BUSINESS

What tech industry earnings reveal about the economy, state of spending

The Associated Press Published Wednesday, May 1, 2013 6:04PM EDT

Tech industry earnings telling of economy

In this April 10, 2013 photo, a saleswoman displays new Samsung smartphones at a retail shop in Taipei, Taiwan. (AP Photo / Wally Santana)

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Technology companies have begun releasing their earnings reports for the latest quarter. The reports come as consumers shift their spending toward tablets. Here is a summary of recent earnings and reports for selected technology companies and what they reveal about the state of spending and the overall economy.

April 5: Estimates from Samsung Electronics Co. show that operating profit for the first quarter grew 53 per cent from a year earlier to 8.7 trillion won ($7.7 billion), outpacing expectations for what's normally a slow time for consumer electronics sales. Revenue grew 15 per cent to 52 trillion won. Analysts say Samsung benefited from smartphone sales and shortages in memory chips for personal computers.

April 10: Research firms IDC and Gartner release reports showing unprecedented declines in sales of desktop and laptop machines during the first three months of the year. IDC says first-quarter shipments of PCs fell 14 per cent worldwide from a year earlier. That's the deepest quarterly drop since the firm started tracking the industry in 1994. Another research firm, Gartner Inc., pegged the first-quarter decline at 11 per cent. IDC Vice-President Bob O'Donnell says Microsoft's release on Windows 8 in October "not only didn't provide a positive boost to the PC market, but appears to have slowed the market.

April 16: Yahoo Inc. says its first-quarter earnings surged 36 per cent, but investors appear disappointed that revenue shrank by 7 per cent. The weak spot was in one of Yahoo's former strengths -- display advertising. After subtracting the commissions that Yahoo pays its partners, the company's display advertising revenue fell by 11 per cent from last year to $402 million. That development suggests that Yahoo is losing more ground in a key area of Internet advertising to Google Inc. and Facebook Inc.

April 17: eBay Inc. says its earnings and revenue grew in the first quarter thanks to growth in its PayPal business and its e-commerce sites. But revenue was slightly below Wall Street's expectations.

April 18: Google Inc. issues results that provide further proof that the Internet search leader is figuring out how to make more money as Web surfers migrate from personal computers to mobile devices. The first-quarter numbers show that a recent decline in Google's average ad prices is easing. That's an indication that marketers are starting to pay more for the ads that Google distributes to smartphones and tablet computers.

Microsoft Corp. says revenue and net income surged in the latest quarter, but much the gains were due to the recognition of sales that occurred before the launch of the latest versions of Windows and Office. Microsoft's Windows division reports a 23 per cent increase in revenue to $5.7 billion, but adjusting for the deferred revenue, revenue was flat.

IBM Corp. says first-quarter net income fell 1 per cent due to delays in closing several of the technology company's large software and mainframe computer deals.

Verizon Communications Inc. says profit rose 16 per cent in the latest quarter as wireless revenue kept rising at a rate that's the envy of the industry. Service revenues at Verizon Wireless, the country's largest cellphone carrier, rose 8.6 per cent to $16.7 billion, accounting for more than half of overall revenue. At its closest rival AT&T Inc., wireless service revenue has been rising just over 4 per cent per year.

April 22: Netflix Inc. says it added 2 million U.S. subscribers to its Internet video service during the first three months of the year, boosted by the release of a critically acclaimed series, "House of Cards." That's at the top end of the target set by the company's management. The company's first-quarter report also shows its profit margins are widening.

April 23: Apple Inc. says it will distribute $100 billion in cash to its shareholders by the end of 2015. At the same time, the company says revenue for the current quarter could fall from the year before, which would be the first decline in many years. Apple CEO Tim Cook also suggests that the company won't release any new products until the fall, contrary to expectations that there would be a new iPhone and iPads out this summer.

AT&T Inc. says it lost phone subscribers from its contract-based plans for the first time in the latest quarter, in a sign that growth in the industry is stalling now that most Americans have smartphones. The company says it added a net 296,000 devices to its contract-based plans in the first quarter, but the gain was due entirely to tablets, which carry lower monthly fees. Excluding tablets, the carrier lost a net 69,000 devices from its contract-based plans.

April 25: Amazon.com Inc. says its net income declined in the first three months of the year even though revenue increased 22 per cent, as the online retailer continued to spend heavily on order fulfilment and rights to digital content.

April 26: Samsung says its first-quarter profit jumped to a record high as smartphone sales remained strong despite the April launch of an updated version of its flagship Galaxy phone. Sales of consumer electronics usually slow down in the quarter after the holiday shopping season, an effect that analysts thought would be compounded by people waiting for the release of the Galaxy S4. Samsung says sales of the older Galaxy S III smartphone and the oversized handset called the Galaxy Note remained strong.

May 1: Facebook Inc. says net income and revenue grew in the first quarter, helped by an increase in mobile ad revenue, a figure that some investors have been watching closely. Facebook says mobile advertising revenue was 30 per cent of its total ad revenue, amounting to $375 million. That's up from 23 per cent, or $306 million, in the fourth quarter.

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