This week is the start of earnings season and there should start to be a bias set for many sectors. This week comes the key technology earnings reports which will set he tone for how major technology companies are treated by investors into next quarter. The two largest and most obvious reports to watch this week are Intel Corporation (INTC) and Google Inc. (GOOG). There are others to watch out for as well, with Advanced Micro Devices (AMD), Linear Technology (LLTC), and Fairchild Semiconductor (FCS) all on deck this week. It is too soon for putting together color beyond basic estimates on next week’s major tech earnings, but next week’s biggest technology earnings are IBM (IBM), Apple Inc. (AAPL), VMware (VMW), EMC Corp. (EMC), Yahoo! (YHOO) and Micrososft (MSFT).
Intel Corporation (INTC) is the first tecg giant on deck. Thomson Reuters consensus estimates for Intel earnings are $0.38 EPS on $9.82 billion in revenues for Tuesday after the close. The 2010 estimate of $1.67 EPS gives this a multiple of just over 13X as a forward P/E ratio. Intel is significantly higher than its lows at $22.50 versus a 52-week range of $14.96 to $22.75. Its stock is still relatively cheap on a forward earnings multiple. Intel’s gross margin last quarter was a record of 65%.
Advanced Micro Devices Inc. (AMD), Intel’s ONLY quasi-rival, is on deck for earnings Thursday. Thomson Reuters estimates for AMD earnings are -$0.10 EPS and $1.53 billion in revenue; next quarter estimates are -$0.09 EPS on $1.52 billion in revenue. Estimates for 2010 are -$0.17 EPS and it is expected to earn $0.15 EPS on $6.89 billion in revenues for 2011. At $9.38, this is at the higher-end of its 52-week trading range of $3.17 to $10.04. As AMD has been losing money as far back as memory serves, it seems as though it will require AMD to report an unexpected profit or at least a credible forecast that profitability is coming much sooner than than expected to keep the bears at bay.
Google Inc. (GOOG) is up for earnings Thursday, and Thomson Reuters has Google earnings estimates of $6.57 EPS and $4.93 billion. This is expected to be over 25% earnings growth and over 21% revenue growth. There is a stealth issue for earnings that goes above and beyond its decision to leave China. CPMs, a.k.a. advertising rates per thousand pageviews, were very weak in many publishing sectors and in many website categories in the month of February. It also ended March with its share of US search barely under 70% for its market share, a level not breached since June of 2008. The $570-handle for shares compares to a 52-week range of $364.16 to $629.51 and compares to an average analyst price target just under $675.00. For forward expectations, Google trades at 20-times 2010 expectations and under 18-times 2011 earnings expectations.
Linear Technology (LLTC) is also an important tech earnings report, although it reports Tuesday after the close so it will be a mere footnote or shadow behind Intels’ earnings. Thomson Reuters has estimates of $0.39 EPS and $279.14 million in revenues, while next quarter is expected to be $0.41 EPS and $288.81 million in revenues. With shares trading at roughly 20-times fiscal June-2010 earnings estimates of $1.45 EPS. At $29.40, its 52-week range is $20.26 to $31.21. While Intel will probably set the tone and direction for chip and tech stocks, Maxim Integrated Products Inc. (MXIM) is the most similar to Linear Tech.
Fairchild Semiconductor (FCS) may not seem to be one of the more important tech earnings to many, but this one could easily react with a mind of its own. With a share price of $11.25 today, its 52-week trading range is $4.58 to $11.48. Its low in March-2009 during the panic selling was down under $3.00. Effectively, shares are up close to 300% from trough to peak in the last thirteen months. Thomson Reuters has estimates of $0.23 EPS on $371.1 million in revenues. The interesting aspect here is that earnings expectations of $1.04 EPS for 2010 gives this a forward P/E of only about 11 times earnings. Analysts have a consensus forward price target just north of $12.00.
Here are next week’s most basic previews with only the Thomson Reuters estimates:
IBM (IBM) $1.93 EPS on $22.8 billion in revenues
Apple Inc. (AAPL) will have to be updated, estimates are changing at print time.
VMware (VMW) $0.27 EPS on $590.7 million in revenues
EMC Corp. (EMC) $0.24 EPS on $3.69 billion in revenues
Yahoo! (YHOO) $0.09 EPS on $1.17 billion in revenues
Microsoft (MSFT) $0.42 EPS on $14.37 billion in revenues
For most of the big technology companies, it seems as though these companies will have to outperform consensus targets to keep he bulls happy in most of the names.
