Tech Roundup: Microsoft, Apple outlooks disappoint investors
NEW YORK—Earnings reports from Microsoft Corp., Apple Inc., Motorola Inc. and other large tech companies dominated the sector this week, though a deadline also looms for Yahoo Inc. to accept a buyout bid from the world's largest software maker.
Microsoft reported better-than-expected results for its fiscal third quarter Thursday. But its outlook for the current period and softness in divisions that produce Windows and Office software disappointed investors and shares tumbled more than 6 percent Friday afternoon.
Microsoft, which wants to buy Internet icon Yahoo for more than $44 billion, also reiterated that it may go hostile with the bid or even walk away if Yahoo doesn't respond to the bid by its Saturday deadline. CEO Steve Ballmer said in speech in Italy Wednesday that Microsoft is "prepared to move forward alone without Yahoo." (Yahoo's earnings were above Wall Street's expectations, but analysts said it was not enough to compel Microsoft to raise its offer.)
Elsewhere, Apple Inc.'s fiscal second-quarter results handily beat Wall Street's expectations, but the company's forecast was below estimates. Still, Apple's shares were headed to finish the week up more than 4 percent.
Doug Reid, an analyst with Thomas Weisel Partners, said in a client note that successful retail and international expansion drove Mac sales up 54 percent. American Technology Research analyst Shaw Wu, who has been very bullish on Apple, cut his rating on the stock from "Buy" to "Neutral" on Tuesday ahead of the company's earnings report, citing valuation.
On Thursday, struggling cell phone maker Motorola Inc. reported a wider first-quarter loss with revenue short of Wall Street's expectations. The company, which is splitting off its handset division to create two public companies, said the poor performance in the unit led to the quarter's weak results. RBC analyst Mark Sue said the results were "not pretty."
Also during the week, online retailer Amazon.com Inc. reported first-quarter earnings above analyst estimates, but investors were worried about a possible slowdown as shoppers cut back on spending. Amazon's shares were set to finish the week down less than 1 percent.
On the telecom service front, No. 1 U.S. carrier AT&T Inc. posted a solid first quarter Tuesday, with earnings up 22 percent, fueled by strength in its wireless division.
IN CASE YOU MISSED IT: San Diego-based NextWave Wireless Inc. said Wednesday it is planning to sell its vast U.S. airwave license holdings, which are worth billions of dollars and cover 85 percent of the U.S. population. The company's shares were set to finish the week up nearly 32 percent on the news.
COMING UP: Verizon Communications Inc., the second-largest U.S. telecom carrier, reports first-quarter earnings on Monday. Analysts expect a solid quarter, boosted by strength in its wireless division.
Internet conglomerate IAC/InteractiveCorp, which owns Ticketmaster, Citysearch, and LendingTree among other sites, posts first-quarter results on Wednesday. The company is planning to split into five publicly traded businesses.
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Compiled by AP Business Writers Rachel Metz and Barbara Ortutay in New York.
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