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Summary:

“As January goes, so goes the market.” Or so holds the January Barometer theory, whose originators claim it’s accurate 75 percent of the time (others are doubtful). So far, the S&P 500 is off 7 percent; if that continues, we’re in for another crappy year. When […]

“As January goes, so goes the market.” Or so holds the January Barometer theory, whose originators claim it’s accurate 75 percent of the time (others are doubtful). So far, the S&P 500 is off 7 percent; if that continues, we’re in for another crappy year. When the January Barometer works, it works much better for a broad index like the S&P 500 — but a similar phenomenon may also play out in the tech sector.  With more uncertainty facing tech than there has been in years, the outlooks tech executives are expected to give when they report their latest quarterly results, starting next week, will be the subject of great mastication and scrutiny.

Plus, the past week has seen some potentially fate-changing news concerning major technology companies — news that could trigger a shift in how investors and customers alike think about them.

For most companies, the coming weeks may involve issuing news similar to that of Intel, which on Thursday reported a 90 percent drop in profit and a 23 percent rise in revenue for its latest quarter — terrible, really, but as expected. (And shares of Intel ended Friday’s session up 3 percent.) But for others it could be a little more tricky. Here are some key stocks, their performances so far in January, scheduled earnings date and issues that will likely come up in conference calls.

Google

Stock change year to date: -2.6 percent.

Earnings: Jan. 22.

At issue: A year ago, investors worried about Google’s growing staff and its myriad projects not making money. This week, Google eliminated 100 recruiting jobs and cut or curtailed projects like Google Video, Notebook and Dodgeball. The stock fell, closing last week 60 percent below its record high of $747 in November 2007. The market’s mood doesn’t look to be in favor of Google, partly because ad prices have been falling. Without hints of a recovery in its business — unlikely from this guidance-averse company — a sustained rally will be tough.

Yahoo

Stock change year to date: -5 percent.

Earnings: Jan. 27.

At issue: Everyone’s written off 2008 as the worst in Yahoo’s history. The earnings call will focus on new CEO Carol Bartz. Can she replicate her success at Autodesk? Will she forge the right partnerships and make the right deals? Can she make Yahoo great again — or if not great, good enough? Most importantly, can she deliver short-term value through a search deal with Microsoft? Her first comments as CEO may be the most crucial ones she’ll make at Yahoo.

Amazon

Stock change year to date: +0.6 percent.

Earnings: Jan. 29.

At issue: They call it Black Friday, but it was the beginning of good tidings for Amazon. Its stock surged 63 percent from pre-Thanksgiving lows to early January. Then came analyst reports saying the company is finally facing economic forces its strategy can no longer defy, taking the bloom of Amazon’s 2009 rose. AmTech Research asked the eternal question of Amazon: “[It] has a tough decision to make — will it attempt to grow its top-line come hell or high water?” The water’s getting a bit high here, Mr. Bezos. Is the answer still yes?

Palm

Stock change year to date: +158 percent.

Earnings: N/A.

At issue: Palm is the Tampa Bay Rays of technology. With the Pre, the company staged a comeback nobody expected. But the flipside to Palm’s stunning stock rally this year is worth noting: The stock fell to $1.54 last month from $19 some 15 months ago. After ending Friday’s session at $7.91, it could go higher, but in order to do so, Palm has to prove itself. Not just with a lauded device; the company needs developers and a carrier better than that of Sprint.

Apple

Stock change year to date: -3.5 percent.

Earnings: Jan. 21.

At issue: I agree with Om and Kara, this speculation/obsession thing with Steve Jobs’ health can get creepy fast. Sadly, until the question of who is going to lead Apple over long term is settled, a cloud will dangle above the stock. Apple has been so sparing with information for so long that investors don’t quite trust it to be forthright. That Google and maybe Palm may have credible rivals to the iPhone this year won’t ease their edginess.

How these companies address these issues will affect their stocks not just in January — but perhaps for the rest of the year.

  1. How come you haven’t included IBM and Microsoft, who also have their earnings this week and can expect questions/comments around key issues like layoff/reorgs, slow economy impact on their business, etc?

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  2. See, the sad thing is, these companies could probably post huge gains and still tank in Q1 overall because of the state of the market right now; especially Google and Apple.

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  3. Hate to break it to you but the stock price of companies in the tech sector is especially misleading.

    Stock change year to date is the wrong indicator just like the January Barometer theory. History is not to be trusted. What is important is understanding the fundamental drivers of change and not just simple results which don’t tell us much at all.

    Google has never been worth $747 so a decline in stock prices is good for them. Palm numbers are meaningless as they come off a low base.

    Amazon is surely expecting low or zero growth rate for ecommerce and will reshuffle its focus and spread its risks towards providing the s3 platform for the likes of tunecore, tubemogul and kyte who all have growing traffic and revenues.

    Share prices are arguably even less reliable than any time in the past.

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  4. Kevin Kelleher Monday, January 19, 2009

    @AS. Space constraints, mostly. They will also have important things to say this week.

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  5. Kevin Kelleher Monday, January 19, 2009

    @Michael. Good point. I suspect there will be a lot of parsing the tea leaves for this quarter, especially over comments from companies you mentioned.

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  6. And Intel is shutting down its plant in the Philippines: http://www.yugatech.com/blog/?p=6374

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  7. [...] Batters Tech Companies at hpcwire.com. A Fateful Month for Big Tech Companies at gigaom.com by Kevin Kelleher [...]

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