Yahoo Gets Tech Sector Off on Right Foot
Yahoo Inc.’s earnings report Wednesday is likely to mark the start of a strong season from the technology sector, according to analysts.
Since 1996, 87.4% of total first-quarter “pre-announcements” for the technology sector have been negative, according to data tracker IBES International Inc.
But heading into the first-quarter reporting season this year, only 61.9% of total pre-announcements have been negative, IBES said. That is the lowest recording of negative pre-announcements IBES has seen since it started collecting the data.
The strongest earnings are expected to come from hardware companies, with the leading sectors expected to be semiconductors, electronic systems, photo optical equipment and computer components.
“A powerful earnings performance this quarter would be a positive influence on what has been a beaten-down technology sector,” IBES’ Joseph Kalinowski said in his latest report Wednesday.
Meanwhile, shares of Sunnyvale, Calif.-based Advanced Micro Devices Inc., Intel Corp.’s biggest rival in computer microprocessors, surged 13% to a record after the company said first-quarter revenue topped $1 billion.
The stock climbed $7.88 to $69, bringing its year-to-date gain to 138%. Sales rose 10% from the fourth quarter to more than $1.06 billion on higher demand, mainly for flash memory chips used in cell phones and processors that run personal computers.
Advanced Micro is benefiting as semiconductor leader Intel struggles to meet demand for PC chips. Chairman Jerry Sanders has engineered swifter product introductions and improved manufacturing, overcoming a string of production problems to help Advanced Micro beat Intel with faster processors.
“They are making a product equal to Intel’s best product, and that is radical for AMD,” said analyst Richard Whittington of Banc of America Securities, who rates Advanced Micro a “strong buy.”
Advanced Micro’s business has showed promise in the past, only to stumble because of delays in new chips and production failures.
Further positive news came from Irvine-based Western Digital Corp., the No. 3 maker of computer disk drives, which said its fiscal third-quarter loss will be narrower than analyst estimates, as sales of its personal storage products have been brisk.
Western Digital expects a loss of $27 million to $34 million, or 20 cents to 25 cents a share, in the quarter ended March 31. The company had been expected to lose 42 cents, according to analysts polled by First Call/Thomson Financial. Western is expected to report results April 27.
Shares of Western Digital rose $1.25 to close at $7.69 on the New York Stock Exchange. The stock is up 84% this year, but still down 1% in the last 12 months.
