Amid the flood of earnings results in the US, Asia and Europe and the UK last week, two stood out in the mind of the markets – tech giants Apple and Amazon.
And despite nervy investors, reaction was stunning – especially in the US market which last week lost 2.8% (for the S&P 500) and 2.6% for the Nasdaq.
Apple shares touched a new high on Friday, US time, after reporting record earnings and iPhone sales earlier in the week, while Amazon shares charged ahead a day after it reported stronger revenues and earnings and shook off the negativity that has gripped the stock since a weak third quarter report three months ago.
The two big tech stocks resisted a wave of late selling wave in the wake of the weaker than expected 4th quarter GDP figures on Friday, and a sharp jump in US oil prices ahead of the end of the month.
Shares in Apple rose to a new all time high of $US120, surpassing the previous intraday high of $US119.40 hit last November, but it later told off and closed lower on $US117.16, down 1.46% on the day.
The gains come days after Apple stunned Wall Street with its record 4th quarter earnings. Fourth quarter net profit surged 37% to an all time high of $US18 billion – the biggest quarterly profits reported any public company in history.
Analysts concluded that the iPhone maker overtook rival Samsung in the last quarter to become the world’s largest smartphone maker. Samsung had reported a sharp fall in 4th quarter profits as sales of its phones slowed and margins plunged. Samsung’s 4th quarter earnings fell 27% to $US4.9 billion in the quarter.
Amazon shares surged by nearly 14% on Friday as the wider market slid 1.3% as investors realised that had the wrong view of the giant retailer and web services company.
The shares ended around $US355, adding a massive $US20.6 billion to the company’s market value. The shares were still off around 12% over the past year at the close early Saturday, our time, while the S&P 500 is up 12% in the same time. But Friday’s close more than halved that loss.
A slew of brokers upgraded the shares, pointing to the growing success of Amazon Web Services [AWS], the company’s cloud offering of tiered products to enterprise customers. Amazon said that AWS had more than 1 million customers in the fourth quarter, with usage growing 90% year-over-year, according to Amazon.
As a result, will start from this quarter, breaking out AWS as a stand-alone business on its income statement. Previously, it appeared under the “other revenue” line item.
Amazon reported a profit of $214 million, or 45 cents a share, on revenue of $29.33 billion for the December quarter. There were no delivery stuff ups as there was in the same quarter of 2013 as the company struggled to delivery presents and purchases after the big online sales after Thanksgiving in late November.
But the profit will be fleeting – the company forecast a possible loss this quarter as the company spending heavily across all its businesses, especially the hot new area of Streaming Video On Demand (SVOD) for its Prime customers.
For the current quarter, the company said it expects sales to rise to between $US20.9 billion and $US22.9 billion, growing 6% to 16% compared with the first quarter last year. It also forecast that operating income would range from a loss of $US450 million to a profit of $US50 million. Amazon last year reported $US146 million in operating income.
