Leading US technology companies provided some much-needed cheer for sector investors last night with quarterly results which either met or exceeded expectations.
Microsoft met already reduced earnings expectations and beat revenue estimates for its second quarter. John Connors, the group's chief financial officer, welcomed "strong customer demand" in the period before adding: "We re main guarded about the near term economic outlook and its impact on PC demand and technology spending."
In spite of such short term caution, the market welcomed the record results as a sign that personal computer sales were not slowing quite as sharply as feared. Shares in Microsoft rose almost 10% in after hours trading to almost $60 (£41). But even at this level, the company is still valued at almost half its record high of a year ago after being crushed by its legal battles with the US government and signs of a sharp economic slowdown.
The company also said that it expected third-quarter revenues to be between $6.3bn to $6.4bn, with earnings at between 42 cents and 43 cents a share, slightly below estimates after an accounting change.
The market enthusiasm for Microsoft's earnings was topped by its welcome for those of EBay. The online auction site announced fourth-quarter earnings of nine cents a share, or $23.9m, almost five times the level of a year ago. Analysts had been expecting more than seven cents a share.
Shares rose 17% in after-hours trading after the results were announced as EBay offered an upbeat assessment of the current year.
Meg Whitman, company chief executive, said that revenues could reach $665m this year, compared with $431.4m for 2000 as a result of more members with a broader range of goods to barter.
Some 3.5m new members were added in the three months to the end of December, bringing the total number using the services of the company to 22.5m. EBay also expects revenues for the first quarter of 2001 to approach $150m. Faye Landes, internet analyst at Sanford Bernstein, told CNBC: "These numbers look very, very strong."
EBay refused to revise its earnings expectations for the current quarter in spite of the better than expected revenues, stating that it intended to reinvest in the company.
Sun Microsystems, the server and workstation group, also announced quarterly earnings up 8% last night, in line with expectations. However, the company's revenues were slightly below expectations of $5.3bn after increasing 6% in the year.
The company offered some cheer by announcing a 32% increase in orders and its shares rose 8% in a buoyant after-hours trading.
