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Wall Street Beat: Mixed news for tech puts dent in sector confidence

Marc Ferranti | March 31, 2014
Mixed news for hardware and some disappointing software vendor financial reports this week appeared to put a dent in confidence in the IT sector.

"Continued strong demand for Red Hat's technology portfolio drove strong growth in our core platform and application development technologies during the fourth quarter," said CEO Jim Whitehurst, in a statement. "In addition, our cross-selling efforts resulted in early wins for our emerging technologies, which address top CIO priorities that are driving the evolution of enterprise computing."

However, the open-source software company said it expects revenue between $412 million and $415 million for its first quarter ending May, while analysts surveyed by Thomson Reuters forecast sales of $414.98 million, at the high end of that range. Red Hat shares closed at $52.20, down by $3.93.

Application development and management software company Progress Software also issued weak guidance after reporting Thursday that quarterly results declined from last year. Revenue from continuing operations declined 11 percent to $74.5 million from $83.7 million, while net income was $11.1 million compared to $31.1 million in the same quarter last year.

For the current quarter, the company forecast revenue in a range of $78 million to $80 million, and earnings per share in a range of $0.32 to $0.35. That compares to analysts' average estimate for $82 million in revenue and earnings per share of $0.35. Shares of Progress closed at $21.09, down by $0.56.

On the whole, shares of tech companies, along with the rest of the market, managed to close slightly higher for the day Friday, possibly buoyed by news that the U.S. gross domestic product grew at a 2.6 percent annual rate in the fourth quarter, according to the Commerce Department. That was higher than the agency's previous calculation of 2.4 percent growth.

But the mixed news for tech during the week took a toll. The Nasdaq Computer index closed Friday at 2,062, down from 2,105 a week earlier. The Nasdaq Computer index is still 29 percent higher than it was a year ago, but up to recently, it was tracking at more than 30 percent higher.

 

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