Wall Street Beat: Earnings bring mixed results

IBM, Intel, and Yahoo disappoint, while Apple, eBay, and PayPal show solid numbers

Earnings season blew in with a vengeance this week, with disappointing fourth-quarter results from industry bellwethers Intel Corp. and IBM Corp. offset by better-than-expected reports from other vendors.

EBay Inc. Wednesday reported earnings and sales that exceeded analyst expectations -- a nice counterbalance in the online arena to Yahoo Inc.'s disappointing results on Tuesday. Activity in eBay's core marketplace in the quarter generated US$1.0 billion in net revenue, while PayPal online payments garnered $304.4 million and the Skype Internet telephony unit bringing in $24.8 million. The company also announces eBay Express, a site designed for a different type of shopping than eBay auctions. The news helped eBay shares (symbol: EBAY) gain $2.33 to close at $46.77 Thursday.

Keeping up a string of good news largely related to the iPod, Apple Computer Inc. on Wednesday reported the highest quarterly revenue and earnings results in company history. Revenue was US$5.75 billion, up from $3.49 billion. However, Apple executives are offering cautious guidance, warning that iPod sales are likely to slow. Though Apple's share price last week got a nice boost when Apple Chief Executive Officer Steve Jobs preannounced sales figures, the warning about iPods brought down Apple shares (AAPL) to $79.04 Thursday, down $3.46 for the day.

Advanced Micro Devices Inc. also had good earnings news Wednesday, reporting fourth-quarter results that beat forecasts. Microprocessor unit sales helped boost profits to $96 million, up from a $30 million loss one year earlier. AMD expects sales for the first quarter of 2006 to be up about 70 percent from last year. AMD has especially benefitted from the release of its new generation of dual-core processors ahead of Intel's equivalent products, and from strong sales in servers. AMD (AMD) shares rose by $2.98 Thursday to close at $37.13.

Tuesday, on the other hand, was a bad-news day, as Yahoo Inc. reported earnings and revenue that fell short of Wall Street expectations. Fourth-quarter earnings excluding one-time items were $247 million, or $0.16 per share, compared to analyst expectations of $0.17 per share.

Analysts have applauded Yahoo's strategic moves during the past year to enhance its search engine and offer more interactive services. But the portal suffers in comparison to Google, which recently has grown its share in the search market. As a result several brokerages over the past few weeks have downgraded their recommendations on buying company stock, advising tech investors to keep, but not buy, company shares. Yahoo shares (YHOO) dropped by $5.07 Wednesday, and again by $0.85 Thursday to close the day at $34.33

IBM Corp. issued a good-news, bad-news report Tuesday, highlighting its perennial strengths and weaknesses. While it ended 2005 with strong earnings, as a result of cost controls and strong services-unit performance, sales were essentially flat. Net income for the year was $8 billion on revenue of $91.1 billion. Revenue for the fourth quarter, however, came up about $1 billion short of broker forecasts. Ultimately the company will have to show that it can make money by selling products, which has been hard -- especially in the storage and server arena -- due to the competition putting downward pressure on prices. IBM shares (IBM) dropped by $0.80 Wednesday, and again by $1.37 Thursday to close Thursday at $83.09.

Also on Tuesday, Intel Corp. announced fourth-quarter revenue that was below the company's own forecast. Revenue was $10.2 billion for the quarter, below company expectations of between $10.4 billion and $10.6 billion. But Intel continues to paint a rosy picture for 2006, when its new dual-core chips are expected to be scooped up by users in a big way. The company expects revenue to be 6 percent to 9 percent higher than the $38.8 billion for all of 2005.

Concerns raised by the disappointing results announced Tuesday were at least temporarily offset by the cheerier reports later in the week, as the Nasdaq Composite Index (COMPX) rose by 22.17 points Thursday to close at 2301.81.