This is a week of reckoning for the high-tech sector, as companies across the board--from giant chipmakers to Internet start-ups--post quarterly earnings.
For the most part, analysts' forecasts are rosy, even for companies that are being hurt by the Asian economic crisis. Nevertheless, Steve Frenkel, an analyst at Drake & Company in New York, said investors should not expect the same run-ups in stock prices this week that characterized many tech stocks during the past month.
"Investors expect these earnings to be better than expected, so more than likely, most of these stocks will sell off a bit" despite the earnings gains, Frenkel said.
Wall Street expects Microsoft and Sun to shine. The software giant is expected to post earnings of 48 cents per share when it releases its figures Thursday, according to First Call. The expected good news comes despite ongoing antitrust investigations and complaints about the company's Windows 98 operating system.
Sun, too, will release its fiscal data Thursday, and analysts expect the company to post earnings of 71 cents per share. One potential bugaboo: the Asian economic downturn.
Apple, meanwhile, continues its roller-coaster ride. The once-embattled Mac maker is forecasting a third straight profitable quarter on the strength of its line of G3-powered desktop and PowerBook computers--after two years in the red. Wall Street is anticipating a profit of 33 cents per share for Apple, according to First Call. Apple will announce results Wednesday.
Excite is forecast to post a net loss of 39 cents per share, according to First Call, but Frenkel said it is likely to follow in Yahoo's footsteps with better-than-expected results. Last week, Yahoo beat analysts' earnings predictions by more than 66 percent. Excite will report its earnings on Thursday.
Other Internet companies also will report their quarterly earnings. DoubleClick, which has been up sharply in recent weeks, is forecast to post a loss of 28 cents per share. In addition, First Call's consensus predicted that @Home will lose 10 cents per share. Both DoubleClick and @Home will report earnings on Wednesday.
Chipmakers will be another closely watched sector. They have been hit hard in recent months by tumultuous economic times in Asia and slumping sales.
Applied Materials, the giant semiconductor equipment supplier, warned of lower-than-expected profits last week, and Intel and National Semiconductor recently have announced plans to cut their workforces.
Intel will announce its fiscal information tomorrow, when Wall Street expects earnings of 68 cents per share to be reported. (Intel is an investor in CNET: The Computer Network.)
Ashok Kumar, an senior analyst covering the semiconductor industry for Piper Jaffray, increased his earnings estimate for Intel today to 70 cents per share from 62 cents per share, on the strength of increased shipments.
Kumar said he expects the company to ship 21 million processors during the coming quarter, up from 18 million units from the year-ago period. The increase is enough to offset a 2 percent decline in the average selling price of Intel's chips since the first fiscal quarter of 1998.
Also predicted to do well is PC giant Compaq Computer, which is expected to break even for the quarter, according to First Call's consensus.
Wall Street is watching the company, which already has warned of a subpar earnings report, with an eye toward the larger computing market segment. (See related story) The company will release its earnings Wednesday. Other technology companies that will report quarterly results this week include EarthLink, 3Dfx, and Cirrus Logic, which are reporting Wednesday.