It’s the first big earnings day in tech world, and the market is already separating the winners from the losers.
As discussed last week, the company is benefiting from growing demand for corporate cloud storage data centers. And unlike some of the more commodity aspects of the memory business, Sandisk’s proprietary technology helps win sales. Of course, selling commodity goods can work out too, and Sandisk also got help from rising memory prices in the quarter.
Bigger names didn’t fare as well. Intel (INTC) and eBay (EBAY) projected slow or no revenue growth for the rest of the year. As mentioned last week, emerging markets are decreasing IT spending dramatically, as are many big corporations. The strong dollar also reduces the value of sales abroad. And, obviously, when the PC market suffers, Intel gets hit harder than most.
Shares of Intel dropped 4% after-hours, while eBay fell 6%.
International Business Machines (IBM) took a pre-earnings hit two weeks ago, when analysts at Goldman Sachs warned about some of those painful global IT trends. Sure enough, IBM’s revenue from services and hardware decreased in the second quarter from a year earlier. Only software increased.
As foreshadowed in the analysts’ warning, IBM saw zero revenue growth in its "growth markets," also known as emerging markets. But earnings per share were OK thanks to cost-cutting. The company announced it would take a $1 billion write-off for downsizing, and it raised its full-year profit target.
IBM shares gained about 2% in extended trading.
Still, after-hours trading can be misleading. Many more investors will weigh in on Thursday after having additional time to digest the reports and conference calls with analysts.
But so far, the long, hot summer for tech companies doesn’t seem to be getting any easier.