After the Bell: Big Tech Earnings on Tap
What investors will be looking for in IBM, Intel, and Yahoo 1Q results.
Market Update
Leading technology players Intel (INTC), International Business Machines (IBM), and Yahoo are set to announce first-quarter earnings after the market close Tuesday.
A consensus of Wall Street estimates forecasts chip giant Intel to post earnings-per-share of $0.46, compared with $0.43 in the same quarter last year.
Sales for data centers are expected to continue to climb as the global economy recovers from the recession.
But with lagging PC sales, investors will key in on the performance of Intel's Atom mobile processors, where smaller rival ARM's (ARM) more power-efficient chips continue to rule the roost.
Morningstar analyst Andy Ng thinks the threat from ARM is overblown and that with time, Intel's own Atom chip will be able to match up to power-efficient smart-phone chips produced by ARM.
Sales of Intel's latest line of processors, Sandy Bridge, will also be examined after the firm identified a chipset error in the quarter. Analysts will also look for management comments on whether the disaster in Japan might affect production and revenue in the second quarter.
IBM is slated to report what would be the first quarter in the five-year roadmap it unveiled recently--the tech giant aims to clock EPS of $20 by 2015.
For the quarter, Wall Street estimates peg IBM's earnings per share at $2.40, as opposed to $1.97 in the prior-year quarter.
In January, Morningstar analyst Sunit Gogia upped IBM's fair value estimate to $162 per share after reassessing his assumptions for the firm's operating margins. Gogia thinks sales in the software division should offset pressure in lower-margin businesses.
Finally, Wall Street expects to see an EPS of $0.16 for Yahoo's first quarter. Investors will examine the performance of the display ad vertical, where Yahoo holds some advantage over larger rival Google (GOOG), and whether market share in search (where Google holds a major lead) improved, to see if the two helped move the struggling company's revenues, which have remained stagnant for years. At its current market price, the stock look roughly fairly valued compared with Morningstar's $15 fair value estimate.