Monday, January 25, 2010

The Tech Quandary

Google continued a curious phenomenon when it unveiled its earnings last week. Like a lot of other tech companies this quarter, Google reported very strong earnings, up roughly fivefold from the year previous, exceeding even the analysts' estimates. But the stock still slipped by 5.7 percent on Friday.

The same thing happened with Advanced Micro Devices, which lost 12 percent of its value on Friday after posting another strong earnings report. Earlier in the week, Intel, you'll remember, blew past the analysts' estimates to post revenue of 40 cents a share, a whopping tenfold increase from the year earlier. For that performance, investors repaid the company by driving the stock down by nearly 10 percent last week.

Are investors expecting too much from these tech companies, or from this market? Are there countervailing forces bringing their stocks down to earth? Or do earnings reports not carry the same weight they used to? It's hard to say, but it's a phenomenon worth watching.

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