Major Tech Earnings Releases on Apr 26: AAPL, TWTR & AKAM
Next week there will be a flurry of reports coming in as we head into the peak of the earnings season. Nearly 175 S&P 500 members are scheduled to post their financial numbers for the just concluded quarter, of which a fair chunk will be from the technology space. Technology is one of the most watched sectors. Owing to its dynamic nature, there are chances of greater returns and even more possibilities of bitter losses.
With macroeconomic conditions still soft, earnings growth is projected to be negative for 10 of the 16 Zacks sectors (as of Apr 20). Even tech earnings are expected to be down 5.8% in the first quarter, though sales are expected to grow a modest 2.3% over the last year.
This Tuesday, i.e. Apr 26, will see reports from tech bellwethers like Apple AAPL, Twitter TWTR and Akamai Technologies AKAM. Let’s have a look at how these players are poised ahead of the scheduled announcements.
Apple has rescheduled its second-quarter fiscal 2016 earnings to Apr 26. Since the last quarter, the company has been striving to revive stagnating iPhone sales (its most important revenue contributor). This Zacks Rank #3 (Hold) company has a negative Earnings ESP, which makes it difficult to conclusively predict an earnings beat this quarter. Even with a rebounding Chinese economy and increasing iPhone prices, there are mixed expectations regarding iPhone sales in the quarter. (Read: Apple Q2 Earnings: What to Expect this Time Around?).
Akamai Technologies, a prominent content delivery network provider, has been going through a rough time owing to the weakness in its Media delivery business. Moreover, this time, the company has lost two of its large customers, Apple and Netflix, which is expected to have some negative impact on its financials. Moreover, Akamai has an Earnings ESP of -1.96%. Nonetheless, a new organizational structure and rising demand for mobile Internet are positives for the company. (Read: Akamai to Report Q1 Earnings: Will it Miss this Time?).
Twitter, the much loved and at the same time much criticized micro blogging platform, has been battling a flagging user base and the ongoing executive shuffling. Though investor sentiments have improved after co-founder Jack Dorsey took the helm to direct the company’s growth path, it still has a long way to go. This is especially because of increasing competition from its social media peers, Facebook and Google. Nonetheless, the recent initiatives taken by the company to improve its engagement and monetization levels will likely have some positive effect on its financials. Twitter has a Zacks Rank #3 and an Earnings ESP of 0.00%. (Read: Can Twitter Pull a Surprise this Earnings Season?).
Bottom Line
Though the global market has been seeing growth issues, companies are reporting better-than-expected numbers, thanks to low expectations.
As such not all hope is lost for these tech stocks as the market has already adjusted the prices (and their expectations) for this uncertain environment. This leaves ample scope for a possible earnings beat. Traditionally, tech sector prices have been responsive to earnings surprises and we might be in for some unexpected ones as well!
Stay Tuned! Check later on our full write-up on earnings releases of these stocks.
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