to the rescue. "With the techs that did give out their earnings today, there
was a little disappointment, but, on the other hand, we had IBM come out with
flying colors," commented Taai Izushima, head trader for Daiwa Securities
America, to Reuters News. However, it was not only the strength of IBM's and
Sun Microsystems' financial releases that impressed the Street, but also the
underlying trends that led them to those figures. IBM indicated that orders
are being placed by big customers, and CFO John Joyce said that he expects
industry growth to resume in 2004. Sun noted that customers in the
telecommunications sector have resumed buying. Market watchers are eager to
read more insightful financial releases like these, perhaps from Microsoft,
which reports this week. Only then will investors feel really secure in the
quality of earnings being presented to them and that could also set the tone
for 2004 (or at least until next earnings season).
High-Tech Monday Update is provided courtesy of Thomson Financial. This
information is believed to be true and accurate; we take no responsibility for
inaccurate information and reserve the right to update our reports. For more
information, please visit our web site at http://www.thomson.com/financial.
SOURCE Thomson Financial
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