Apple, Google, IBM and AMD announced quarterly results this week, as personnel news trumped earnings reports.
Apple's statement Monday that CEO Steve Jobs is taking medical leave and Google's announcement Thursday that co-founder Larry Page would be taking the CEO reins from IT veteran Eric Schmidt in April overshadowed an exceptionally busy week for tech sector business news.
The flood of financial reports, however, suggests that IT stands to be a major driver for the economy in the near term.
After the market closed Thursday, Google reported that fourth-quarter profit jumped 29 percent from a year earlier to US$2.54 billion, while revenue rose 26 percent to $8.44 billion.
Google earnings have rarely if ever disappointed but the big question still is whether the company can diversify from its base in search advertising. Revenue from YouTube doubled during the year and 300,000 Android phones are activated each day, Google noted. But Google still is heavily dependent on search, and this may be why Page is succeeding Schmidt.
"One of the things missing from Google's strategy has been the social component, I think that possibly the ability to move on a major social networking strategy may more easily come from a younger CEO," said Allen Weiner, research vice president at Gartner. "But you also wonder if (Page) has the type of presence to deal with for example the major media companies of the world like the Viacoms and the Disneys, and other companies that may have CEOs from the older CEO corporate world.
Google shares were trading at $621.42, down by $5.35, Friday afternoon.
Advanced Micro Devices, also reporting late Thursday, said net profit for the fourth quarter fell 68 percent from a year earlier to $375 million, $236 million of which came from a legal settlement with Samsung. Last year's figure was boosted by $1.24 billion from a legal settlement with Intel. Revenue, at $1.65 billion, was flat year over year.
Market researchers have been saying that the hardware and chip sectors will be hit by a slowdown in spending on PCs that started in the last half of 2010. However, AMD said revenue for the current quarter would be flat or decline only slightly from last quarter, which is better than the usual quarter-to-quarter trend for a chip maker.
Nevertheless, AMD has a personnel problem of its own: ex-CEO Dirk Meyer was booted out recently, reportedly for failing to come up with a comprehensive strategy for the tablet market, and the company declined Thursday to give an update on its search for a new, permanent chief executive. AMD shares were trading at $7.56, down $0.46, Friday midafternoon.
IBM, a major bellwether for the enterprise market, said Tuesday that net income for the fourth quarter rose 9 percent year over year to $5.3 billion, while revenue increased by 7 percent to $29 billion. It was the strongest quarterly sales increase for IBM in almost 10 years, and in line with market analysts' predictions that enterprise sales, particularly software, will be the main driver of growth for IT this year and next.
Software sales rose 7 percent to $7 billion, IBM said. WebSphere middleware sales were up 32 percent and business analytics-related revenue increased 19 percent. As enterprises deal with an exploding amount of data coming in from customers via the Web and mobile devices, analysts say, vendors who have strong offerings in analytics and middleware are bound to prosper over the next few years.
Apple kicked off the week by announcing, while U.S. markets were closed for a holiday on Monday, that Steve Jobs would take a medical leave. In a statement, Jobs, who was diagnosed with pancreatic cancer in 2004, said that he hoped he would be back soon, but did not offer a time frame. Jobs will remain CEO, but Tim Cook will be running the company's day-to-day operations. Apple's high-flying share price took an immediate dive, closing $340.65 on Tuesday, down by $7.17.
After the market closed Tuesday, Apple reported record revenue of $26.74 billion for its first fiscal quarter, up 71 percent from a year earlier, while profit rose a whopping 78 percent, to $6 billion. The results were fueled by sales of iPhones, Macs and iPads.
Despite the stellar quarter, Jobs' fate appears to weigh on investors. Apple shares closed $338.84 Wednesday, and were trading at $329.75 Friday afternoon. Apple, the most highly valued company on the planet after Exxon, may continue to see shares slide in the face of increasing competition from tablet makers and manufacturers of Android-based smartphones.
In the wake of the headline-making tech personnel changes this week, the IT- and telecom-heavy Nasdaq was trading at 2699 Friday afternoon, down by 5.27. Nevertheless, supported by strong vendor profits, computer stocks on the exchange are up 3.09 percent for the month so far, and 22.95 percent since a year ago.