Investors Hopeful As Earnings Season Heats Up

After one of the best weeks in the past year for Internet and tech stocks, investors hope this upward momentum and their own renewed optimism will help the market successfully run a gauntlet of earnings reports this week without absorbing too much punishment.

Since many of the most painful blows already have been delivered in terms of earnings warnings, there’s a reasonable chance that stocks could hold up, even as red ink continues to flow from quarterly reports.

One reason, of course, is that most ‘Net and tech companies are trading at or near 52-week — or even all-time — lows. In other words, the bad news has been built into prices.

For example, cellular phone maker Motorola is up 2% since releasing an earnings report after last Tuesday’s market close showing its first quarterly loss in 15 years. But MOT had plunged 23% on April 5 in anticipation of the numbers, hitting its lowest closing price ($11.50) in nearly eight years.

Let’s look at some of the Internet companies preparing to release quarterlies this week:


The maker of streaming multimedia software closed Friday at $9.19 per share, much closer to its 52-week low of $5 set in mid-March than its 52-week high of $59.50. RealNetworks created a stir early this month when it announced plans to launch a subscription service for downloading songs from the Internet with three of the five major music publishers. Consensus estimates call for RNWK to show a profit of 2 cents per share after trading closes on Tuesday.

AOL Time Warner

Unlike most other Internet companies, this hybrid digital entertainment giant hasn’t seen shares plummet in the past year, though Friday’s closing price of $42.22 is closer to the 52-week low $31.50 than the 52-week high of $69.37.

When the merger of America Online and Time Warner was announced in January 2000, investors reacted adversely amid concerns about slower revenue growth. Since then, Wall Street’s focus has turned to profits. That’s fortunate for AOL , which analysts expect to show a Q1 profit of 20 cents per share on Wednesday.

i2 Technologies

One of last year’s only ‘Net gainers, gravity caught up with supply-chain software vendor i2 Technologies in February, driving share price as low as $12.56 from the Dec. 29 close of $54.38. ITWO ended Friday at $19.74, a far cry from its 52-week high of $99.44. Like many e-commerce software players, ITWO has seen revenue fall as corporate customers cut back on spending. The company said early this month that Q1 sales will drop to about $355 million from Q4’s $378 million.

ITWO expects Q1 profits of 2 cents per share, below earlier profit projections of 5 cents per share. Its report is due after Wednesday’s market close.

Commerce One

Another major e-commerce software vendor, Commerce One closed at $9.51 on Friday, much nearer its 52-week low of $5.12 than its 52-week high of $84.13. Two weeks ago CMRC downgraded sales estimates for the quarter to $170 million from $208 million, while upping its estimated per-share loss to 11 cents from estimates of 4 cents per share. CMRC will report after trading ends on Thursday.

News Around the Web