Earnings season is in full swing and traders, along with investors, will be seeing an avalanche of earnings over the next few weeks. There are nine technology earnings traders will be focusing on this week. Traders will be focusing on these earnings for multiple reasons. First, some companies are market leaders, therefore, any major beat or miss will cause severe share price movements. On the other hand, if these major companies report earnings in line with expectations, we will see the share price remain the same. I will discuss the other reasons as to why traders will be watching these stocks in later analysis.
ARM (ARMH) is another semiconductor company slated to report earnings before the opening of the equities market on Tuesday. ARM will be watched by traders because traders will be looking to send ARM's stock higher during this earnings season. The share price has already increased nearly 360% at the 52 week high since 2009. Also, ARM's stock has outperformed the Nasdaq by roughly 30% year to date. On the other hand, the stock has underperformed the Nasdaq by about 6% over the past month.
As previously mentioned, bulls will look for any reason to continue to push this double digit growing company higher. The street is expecting revenue to be in the $187 million region, along with EPS at $0.13. I am expecting the company to report revenue and earnings per share higher than these expectations. Because of this, traders and investors will be looking to add to current positions, or open new long positions.
Key to remember: ARM's stock has been carrying strong upward momentum prior to 2011, and traders will be looking to keep this momentum going upon strong earnings.
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Imation (IMN) is also scheduled to report earnings before the market opens on Tuesday. Imation is one of the world leaders in removable data storage and the company is beginning to enter the scalable storage market. While Imation is a very small company (market cap= $272 million) the earnings results and forecast will effect larger companies in the removable storage industry; such as Seagate (STX) and Western Digital (WDC). Therefore, if Imation can give a strong forecast regarding removable storage, Seagate's share price may continue to fly higher; even after the 30% we saw last week.
The one analyst covering Imation is expecting revenue to be at $319 million and EPS a loss of $0.03. I would not recommend opening any long term positions in Imation because the earnings have been following a consistent downtrend for at least one year. The share price has reacted accordingly and investors have seen the stock slide since the beginning of 2007. On the other hand, traders may find Imation a strong candidate to short.
Key to remember: Imation is a small company, therefore the earnings are more important to view the progress of the data storage market. A contrarian play would be to open a long position in speculation of a big earnings beat and/or strong forecast; which, by the way, is highly unlikely.
Broadcom (BRCM) will be releasing earnings after the market closes on Tuesday. Broadcom's earnings will be watched because the company is one of the world's leaders in semiconductors for wired and wireless communications. Therefore Broadcom, along with Arm Holdings will cause a major shift in the semiconductor industry. Another reason traders will be watching these earnings is because Broadcom will give investors a look at the current wireless 4G and 4G LTE markets; which are important for the expansion of cellular service providers as well as smartphone manufacturers.
Broadcom is expected to report revenue at $1.95 billion with an EPS $0.76. This revenue mark may be difficult to beat. The company has not reported revenue above $1.94 billion for at least five quarters. Furthermore, Broadcom's share price follows a long time stagnation phase disregarding the September 2010 through April 2011 hump. It is important to note, this hump is due to the equities markets rallying off the back of strong earnings and forecasts; as well as strong economic data.
Key to remember: Traders will be watching Broadcom's earnings because Broadcom's stock has the potential to seek new highs. However, traders may find more profits by shorting the companies earnings.
F5 Networks (FFIV) is slated to report earnings after the close of the Tuesday trading session. F5 has been growing at a very high rate for several years. Because of this, traders will be watching the company's earnings in hope to send the stock higher. Similarly, F5's chart has performed very well throughout the equities 12 year life span. It is important to note, the recent weakness in the equities market has brought the share price back to summer of 2010 levels. This is why traders and investors are willing to add to and open new long term positions; if F5 reports strong numbers.
An added bonus to F5's earnings is the fact that the company will be reporting full year results as well as fourth quarter results. Full year earnings are easily predictable after three quarters have passed. However, often times full year earnings cause dramatic share price shifts due to new forecasts for the following year. With that said, F5 is expected to report full year ending 2011 revenue at $1.15 billion with an EPS of $3.72.
If F5 simply reports the analyst expected $308 million for fiscal fourth quarter revenue, the company will slightly miss full year expectations. Therefore traders are faced with two options. First, F5 may miss full year expectations and guide below the current full year 2012 estimate of $1.36 billion. The second option is F5 has a blowout quarter and beats estimates as well as forecasts higher than expected. The company may report mixed results as well. It is important to note the share price will react accordingly dependent on which option occurs.
Key to remember: F5 networks is more often than not a strong company. However, 2011 has not been good for F5 and the share price reflects earnings misses and disappointment. Therefore traders will be eyeing F5's earnings for any signs of weakness or strength that will lead to future profits.
Corning (GLW) is scheduled to release earnings before the market opens on Wednesday. Corning is a technology firm involved with several different forms of technology from telecommunications to life science. Traders will be watching Corning's earnings for two reasons. First, the company will give a baseline view of the fiber optics market which will effect stocks such as JDS Uniphase (JDSU). Secondly, the stock has been stuck on a downward slide all of 2011. Therefore, any signs of strength will give traders a reason to push the stock higher.
Analysts are expecting Corning to report revenue at $2.02 billion and EPS of $0.42. Unlike Texas Instruments, Corning's revenue has been growing at nearly 20% per year. This means the stock has the potential to spike. Could the long tailspin be due to aggressive forecasting methods by Corning or even aggressive analyst expectations? Possibly, but there will come a time when the growth potential will intersect the falling share price. When this happens, traders and investors will send the stock in the upward direction.
Key to remember: Corning deals primarily with fiber optics, therefore the firm may be backlogged from a buildup in fiber optic communications over the past 2-5 years. I expect Corning to produce strong earnings, however, as always, the forecast will likely be gloomy with the expectations of slowed spending in 2012.
Akamai (AKAM) is slated to report results after the close of the bell on Wednesday. One word can describe Akamai's stock in 2011: terrible. The company has missed earnings the past three reporting periods. This has led to a nice step pyramid that has brought investors nothing but losses. A contrarian play would be to open a long position prior to the earnings report in hope the company has reached a bottom. I would not recommend this action, but sometimes speculative plays pay off.
On a more serious note, Akamai is expected to report revenue at $279 million with an EPS of $0.33. This would slightly beat the previous quarter's revenue mark, but it would still fall short of the fourth quarter last year. Furthermore, I am expecting Akamai to miss the mark again this quarter. Because of this, traders will be eying Akamai to short and pick up major profits on the possible plunge.
Key to remember: Akamai has underperformed the Nasdaq by about 55% over the past year and this trend may not change anytime soon. Traders will use this history to short the company and pick up major profits on another earnings miss. I would rate the possibility of an earnings beat at less than 5%.
Oclaro (OCLR) is also scheduled to report earnings after the close on Wednesday. Oclaro is also a fiber optics telecommunications company that has performed terrible in 2011. Oclaro has performed worse than Akamai. In fact, Oclaro has underperformed the Nasdaq by nearly 80%. Just as Akamai, traders are looking to short Oclaro. Unlike Akamai, Oclaro's stock has continued downward momentum while Akamai's stock tends to stabilize after earnings then plunge after the following earnings report.
The street is expecting Oclaro to report revenue at $109 million with a loss per share of $0.23. No matter which way you slice this earnings report, the result will end in disappointment.
Key to remember: Oclaro's revenue has been shrinking each quarter. Also, investors have abandoning the company each earnings period as bad news surfaces. Keep in mind, if the company reports an earnings beat, bullish traders will be more than happy to push the stock higher.
Symantec (SYMC) is one of the more stable companies in the security software industry. Symantec is scheduled to report earnings after the close on Wednesday. The company's earnings have slowly increased over the past five quarters and this trend should continue. Symantec should continue to slowly prosper as small and medium businesses (SMBs) and personal computers become targets of hackers. Not to mention the fact that consumers are concerned about identity theft as the world continues to move towards an internet based society. With that said, Symantec's share price has not rewarded investors in the short term. I do not expect Symantec's stock to take off to new highs in one day, however over the next decade the share price will frustratingly grow higher.
Analysts are expecting Symantec to report revenue at $1.67 billion and EPS at $0.39. Symantec should be able to beat these expectations. However, after Adobe's weak results Symantec's results are in question. With that said, Adobe increased the companies fourth quarter outlook and investors reacted by sending the stock 7% higher after hours on September 20th. Traders will be eying Symantec in expectation the company will follow suit. Other companies, such as Red Hat, will be effected by an extremely positive or negative report from Symantec.
Key to remember: Symantec is a strong company with stiff competition from Adobe and Red Hat. With that said, consumers are recommended to use security software and companies such as Symantec will benefit. Traders will be looking to pick up profits off Symantec's positive forecast.
Yandex (YNDX) will present the companies second earnings report since going public in May before the market opens on Thursday. The storm surrounding Yandex has more than calmed since the companies IPO which saw 70 million share trade hands. Currently the three month average volume is 1.3 million shares. Nevertheless, traders will be eying Yandex because the company is the major search engine in Russia. Therefore Yandex is expected to grow to the levels of Google (GOOG) and Baidu (BIDU). Traders may have put the stock on the back burner as of late, however with any signs of strength or weakness the share price will move accordingly.
Yandex is still growing at a high rate as the company recently reaffirmed a yearly revenue increase of 55%-60%. Nevertheless, analysts are expecting Yandex to report revenue in the range of RUR 5.07 billion. This would bring full year 2011 revenue equal to Yandex's full year 2010 revenue; with one quarter remaining. It is important to note, traders are expecting high marks from Yandex because the company is expected to continue growing and beat estimates by large margins. If Yandex can top estimates by a wide margin, Yandex's share price will be pushed higher by traders and investors opening long positions with the intention to ride a wave of growth over the coming years.
Key to remember: Yandex is growing very fast at the current moment. However the share price has trended downwards. In fact, Yandex has underperformed the Nasdaq by over 30%. This may lead traders to short the company going into the earnings report. Also, one key to keep in mind is Yandex has stated on September 29th, "Yandex has experienced periods in which its market share temporarily declined due to changes in the competitive environment." This may be a sign for investors to expect a weak third quarter followed by a strong fourth quarter due to the affirmation of the 55%-60% growth in revenue target.
Traders tend to watch companies that have a reason to spike upwards or plunge downwards. As I noted above, several of these companies are set to tank. On the other hand, some of the technology companies are more than likely set to report a strong quarter. However, it will be important to remember forecasts are just as, if not more important than, the earnings results of the previous quarter. Also, at any given moment a stock such as Oclaro or Akamai could spike on any sort of strong earnings. However, I must reiterate I do not expect this to happen.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.