Earnings, M&A, IPOs stir IT market

As macroeconomic concerns caused market volatility this week, IT stayed hot as upbeat vendor earnings news, including Apple results, continued to pour in while HP, Netezza, and Voltaire stoked excitement over acquisitions and IPOs.

Though most of the IT bellwethers have already announced results this quarter, a cross-section of vendors this week announced results that spotlighted strength in a range of technologies.

All eyes were on Apple, which reported Wednesday that it sold 270,000 iPhones in the second quarter. The news heartened Apple followers, after partner AT&T said last week that only 146,000 users activated iPhones in the brief time they were on sale before the end of the quarter.

Apple’s core business is strong with Mac sales for the quarter, at 1.7 million machines, up 33 percent in terms of units over the same quarter last year and iPod sales, at 9.8 million units up 21 percent in terms of units. The company reported $818 million in profits, a jump of 73 percent. Shares jumped by $8.42 to close at $145.68 Thursday. Goldman Sachs raised its share price target to $165 from $135, saying that it believes major product releases will drive earnings and shares higher.

Apple’s results did not stop shares in other technology companies from sliding as U.S. housing, mortgage and credit concerns pushed down exchanges, including the tech-heavy Nasdaq. So far this year, the Nasdaq has hit six-year highs as companies report strong earnings.

For the most part, earnings announcements this week continued to be upbeat for IT. Sony saw disappointing game sector losses but experienced an 11.6 percent jump in quarterly sales in its core electronics sector. It reported that net income doubled to ¥66.5 billion ($534 million).

Storage and security vendor EMC reported a 20 percent increase in second quarter net income Tuesday, to $33.4 million, driven in part by its VMware subsidiary, a portion of which soon will be spun off in an IPO later this quarter.

In the Internet arena, Amazon.com shares surged more than 20 percent Wednesday after its Tuesday earnings announcement. The Amazon Prime shipping plan helped boost its second-quarter earnings to $78 million, more than triple its year-ago results. Wednesday’s share jump of $16.93, to $86.18 marks Amazon’s largest one-day point gain since its initial public offering in 1997.

Tech vendors continue to lead IPO activity as shares of server and storage switching and software maker Voltaire started trading on the Nasdaq Thursday. The IPO share price was set at $9.00, and shares closed at $8.33 on a down day for most indices. The news follows the announcement last week that Netezza, a maker of data warehousing appliances, hopes to raise $108 million in its own IPO.

On the M&A front, Hewlett-Packard opened the week with a bang by announcing two acquisitions: Plans to buy data center automation software vendor Opsware for about $1.6 billion, and the acquisition of thin-client computing device maker Neoware for $241 million.

Though macroeconomic concerns may have trumped IT news in the markets this week, the signs of a vital tech sector are still there: Rising profits and the confidence underlying continued M&A and IPO activity.