Intel, Apple provide bright spots in weak market

Earnings reports from a few brand-name tech companies this 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 the week.

The Nasdaq exchange sank at the beginning of the week, as Advanced Micro Devices (AMD) said Monday that it expected revenue would be up only slightly from the $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 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 $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 was widely credited for curbing what would have been a worse broad decline on U.S. exchanges. Apple reported $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, 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.

The overall reaction to the mixed earnings reports suggested that the Nasdaq, despite the few brights spots, was not going to recover quickly from its depressed first week of the year. 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. The index was 2070.56 right before the Sun announcement.