Apple, IBM, Yahoo Jump-Start Earnings Season

The technology sector roared out of the gate with strong earnings reports from IBM (NYSE: IBM), Yahoo and Apple (Nasdaq: AAPL). Optimism about strong sales and profits was muted only by somewhat cautious outlooks for the coming year.

The reports brimmed with good news about the end of 2003. IBM beat expectations with US$25.9 billion in revenue, a 9 percent jump, and a healthy profit of $2.7 billion.

Meanwhile, Yahoo posted a profit of $75 million. Revenue climbed to $663 million, up sharply from $285 million a year ago, as the Web portal rode a rising online advertising tide that drove up marketing income by an eye-popping 178 percent to $545 million.

For its part, Apple said brisk sales of its iPod portable music player and computers helped it book revenue of $2 billion, 36 percent higher than last year's figure and slightly better than analysts' expectations. The company also turned a year-ago loss into a modest profit. Apple said it sold 733,000 iPod units and that only inventory shortages prevented it from selling more.

Not So Fast?

However, in all cases, the companies seemed to stop short of giving investors and market watchers what they most wanted -- a 2004 outlook that is confident and robust enough to justify the strong run-up in tech stock prices during the past year.

While Apple said revenues will stay ahead of earlier forecasts, only IBM -- which delivered its earnings report nearly a week earlier than planned, soundly beating expectations -- offered a truly upbeat forecast for 2004. The company said it expects to exceed analysts' estimates for the full year ahead, but added that it will not provide specifics until later in the quarter.

"We enter 2004 with good momentum," Big Blue CEO Sam Palmisano said. "The client buying environment is steadily improving. We are enthusiastic about our prospects for this year and beyond."

Too Far, Too Fast?

"It becomes a matter of the expectations maybe getting ahead of what is still definitely a strong comeback for technology companies," Morningstar.com stock analyst Todd Bernier told the E-Commerce Times. "The fundamentals -- profits, revenue increases -- are solid. But there's a concern that investors are counting on a trend line that will be hard to sustain, especially if the economy doesn't do its share."

Bernier said the recent rise in tech stocks reflects both the improved performances of 2003 as well as expectations of a full-blown recovery this year.

PCs Soar, Too

The tech earnings weigh-ins were backed up by two separate reports highlighting the PC market's stellar performance at the end of 2003. Both IDC and Gartner said worldwide PC sales rose to record levels in the fourth quarter, with growth pegged by both firms at about 12 percent.

IDC vice president Roger Kay told the E-Commerce Times that everyone benefited from lower prices. Computer makers were able to trim costs but maintain profit margins, and consumers scooped up bargains on notebook and desktop machines.

"The enterprise sector also showed some life at the end of the year, though it's still not as hot as the consumer side," Kay said. "If the two get on the same page in terms of growth, 2004 will be another great year for the tech industry as a whole."