Tech investors look to Apple and FaceBook earnings next week

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Plenty for technology investors to get their teeth into next week in terms of earnings announcements after Microsoft’s first ever quarterly loss announced last week.

Apple’s fiscal third quarter is out on Tuesday after the Wall Street close (the company’s financial year runs October to September). Expectations are for earnings of $10.37 per share on revenue of $37.5 billion, compared with earnings of $7.79 per share on revenue of $28.6 billion for the same period in 2011. It has delivered 86% annual earnings per share growth since 2005, and in 2012 shown EPS growth of 71%.

With Iphone 5 due most likely in the Autumn, many analysts are expecting a tough time for Iphone 4 sales this quarter and next as consumers wait around before upgrading or switching. However, Ipad 3 sales are expected to be very strong to offset any Iphone weakness with around 16 million units, up 20-25% since the last earnings report.

Apple said in February that it sold more than 37 million iPhones in Q1 2012, making a total of 175 million since the device was launched in the third quarter of 2007. The company sold 17.1 million in Q4 2011. Expectations are for around 28-35 million units this time around and a lack of any real response from Nokia and Research in Motion is making life easier for Apple than it should be. For example, RIM, the Blackberry maker, announced a delay to its new operating system into 2012.

The shares closed at $604 on  Friday, up 50% during 2012 and valuing the company at $565 billion.

FaceBook will also report  on Thursday next week, its first as after the botched IPO. Consensus estimates are for earnings of 12-15 cents a share on revenue of $1.18 billion.  The shares closed on Friday at $28.76, nearly $10 below its $38 offering price.

At the end of quarter one 2012, Facebook had 901 million Monthly Active Users (MAUs), an increase of a third versus 2011. Expectations are for around 965 million in this set of results.

Investors will be looking at Facebook’s mobile monetization avenue which founder and CEO Mark Zuckerberg says is potentially its Achilles Heel . Earlier this year, it began to run sponsored stories into newsfeeds which according to various pieces of research are delivering a high click through rate at a high cost per click potentially substantially increasing incremental earnings. Desktop newsfeed has a 0.6% click through rate at $0.63 cost per click.

Of the 104 companies that have reported earnings so far in the US, 74% have beaten consensus estimates, and 45% (versus 56% on average), have reported revenue above forecasts – the lowest percentage of companies beating sales estimates since the first quarter of 2009.

Contrarian Investor UK

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