The technology sector lands in the spotlight this week, with several heavyweights reporting quarterly results and offering forecasts that will serve as a bellwether for the industry.
Apple and Yahoo will open the show on Tuesday, followed through the week by Intel , eBay and Microsoft .
The most interesting contrast will be between Apple and Yahoo, both of which have recently lost their leaders.
Apple is praised for having a deep and talented team to continue the legacy of Steve Jobs. Management has "built an unparalleled talent base and corporate culture that sets the table for future success and innovation," says Canaccord Genuity's Michael Walkley.
Yahoo, on the other hand, gets harshly criticized for unceremoniously dumping Carol Bartz as chief executive officer and leaving itself scrambling for leadership as it faces declining sales and takeover rumours.
Analysts expect Apple to post a 45-per-cent jump in revenue from a year earlier, to $29.5-billion (U.S.), and a 60-per-cent increase in profit, to $6.9-billion.
What will be of even more interest is management's guidance for the fiscal year ahead and its expectations for the latest iPhone 4S, which went on sale Friday. The iPhone has become the single biggest source of revenue for the company, generating almost half its total sales. Although the latest model is evolutionary rather than revolutionary, it has been well reviewed by the technology press and shoulders big expectations. Analysts estimate two million to four million of the devices sold over the past weekend. That compares to first-weekend sales of 1.7 million units for the previous iPhone.
The iPhone 4S houses an eight-megapixel camera, a dual core processor and voice recognition software. Equally important, in the United States the device will launch with all three largest wireless operators onboard for the first time. Mike Abramsky, of RBC Dominion Securities, forecasts that Apple will ship 19.5 million iPhones this quarter, a 39-per-cent increase from a year earlier.
Optimism about the new phone helps to explain why the post-Jobs era is looking so good for Apple, at least in the early days. The company's share price hasn't tumbled with the loss of its visionary leader, but instead has climbed nearly 12 per cent since Oct. 5, as 91 per cent of 55 analysts rate the shares a buy. But competition is intensifying.
Google Inc. CEO Larry Page said last week that 190 million smart phones now run the company's Android operating system. Google offers its mobile platform to handset makers for free to make money on mobile advertising and services. In these early days, mobile advertising is already generating the equivalent of $2.5-billion a year, Mr. Page said.
Yahoo shares have also risen recently, but not on optimism about quarterly results. Sales are expected to have fallen by almost half compared with a year earlier, to $1.1-billion, while profit is thought to have declined by 44 per cent to $221.8-million.
Many investors are betting on a takeover lifting the fortunes of the Internet pioneer. The buzz intensified after Jack Ma, founder and CEO of Chinese e-commerce giant Alibaba Group Holding Ltd., said this month that he is "very interested" in buying Yahoo.
The list of rumoured companies interested in Yahoo has grown nearly every day to include private equity firms KKR & Co., Blackstone Group LP and Silver Lake Partners.