Wall Street Beat: Google, IBM, Intel lift gloom

Quarterly earnings from IBM, Intel and Google are allaying some of the worst fears of IT investors facing a U.S. economic slowdown.

Quarterly earnings from IBM, Intel and Google are allaying some of the worst fears of IT investors facing a U.S. economic slowdown.

The sputtering economy, credit-market turmoil and rising energy costs are having an effect on technology product and service sales in some sectors, but tech bellwethers this week issued upbeat reports.

After seeing its share price drop since November, along with most tech stocks, Google excited investors with a strong report on Thursday, easily beating analyst expectations for both profit and revenue. For the quarter, net income jumped to US$1.31 billion from $1 billion a year earlier, while revenue, after taking out traffic costs, rose to $3.70 billion from $3.61 billion.

Google has been beset by fears that revenue from paid clicks -- money the company makes from advertisers when people click on sponsored links -- is slowing. In fact, Google reported that the number of paid clicks rose 20 percent in the quarter, compared to a rise of 30 percent in paid clicks for the same quarter last year. The bigger Google gets, the harder it will be for the company to keep paid-click growth up at that rate.

But the company's profit and revenue growth for the quarter will help alleviate those concerns. In after-hours trading, Google shares shot up by $57 within 30 minutes after the market closed, trading at $506.

IBM's strong report on Wednesday showed that the company has leveraged a flexible product strategy to deal with different market conditions around the world. Beating analyst earnings forecasts, the company reported net profit of US$2.32 billion, a jump of 26 percent from the 2007 period.

IBM was helped by the weak dollar. But the company also was able to target infrastructure products and services in emerging growth markets, while stressing cost-savings products in the U.S., according to IBM Chief Financial Officer Mark Loughridge, speaking on a conference call. IBM raised its profit forecast for the year, from $8.25 per share to $8.50 per share.

IBM shares rose Thursday by $2.61 to close at $123.08.

Intel on Tuesday reported strong demand for chips in the quarter. Hurt by restructuring charges, profit for the quarter fell 12 percent, to $1.4 billion. But revenue increased 9 percent to $9.67 billion, and the company raised its forecast for gross margins for the year.

In a nod to the company's geographic reach, CEO Paul Otellini stressed a "strong global environment" in a conference call to discuss the results. Intel shares jumped Wednesday by $1.22 to close at $22.13.

There is no doubt that the U.S. slowdown is affecting technology. PC shipments in the first quarter rose only 3.5 percent from a year earlier, according to an IDC report on Wednesday. Boosted by Asia, however, global PC shipments rose 14.6 percent for the quarter.

Global companies that are executing on product strategy, like Intel and IBM, suggest that a pullback in U.S. spending may not hit the tech sector as badly as had been feared.

AMD weighed in with an expected poor performance. Still hampered by last year's botched launch of its "Barcelona" line of quad-core chips, the company reported a net loss of $358 million. Most market observers, however, attribute the loss to AMD's staggered rollout of the Barcelona chips, not to industrywide forces.

With another round of quarterly reports due next week, so far the main thought in many investors' minds must be: It could have been worse.

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