Oracle, Circuit City results weigh on market
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U.S. stocks slipped on Tuesday after disappointing financial results from software maker Oracle Corp.  and electronics retailer Circuit City  sparked worries about corporate profits and the economy.
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(InfoWorld) - This week, the biggest market declines since the Sept. 11, 2001, terrorist attacks in the U.S. caused a crisis of confidence in sectors including technology, leading IT investors to reassess what's in store for the year. Considering that most analysts are predicting moderate -- about 6.5 percent -- global growth in IT product sales this year, vendors have been riding high recently. Key technology suppliers reported better-than-expected earnings in 2006, and IT companies in general enjoyed seven straight months of market gains capped last week by a six-year high in the tech-heavy Nasdaq exchange. But share-price gains for this year were wiped out this week as a precipitous decline in Chinese markets Tuesday led to panic selling around the world. The Nasdaq closed Tuesday at 2407.86, down 96.66 points for the day and 117.08 down from its six-year high last Thursday. The question for IT is whether the decline signals an overdue correction for valuations on technology suppliers: Given the modest prospects for overall revenue growth, have investors been a little too exuberant? "Yesterday's 3-5 percent drop in the popular stock averages is a wake-up call for a market that had become far too complacent, in our view," said Banc of America Securities analyst Tom McManus Wednesday. The Nasdaq slid again Thursday asÂ Dell reported disappointing results for its fourth fiscal quarter ended Feb 2. Dell posted net income of $673 million, compared with $1.01 billion a year earlier. Revenue declined 5 percent from a year ago to $14.4 billion. Analysts polled by Thomson Financial had been expecting $14.9 billion in revenue. Despite the warnings and the grim news from Dell, however, there still appears to be underlying confidence in the tech sector. For example, traders applauded Oracle's announcement Thursday thatÂ it would buy business intelligence software vendor Hyperion SolutionsÂ for $3.3 billion. Oracle shares closed at $16.78, up by $0.35. This is a big endorsement for strength in that sector. Often, an acquiring company suffers share price declines on the assumption that a big buy will negatively affect earnings even in a healthy market. And on Thursday alone, companies in various sectors of IT received kudos from analysts in the form of stock forecast upgrades. CAD maker Autodesk was upgraded to an outperform rating by Robert W. Baird & Co.; business software developer BEA Systems was upgraded from underperform to peer perform by Bear Stearns & Co.; and telecom equipment maker Ciena was upgraded from neutral to overweight by JP Morgan & Co., which noted that the optical market continues to recover faster than expected. Soothing remarks about the overall U.S. economy from Federal Reserve Bank Chairman Ben Bernanke to Congress on Wednesday also helped prevent a further big decline in markets. He said he was still looking forward to "moderate" overall growth this year. So far, "moderate growth" has been good enough to stoke investments in IT. If that's an indication of things to come, this week's sharp declines might end up being seen as only a brief correction.
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Circuit City Stores Inc. (CC.N: Quote, Profile, Research) on Tuesday reported a 2.9 percent gain in quarterly same-store sales but its growth lagged estimates due to a calendar shift and reduced spending through August.
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U.S. stocks looked to open little  changed on Wednesday as concerns about Hurricane Ivan weighed  on sentiment, although solid earnings from Oracle Corp.  ORCL.O could help the mood among technology stocks.
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U.S. stocks fell on Wednesday as concerns about the outlook for software maker Oracle Corp.  hit technology shares and investors worried that November job growth could discourage the Federal Reserve from cutting interest rates any time soon.
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By Akweli Parker, The Philadelphia Inquirer  Sep. 21--As shares of Oracle Corp. paced gains on Wall Street yesterday  after a glowing earnings report late Tuesday, rival SAP AG scrambled to douse  incendiary remarks made at its expense by Oracle officials.
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Analysts were expecting Oracle earnings of 9 cents per share with revenue of $2.23 billion, according to Thomson First Call. New software license revenue came in at $563 billion, meeting
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Earnings season is in full swing, and results this week from bellwethers like Google, Intel, and Nokia are fueling hopes for a strong fourth quarter while confirming the investor confidence that has led to a rebound in share prices of technology vendors.All eyes were on&#160;Google, which Thursday reported another stellar quarter. For the third quarter, net income was $1.07 billion compared with $733.4 million a year ago. Revenue leaped 57 percent to $4.23 billion. The company has made some investors nervous by expanding rapidly and spending a lot of money on acquisitions to fuel growth in new areas. However, its core search business manages to ward off the competition. Google shares jumped $6.14 to $639.62 right after its announcement.Google archrival&#160;Yahoo reported a 4.6 percent decline in third-quarter profit&#160;compared to a year ago Tuesday, but revenue climbed 12 percent to $1.76 billion. Company executives said they were weeding out poorly performing services and enhancing efforts in promising areas&#160;like ad-supported music services and e-mail offerings to small businesses. The company is also expanding efforts to support third-party developers with open APIs.Even though Yahoo has been blasted for its failure to steal search ad revenue from Google, investors and analysts appear to like its strategy. Citigroup maintained a &quot;buy&quot; rating on the company while RBC maintained an &quot;outperform&quot; rating. Yahoo shares jumped $2.13 to close at $28.82 the day after the report.The market might be tougher on Internet retailers. eBay reported Wednesday that revenue climbed 30 percent but that it suffered a loss because of a $1.39 billion charge for&#160;its acquisition of Internet phone pioneer Skype. Although the company raised its 2007 revenue target, investors apparently did not like the charge for Skype, which failed to make revenue goals. Shares of eBay lost $2.50 to close at $38.10 Thursday.In one of the most-anticipated results of the week,&#160;Intel got the earnings season off to a good start Tuesday, reporting revenue of $10.1 billion, a 15 percent increase year-over-year, while achieving net income of $1.9 billion, a whopping 43 percent increase. The price competition in the market is tough, but a jump in sales and a restructuring effort appears to be paying off. Intel jumped $1.24 to close at $26.72 the day after the report.AMD did not handle the price competition so well, however. Though it registered a 23 percent rise in sales, it posted another loss. Thursday,&#160;AMD reported that its net loss was $396 million, compared with a profit of $136 million in 2006.Reaction to IBM results were mixed Tuesday, when&#160;it reported profit of $2.36 billion, compared to $2.22 billion a year ago. Revenue was $24.1 billion, a 7 percent increase from last year. Though the numbers were better than expected, a disappointing 10 percent slip in hardware sales worried investors, who pushed down IBM shares Tuesday by $3.82 to close at $115.78.Nokia managed to offset declining prices of handsets with a jump in sales. Thursday it said that for the three months ending Sept. 30, net profit increased 85 percent over the third quarter of 2006, while sales rose 28 percent. Nokia shares closed Thursday at $37.64, up by $1.11.Concerns about the U.S. economy -- because of a declining housing market and an increase in mortgage defaults -- caused shares to tumble in July and August. But judging from results this week, IT vendors were not hard hit during the quarter and investors are likely to have high expectations for the rest of the year.
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Circuit City Stores Inc. CC.N on  Tuesday reported a 2.9 percent gain in quarterly same-store  sales but its growth lagged estimates due to a calendar shift  and reduced spending through August.
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Oracle Corporationâs stock dipped in late trading despite strong profit growth because smaller-than-expected new license revenue disappointed investors.
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Circuit City Stores Inc. (CC.N: Quote, Profile, Research) , the No. 2 US electronics retail chain, on Monday reported lower quarterly sales at stores open at least
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U.S. stocks fell on Wednesday as concerns about the outlook for software maker Oracle Corp.  hit technology shares and investors worried that stronger-than-expected job growth could delay a cut in interest rates.
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(InfoWorld) - Despite financial and accounting problems at Dell Inc., Novell Inc. and Yahoo Inc., underlying faith in the software sector and a solid first-day performance on Riverbed Technology Inc.'s initial public offering indicate that the end of the year may yet reward IT investors. The early part of the third quarter proved worrisome for technology investors, as high hopes in the beginning of the year gave way to softer than expected sales and a price war for PC makers. But as the fourth quarter approaches, several brokerages have raised their forecasts for the tech sector as a whole. The lower cost of hardware is expected to spark a spending spree by both consumers and corporate buyers by the end of the year. Analysts also see pent-up demand for software. Signs of hope started appearing in August, when for example Merrill Lynch & Co. Inc. released a survey showing that 60 percent of chief information officers polled anticipated increasing software spending in the second half of the year. In addition, Lehman Brothers Inc. and Credit Suisse First Boston have recently recommended that investors take a closer look and invest in technology stocks, reasoning that declines earlier in the year have made some companies a bargain. Stoked by recommendations, the Nasdaq exchange started taking off in August after sinking to a yearly low in July. Good news continued this week, as the debut of Riverbed, a maker of WAN (wide area network) optimization technology, shone on the Nasdaq. Riverbed's (RVBD) initial public offering of 8.7 million shares priced at US$9.75 a share, above the target of $7 to $8.50 a share, and closed at $15.30 Thursday, showing confidence in the network optimization trend. On TuesdayÂ Oracle Corp. reported better-than-expected earnings. Excluding one-time charges for acquisitions, Oracle's earnings per share grew 24 percent to $0.18, better than the $0.16 consensus forecast of analysts polled by Thomson Financial. Several analysts said that Oracle's results, after a similar strong report from Adobe Systems Inc. last week, bode well for the upcoming quarter. Specifically, Oracle's strong sales for new applications and services indicate that businesses are in the mood to buy. Citigroup upgraded Oracle to "buy" from "hold," and UBS Warburg and Deutsche Bank raised their price targets. Some bad news midweek put at least a temporary halt to the Nasdaq rise. Yahoo (YHOO) shares plunged $3.25, to close at $25.75 Tuesday after it warned that slowing growth from automotive and financial services advertisers would affect revenue. The warning pushed down sales of other Internet companies as well. News that both Dell andÂ Novell face delisting from the Nasdaq also helped depress the market Thursday. Due to accounting probes, both companies delayed financial reports, which triggered delisting notices. Hewlett-Packard Co. shares, which up until this week seemed impervious to the company's growing spy scandal, finally took a hit Thursday after revelations that Chief Executive Office Mark Hurd may have known about possible illegal investigative techniques as they were being planned. HP shares (HPQ) closed at $34.87, down by $1.91 Thursday. On balance, the bad news seems company-specific, while the solid software results and the excitement sparked by Riverbed appears to speak more to underlying trends. For the hoped-for fourth quarter tech rally to really happen though, investors need to see some strong quarterly reports next month. Â
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Wall Street stocks rose on Thursday, after strong results from Oracle (NASDAQ:ORCL) raised hopes that fears of a slowdown in corporate technology spending were premature, but investment bank Bear Stearns (NYSE:BSC) suffered another weak quarter.
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Oil prices up toward $45 a barrel are  likely to mar sentiment on Wall Street on Wednesday, but solid  earnings from software giant Oracle ORCL.O looks set to  support the technology sector.
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NEW YORK - Thursday's pro-Oracle Corp. decision on the U.S. Department of Justice's attempt to block Oracle's proposed takeover of PeopleSoft Inc. could have ramifications for the broader software market: Most software stocks rose in Friday trading as investors and analysts viewed the DOJ's loss as a signal for Oracle and other software companies to go shopping for acquisitions.
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Stock futures pointed to a flat to  slightly higher market open on Tuesday, with news of a buyout  offer for electronics retailer Circuit City Stores Inc. CC.N  and healthy retail sales data lifting the mood in the retail  sector.