Wall Street Beat: Tech results mixed, but show areas of strength

IPOs by Kayak and Palo Alto Networks do well Friday despite economic headwinds

By , IDG News Service |  IT Management

Quarterly earnings from some of the biggest tech companies in the world this week were decidedly mixed, but showed some signs of strength, particularly in enterprise IT spending.

Tech vendors with exposure to the hardware market have suffered as sales of PCs flatten out in the face of competition from Web-connected mobile devices and economic uncertainty, especially in Europe.

"As we look ahead at to the second half of the year, consumer market growth in Western Europe and North America is not forecasted to recover as fast as we had anticipated. Worldwide enterprise demand is growing as expected," said Intel CEO Paul Otellini on the company's earnings conference call Tuesday, according to a Seeking Alpha transcript. "We are now expecting full-year revenue growth in the 3% to 5% range versus our prior expectation of high single digits."

For the second quarter ending in June, Intel's net profit was down 4 percent year over year to US$2.8 billion. Nevertheless, revenue was $13.5 billion, up 3 percent.

Intel rival Advanced Micro Devices on Thursday said that quarterly profit declined 40 percent year over year to $37 million. Revenue dropped 10 percent to $1.41 billion. AMD CEO Rory Read lay the blame on flagging growth in China and Europe and a weak consumer PC market.

Company officials forecast current quarter revenue to be anywhere between 2 percent growth to a 4 percent decline from the second quarter.

The other big disappointment this week was Nokia's earnings announcement Thursday, when it reported a 19 percent year over year decline in revenue, to ¬7.54 billion (US$9.5 billion). Its net loss worsened, to ¬1.53 billion from ¬492 million a year earlier.

Though the smartphone market is booming for Apple and Android-based devices, Nokia is playing catchup in the market for higher-end devices. The company is pinning its hopes on convincing developers and operators to create a "third ecosystem" in the smartphone market, making room for Windows Phone devices. But Nokia forecast that the operating loss in its phone business will continue at the same level through the third quarter, possibly worsening.

Some analysts still insist that Nokia is making good choices, however.

"The release of Windows 8 across multiple platforms, including the new Surface tablet, will provide the consumer with more exposure to OSs unique features and benefits, and will give the boost in sales that Nokia needs," said Informa Telecoms & Media analyst Julian Jest in an email report.

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