Apple, Intel provide bright spots in weak market

Earnings reports from a few brand-name tech companies last week helped cushion worries about the U.S. job market, geopolitical concerns affecting oil prices, and a weak start for trading in the new year. Still, overall investor confidence seemed shaky through most of last week.

The Nasdaq exchange sank at the beginning of the week, as Advanced Micro Devices Inc. (AMD) said last Monday that it expected revenue would be up only slightly from the US$1.24 billion generated in the 2003 fourth quarter. Wall Street analysts cut their ratings on the company, after which AMD share prices plunged on the New York Stock Exchange by $3.44 to $16.69. The stock continued to fall during the week, heading toward $15.

On Tuesday a strong report from Intel Corp. was credited with helping restore investor confidence in the chip sector. Intel shares gained $0.62 to $23.16 on the Nasdaq Wednesday, but then settled down, moving below $23 toward the end of the week. The company reported that it had shipped record numbers of processors for servers and notebooks, and generated US$9.6 billion in revenue during the 2004 fourth quarter, up 10 percent from the fourth quarter of 2003.

Midweek was marred by a report of an unexpected increase in unemployment claims, and a rise in crude oil prices due to concerns about violence connected to the upcoming Iraq elections.

A strong Wednesday report from Apple Computer Inc. was widely credited for curbing what would have been a worse broad decline on U.S. exchanges. Apple reported US$3.5 billion in revenue for the first quarter of its 2005 fiscal year due to a huge increase in iPod sales. The company also set a record for net income, with $295 million in profit for the quarter. Shares in Apple (AAPL) on the Nasdaq jumped about 9 percent, at one point Thursday surpassing the company's 52-week high of $70.70.

The story was different for Sun Microsystems Inc., which on Thursday reported a slight increase in earnings, in line with Wall Street expectations, but a worrying decline in revenue for its second fiscal quarter, which ended Dec. 26. The company reported profit of $19 million, or $0.01 per share, but a decline of 1.16 percent in revenue, to $2.84 billion from the $2.89 billion generated during the company's 2004 second quarter. Analysts polled by Thomson First Call expected revenue to be $2.93 billion, and the shortfall presaged a drop in investor confidence as the company's share price declined in after-hours trading, slipping from $4.58 to $4.36 in the early evening. Sun shares continued to fall last Friday, closing at $4.22

The overall reaction to the mixed earnings reports during the week suggested that the Nasdaq, despite the few bright spots, may not move up quickly from its depressed first week of the year. By the end of the day Friday, however, the Nasdaq and other exchanges and indexes recovered some of the ground lost during the week. The broad uptick during the day was credited not to tech stocks, but mainly to reports that inflation in the U.S. would remain low. At the close of the day, the Nasdaq Composite Index was up 17.35 points from Thursday, to close at 2,087.91. The first full week of trading, ending Jan. 7, saw the Nasdaq Composite Index drop 4 percent to 2088.61, its worst first week since 2000, which saw a decline of 4.6 percent.

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