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Wall Street Beat: Apple, IBM, AT&T Earnings Fuel Markets

Marc Ferranti | March 3, 2011
Some of the biggest names in computers and telecommunications including Apple, IBM, EMC and AT&T turned in solid and in some cases record earnings this week, indicating a strong end to the year for tech.

FRAMINGHAM, 22 OCTOBER 2011 - Some of the biggest names in computers and telecommunications including Apple (AAPL), IBM (IBM), EMC (EMC) and AT&T turned in solid and in some cases record earnings this week, indicating a strong end to the year for tech.

 

The weak global recovery from the recession, however, continues to cause a lot of second-guessing about the continued strength of the tech sector. A new report from Gartner (IT) this week, for example, forecasts an anemic increase in enterprise IT spending over the next few years.

Worldwide enterprise IT spending will reach US$2.5 trillion in 2011, a 3.1 percent increase from 2010 spending of $2.4 trillion, according to Gartner. But over the next five years, enterprise IT spending will go through a period of timid growth with spending totaling $2.8 trillion in 2014, Gartner said.

"Several key vertical industries, such as manufacturing and financial services, will not see IT budgets recover to pre-2008 levels before 2012 or 2013," said Peter Sondergaard, senior vice president at Gartner.

IBM, which depends on enterprise spending, reported strong earnings but was beat out Monday by record Apple quarterly results that made the consumer electronics vendor the most profitable U.S.-based technology company behind Microsoft (MSFT).

Thanks to strong sales of Macs, iPhones, and iPads, Apple reported record revenue and profit for its fiscal fourth quarter. Apple's earnings were $4.31 billion, compared to $2.53 billion for the same period last year, while sales were $20.34 billion in revenue, a whopping 67 percent jump from $12.21 billion.

The iPhone's popularity played a big part in AT&T's results. AT&T on Thursday reported revenue of $31.6 billion for the third quarter, up 2.8 percent from the third quarter of 2009, with gains from the iPhone fueling growth.

Apple is now poised to take advantage of an uptick in consumer spending expected during the end-of-the-year shopping season. A new forecast from IBM indicates that consumer electronics spending in the U.S. will be healthy in November and December.

"Retailers should be ready for a robust Black Friday and Cyber Monday," according to a statement from IBM Global Business Services partner and retail analytics leader Michael Haydock, referring to the Friday and Monday following the U.S. Thanksgiving holiday, which this year falls on Nov. 25. U.S. retail electronics sales will rise to $20.89 billion during the last two months of the year compared to $19.97 billion in 2009, according to the IBM forecast.

 

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