First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.
Wall Street Beat: Tech starts Q3 with upbeat outlook
- — 02 July, 2011 02:51
Tech companies this week enjoyed an end-of-quarter market rally as concerns about the recovery abated somewhat and reports from market analysts indicated that IT spending would stay ahead of overall economic growth.
After losing ground in May and most of June, the tech-oriented Nasdaq exchange is now in positive territory for the year. In aggregate, shares of computer companies on the exchange closed Thursday, the last day of the second quarter, up by 1.7 percent for the year. Tech, media and telecom companies in the New York Stock Exchange closed up by 4.39 percent for the year.
For most of June, however, computer vendor share prices, along with stocks in companies in most other sectors, were trading below their level at the start of the year.
Shares of companies with exposure to the consumer market have been hit especially hard. For example, Apple shares sunk from $363.13 in mid-February to $315 last week, before the end-of-quarter rally this week. On the strength of hit products including the iPad, iPhone and iPod, Apple has become the second most valued company on the planet, in terms of market capitalization (number of shares multiplied by share price), after Exxon Mobil.
On Thursday, Apple shares closed up by $1.63 at $335.67, and continued climbing in Friday morning trading. Other market leaders were up Friday morning as well. Google shares climbed by $8.44 to $514.80; Intel was up $0.26 to $22.42; IBM was up $1.06 to $172.61; and Microsoft edged up $0.03 to $26.02.
Though IT companies in general have issued strong earnings reports this year, concerns about the economy and in government's ability to bolster the recovery have weakened confidence that vendors would continue to show results for the rest of the year.
"I think consumers are cautious. They're cautious because business is cautious. In fact we have an unemployment situation we have to deal with and I think it all really comes down to Washington, frankly. Washington has to send out a message that the parties can come to some agreement on some healthy moves for the economy. It's not going be increased taxes. It's not going to be increased spending. We have to deal with the deficit and it's something that we'll need some true leadership and I hope we see it," said Gary Shapiro, CEO of the Consumer Electronics Association, on the sidelines of the CEA's Digital Downtown show last week in New York.
The general outlook on the economy improved this week as the Greek government on Wednesday enacted an austerity plan that eased worries about a national debt default -- which would exacerbate European market conditions -- and regional economic surveys in the U.S. registered gains. The Chicago purchasing managers index, for example, showed an unexpected rise to 61.1 for June, ahead of expectations for a monthly decline to 54 (a score of 50 indicates no growth at all).
The gains made by tech companies at the close of the quarter Thursday were part of a general upward trend in the markets during the last few days. The Nasdaq composite index closed Thursday up 33 points at 2,773.52; the Dow industrials closed up by 152.92 points at 12,414.34; and the S&P 500 index closed up by 13.23 points at 1,320.64.
The tech sector got an extra injection of confidence this week as several market research companies issued positive reports. For example, according to the latest quarterly spending outlook by Gartner, released on Thursday, global spending on IT is expected to rise 7.1 percent in 2011 to US$3.7 trillion. In dollar terms, the forecast was revised upward from Garther's quarter report, in which they projected 5.6 percent growth for 2011. The Gartner survey includes telecom products as well as computer hardware and software.
Even though Gartner cautioned that, stripping out exchange rate fluctuations, its forecast in constant currency terms is for global IT growth of only 3.6 percent, the report said that, surprisingly, the tragic earthquake and tidal wave in Japan earlier this year had less of an impact on IT than had been expected.
"On the supply side, we continue to monitor closely the global electronics supply chain but, so far, despite widespread concerns about disruptions to the supply of critical components in the initial aftermath of the natural disaster, there has been no catastrophic impact," said analyst Richard Gordon in the Gartner report.
Earlier in the week, IDC issued a report that indicated that the tech sector would be leading the U.S. recovery.
IDC Monday said new data from its annual IT spending survey shows that U.S. enterprise and public sector IT spending is on track to grow at 5.6 percent through the end of 2011. In comparison, U.S. GDP (Gross Domestic Product) is forecast to grow only 3 percent.
IDC reported that survey respondents said top IT initiatives at large enterprises include security (selected by 31 percent of those polled), business analytics (selected by 19 percent).
A recent survey by audit and tax advisory firm KPMG backed up the IDC findings. KPMG's survey of senior technology executives showed that company officials predict stronger revenue and profit ahead for their industry this year, even though they see a longer road to recovery for the U.S. economy in general. In its survey, KPMG found that almost 90 percent of respondents expect companies around the world to increase IT budgets this year.
"While they remain guarded on general U.S. economic condition, tech executives continue to grow more confident that the worst is behind the sector and that the engine of innovation which has traditionally led tech sector growth is still there," said Gary Matuszak in the report.