Global economies may be faltering on their way to recovery, but the technology sector has kept its pace, showing high sales numbers on increased demand. As companies unveil their quarterly financial results this week, tech stocks and related exchange traded funds (ETFs) may start to look more appealing. For the last three months, they’ve been down about 8% on average.
Chip giant and industry bellwether Intel (NASDAQ: INTC) reported that sales jumped 35% to $10.8 billion, with earnings of 51 cents per share, which was way above Wall Street’s estimated 43 cents per share, writes Carl Gutierrez for Forbes. Intel projects third-quarter sales to be in between $11.2 billion to $12 billion, ahead of Wall Streets $10.9 billion estimates. [ETFs Hit the Pause Button Ahead of Earnings Season.]
So far, the only laggard on the good news was Apple (NASDAQ: AAPL), which slipped after Consumer Reports’ bad review on the iPhone 4’s bad antenna signal. Apple’s earnings report will be out next week.
The robust earnings results from Intel points to increased spending by consumers and businesses, a good signal for a broader economic recovery, remarks Sam Gustin for DailyFinance. Analysts comment on Intel’s position for capitalizing on corporations’ upgrades of their computer systems and growth from emerging market consumers. [Russia Upgrading Technology, Too.]
According to Don Clark and Pui-Wing Tam for The Wall Street Journal, there are a number of factors behind the continued sector growth:
- Personal computer sales are still going strong despite predictions of a slowdown. Laptop sales have also increased as lifestyle changes have made more people use computers on the go.
- Apple sold 1.7 iPhones 4s in the first five days after the smartphone hit the market, and the company also sold more than 3 million iPad devices in less than three months.
- Market-research firms say the strong demand is raising prices and shortages for key tech components.
- Market researcher Gartner Inc. projects chip-manufacturing equipment producers will experience a 113.2% increase in capital spending for 2010.
- Initial stock offerings and acquisitions of tech companies are up. Investments by venture capitalists was up 12% in the first quarter.
- Increased online activity and usage of social-networking sites have also raised online-advertising revenues.
Other earnings numbers due out soon will be coming from Google (NASDAQ: GOOG), SanDisk (NASDAQ: SNDK), Advanced Micro Devices (NASDAQ: AMD) and Texas Instruments (NASDAQ: TXN).
- Technology Select Sector SPDR (NYSEArca: XLK)
- iShares Dow Jones U.S. Technology (NYSEArca: IYW)
- Vanguard Information Technology (NYSEArca: VGT)
- iShares S&P North America Technology (NYSEArca: IGM)
- PowerShares QQQ (NYSEArca: QQQQ)
- First Trust NASDAQ-100 Technology (NASDAQ: QTEC)
- SPDR Morgan Stanley Technology (NYSEArca: MTK)
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.