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2HRS2GO: Lessons of the earnings season

COMMENTARY -- What This Earnings Season Told Us So Far:

  • It's easy to see why the top three wireless handset makers have the market positions they do, meaning the industry isn't as flat some observers thought. Nokia (NYSE: NOK) simply runs its handset business better than Motorola (NYSE: MOT), and a heck of a lot better than Ericsson (Nasdaq: ERICY).

  • Profits matter -- Multex.com (Nasdaq: MLTX) and Register.com (Nasdaq: RCOM) are blasting ahead after their first non-losing quarters -- but quality of revenue matters more: Yahoo (Nasdaq: YHOO), though up more than 5 percent today, remains 20 points below its price before a quarterly conference call that failed to allay worries about advertising sales. Conversely, America Online (NYSE: AOL) gained after telling analysts that its advertising backlog (as well as Time Warner's) is heavily weighted toward traditional companies.

  • Despite what some observers thought, Microsoft (Nasdaq: MSFT) still matters more than almost any other tech stock, judging by the market's reaction to a report best characterized as run-of-the-mill Microsoft.

  • Summertime blues depressed people to the point where investors' earnings expectations were lower than Rulon Gardner's going into his Greco-Roman wrestling upset against the Siberian Monster, Alexander Karelin.

  • The only thing that looks more frightening than Karelin are near-term projections (an earnings decline and zero revenue growth in fiscal 2001) for Apple (Nasdaq: AAPL).

  • Speaking of which, you can see why vows of humility and poverty usually go together. Not that Apple is poor, but its overwhelmingly underwhelming financial performance not only brought CEO Steve Jobs into an earnings conference call for the first time in recent memory, but even brought out mea culpas. Kudos to Jobs and his management team for facing their mistakes squarely.

  • That doesn't mean their proposed answers are correct. Apple's upcoming products might be the best that Jobs has ever seen, but nowadays a strong computer company is about much more than just new hardware or software. There's a reason why "Beyond the Box" Gateway (NYSE: GTW) produced Wall Street's favorite set of September quarter results from major computer vendors.

  • Apple isn't the only lobber of stink bombs. IBM (NYSE: IBM) deserves all the credit in the world for building its sevice business, but Wall Street is rightly becoming restless with Big Blue's sluggish hardware and software businesses. It's amazing when you consider wasted opportunities like this one: IBM System/390s are among the baddest, fastest processing machines on the planet, yet the company didn't bother molding and aggressively marketing them as Internet servers until this month.

  • On the other hand, Sun Microsystems (Nasdaq: SUNW) may or may not have the best Unix servers, but the company's marketing and sales people can run rings around their counterparts at IBM and Hewlett-Packard (NYSE: HWP).

  • B2B stocks' demise is vastly overstated. See earnings reports for Commerce One (Nasdaq: CMRC) and Ariba (Nasdaq: ARBA) for details.

  • Rambus (Nasdaq: RMBS) investors have a strong belief in the legal system. You would think -- or at least I would -- that losing the confidence of Intel (Nasdaq: INTC) would hurt the purveyor of RDRAM and would-be king of DDR memory, but Wall Street instead drove Rambus' price higher after the Financial Times of London quoted Intel CEO Craig Barrett's strong criticism. Investors pumped RMBS stock even more after this week's quarterly report, which largely highlighted Rambus' ability to collect on its SDRAM claims. But that royalty source will stop cold if the company loses its patent litigation cases against some heavy hitters in the DRAM manufacturing industry.

  • There are still too many creaky businesses floating on the stock market. At least eight pure dot-coms reported earnings yesterday afternoon alone, and that's after dozens already reported over the last couple of weeks. And there are dozens more to come. 22GO>