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Technology sector earnings started on a weak note yesterday as both Intel and IBM failed to impress the investors. The weakness was more evident in the revenue lines.
Both these companies are seen as bellwethers for the industry. And weak results/guidance show that the businessesworldwide are hesitant about spending on technology in view of the weak global macroeconomic environment. (Inside the Top Zacks ETF Ranked Technology Fund)
Intel actually beat the earnings expectations but since the company had reduced its revenue guidance last month, the investors were not impressed by the beat; they rather focused on guidance for the fourth quarter, which was below expectations. In addition to the economic woes, the company is also hit by the shift of consumers’ preference towards tablets. The stock is trading about 3% down today.
IBM’s earnings as well as revenue missed Zacks consensus estimates and the full-year guidance was also below current consensus. It was the fifth consecutive quarter of revenue decline for IBM. The results were also impacted by adverse currency translation. IBM is almost 6% down today.
The results’indicate growingpains for large multi-national companies due to the recession in Euro-zone and slow-down in the emerging markets. We may see more of lower revenue reports and weaker guidance for the fourth quarter and beyond in the coming days.
Do these earnings worry you?
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