Week Ahead: Major Tech Ignoring Pre-Earnings Warnings (INTC, EBAY, IBM, QCOM, GOOG, MSFT, NOK, SNDK, AAPL)

Apps & Software

Published: July 13, 2012 1:51 pm

Last Updated: April 28, 2020 9:37 am

Friday has been a stellar day based upon reaction to the major bank earnings reports and due to reports that China’s GDP maintained a growth rate of 7.6%. What is amazing is that the market has ignored more cautious news out of Europe, it has ignored an uptick in inflation, and it has ignored a very negative consumer sentiment report. Investors bid up shares of technology (and just about everything else) on Friday. A reminder has to be made that we have witnessed wave after wave of major technology companies issuing earnings warnings and revenue warnings ahead of the earnings in the week ahead.

While we did not use the Lexmark International (NYSE: LXK) major shortfall nor the warning from Infosys Ltd. (NASDAQ: INFY) in the report, we just highlighted a dozen or so recent key technology earnings and sales warnings from major component makers. It seems impossible to think that one day of great bank earnings can allow the technology sector to escape unscathed. The calendar is also working against technology as this is the summer. Still, the market trading is telling us that there have to be at least some tech outfits that may not fall victim of the global slowdown.

24/7 Wall St. has highlighted earnings previews and added color on the following major technology earnings reports: Intel Corporation (NASDAQ: INTC); eBay Inc. (NASDAQ: EBAY); International Business Machines Corporation (NYSE: IBM); QUALCOMM Inc. (NASDAQ: QCOM); Google Inc. (NASDAQ: GOOG); Microsoft Corporation (NASDAQ: MSFT); Nokia Corporation (NYSE: NOK); SanDisk Corporation (NASDAQ: SNDK); and also for Apple Inc. (NASDAQ: AAPL). Estimates and targets are taken from Thomson Reuters.

Intel Corporation (NASDAQ: INTC) reports on Tuesday July 17 after the close. We recently saw only a slight downgrade after the smaller rival of Advanced Micro Devices Inc. (NYSE: AMD) gave a nasty revenue warning due in part to slowing international and OEM demand. Earnings estimates are $0.52 EPS and $13.57 billion in sales, and the following quarter estimates are $0.65 EPS and $14.66 billion in sales. Intel shares were up 1.6% at $25.15 late on Friday against a 52-week range of $19.16 to $29.27 and its consensus price target is 29.29.

eBay Inc. (NASDAQ: EBAY) reports on Wednesday, July 18 after the close. The near-monopoly in online auctions for consumers is expected to report earnings of $0.55 EPS and $3.36 billion in sales; next quarter estimates are $0.55 EPS and $3.42 billion in sales. We have spoken with auctioneers and seen how many auctions are going at disappointing prices of late. With a poorer and poorer consumer sentiment, can eBay really expect to be immune even if it is a virtual online auction monopoly? eBay shares were up 1.2% at $39.79 late on Friday against a 52-week range of $26.86 to $43.94. The consensus price target is $44.28.

International Business Machines Corporation (NYSE: IBM) reports on Wednesday, July 18 after the close. Estimates are $3.43 EPS and $25.35 billion in revenues; next quarter estimates are $3.62 EPS and $26.36 billion in revenues. As always, we will focus on that order backlog. IBM was up 1.5% at $185.85 against a 52-week range of $157.13 to $210.69. The consensus price target is $214.05.

QUALCOMM Inc. (NASDAQ: QCOM) reports on Wednesday, July 18 after the close. Estimates are $0.86 EPS and $4.68 billion in revenue; next quarter estimates are $0.89 EPS and $4.91 billion in revenue. QUALCOMM was up 2.4% at $55.01 late on Friday with a 52-week range of $45.98 to $68.87. The consensus price target for QUALCOMM is $70.65.

Google Inc. (NASDAQ: GOOG) reports on Thursday, July 19 after the close. Estimates are $10.05 EPS and $8.55 billion in revenue; next quarter estimates are $10.77 EPS and $9.21 billion in revenue. Google shares were up “only” 0.8% at $575.00 late on Friday with its 52-week range being $480.60 to $670.25. Google’s consensus price target is $736.40.

Microsoft Corporation (NASDAQ: MSFT) reports on Thursday, July 19, 2012 after the close. Estimates are $0.62 EPS and $18.16 billion in revenue; next quarter estimates are $0.66 EPS and $17.62 billion in revenue. Microsoft shares were up 2.05% at $29.22 late on Friday with a 52-week range of $23.79 to $32.95. The consensus price target for Microsoft is $35.63.

Also Read: Microsoft Warns Online Services Running Soft

Nokia Corporation (NYSE: NOK) reports on Thursday, July 19, 2012 in the early hours of the morning as it is a Finnish company. Estimates are -$0.11 EPS and $9.38 billion in revenue; next quarter estimates are -$0.08 EPS and $9.43 billion in revenue. We would caution that the estimates are higher in the next quarter and also that international currency fluctuations are likely very volatile for this Finnish company. Nokia shares were down 2.5% at $1.832 late on Friday against a 52-week range of $1.77 to $7.38. Nokia is dying under competition. The consensus price target is “who cares!”… really.

SanDisk Corporation (NASDAQ: SNDK) reports on Thursday, July 19, 2012 and estimates are $0.19 EPS and $1.01 billion in revenue; next quarter estimates are $0.35 EPS and $1.22 billion in revenue. The independent king of flash memory now has stronger competition from Micron Technology Inc. (NASDAQ: MU) and SanDisk has been talking numbers down. SanDisk shares were basically flat at $33.41 late on a very strong Friday with a 52-week range of $30.99 to $53.46, indicating that investors are not looking for a real upside surprise. The consensus price target is almost $44.00.

Apple Inc. (NASDAQ: AAPL) is going to be very late this quarter with earnings as it will not report earnings until Tuesday, July 24, 2012. Again, that is the following week. Apple is expected to report earnings of $10.39 EPS and $37.41 billion in revenue. For the following quarter it sees $10.32 EPS and $38.34 billion in sales. The new iPad launch in China will not be reflected in this last quarter as it was a July launch. Apple was up “only” 1% at $604.90 late on Friday against a 52-week range of $353.02 to $644.00. The consensus price target is almost $727.00 for Apple.

All estimates and consensus valuations were provided by Thomson Reuters, and these can and likely will change as we get closer to each earnings report.

JON C. OGG

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