Google and IBM come up trumps as technology earnings move into focus

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So far so good from the big technology companies fourth quarter 2012 earnings as Google and IBM came in with some strong numbers after the close last night.

Google shares were up 5% to $738 after beating already strong earnings estimates. The company reported fourth quarter 2012 earnings of $2.9 billion, $8.62 a share, compared with $2.71 billion or $8.22 a share for quarter four 2011. Total revenues came in at $14.4 billion ($11.3 billion net to Google), up 36% year on year with 2012 revenues exceeding $50 billion for the first time. Adjusted earnings were  $10.65, compared with expectations for $10.45-10.50. UK Revenues were up 23% to $1.3 billion.

Revenue from Search and YouTube rose 22% to $12.9 billion with the growth driven by a 24% gain in paid advertising clicks, with the cost per click dropping 6% versus the year ago period, which was better than than the 15% drop in the quarter before and  ahead of analyst expectations of a 7.5% drop. The declines have been caused by a shift in Google usage from desktop to mobile, which is less lucrative for advertising.

The Motorola, mobile phone division, bought for $12.5 billion in 2011, contributed $1.5 billion in revenues but produced an operating loss of $353 million.

IBM shares rose 3% after hours to $202 after also reporting Q4 earnings with a strong earnings beat.

The company had broadly flat fourth quarter revenues of $29.3 billion with technology spending by corporate customers under pressure resulting in business services down 3.2%, however software sales increased 3.5%. Earnings came in at  $5.8 billion, or $5.13 a share, up from $5.49 billion or $4.62 a share in quarter four 2011. Operating earnings, rose to $5.39 a share from $4.71 a share, which beat estimates of $5.25, as the company benefited from a shift to higher margin software products and services.

The company also posted a strong outlook for 2013 with projected earnings of $16.7 a share, versus expectations of $16.6  a share.

Buffett’s Berkshire Hathaway made a major investment in 2012 and it looks to be a smart move right now with the company on track for $20 per share of earnings by 2015.

So, all good from the heavyweights on the Nasdaq so far with profits coming in well ahead of expectations. Now the focus moves to Apple after the close tonight, and with it contributing to 10% of the Nasdaq 100 index weighting, it could have a major impact come tomorrow. 

Contrarian Investor UK


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