Tech is looking strong

Google had a blow out earnings yesterday and their shares jumped in after hours trading.  Google had significantly higher revenues. 28 % YOY growth is quite impressive. More clicks and monetization are occuring with Google’s search engine. Android marketshare is looking strong. Google Plus is growing and becoming more popular. There are rumors that Google wants to develop a better music network for Android to better compete with I-Tunes.  Will Google release G-Tunes? Stay tuned.

IPhone 4S pre-orders have already sold out. On Oct 12 Apple launched I-Cloud. Apple is betting that cloud computing will thrive in the future and PC’s will fade away. You can read about the I-Cloud here:
http://www.apple.com/pr/library/2011/10/04Apple-to-Launch-iCloud-on-October-12.html

Amazon remains optimistic about the potential of Kindle Fire to extend Amazon’s reach with tablet computing and e-commerce . Pre-orders have been strong thus far heading into the holiday season. 50k new orders per day is impresive. Google had higher search revenue in a down economy which indicates that more consumers rely on online purchasing instead of retail shopping. Amazon is the premier online retailer. Is there a connection to be made with Google’s higher search revenues during yesterday’s earnings and Amazon’s future earnings with retail spending and online retail growth? Possibly. Read about Amazon’s pre-orders with Kindle Fire here:

http://www.csmonitor.com/Innovation/Horizons/2011/1010/Amazon-Kindle-Fire-preorders-reach-50K-per-day-report

Yahoo continues to garner attention from private equity groups. The latest two are KKR & Blackstone. Schwarzmann of Blackstone is not known to be a big investor in tech but Yahoo has a market cap of 19.9 Billion and there are many interested players looking seriously at Yahoo. All roads with Yahoo seem to be leading to Jack Ma, Chairman of Alibaba who has said that he wants to acquire his 40% share of yahoo. You can read more about yahoo’s potential acquisition here:
http://www.ibtimes.com/articles/230830/20111013/yahoo-takeover-bain-kkr-activist-icahn-romney-private-equity-facebook-goldman-sachs.htm

Netflix is working out a deal with CW Network to gain more content. First year cost is projected to be around 60 million. The total package over 9-10 yrs is in the 1 Billion range.

Overall, tech is looking strong relative to other sectors. On a cyclical basis, this quarter is a good time for stock to rally. Fall-winter spending with tech is noticeably higher. I would expect to see tech to rally on Friday based on Google’s big earnings beat.

Spain’s credit rating was downgraded again. It is not the first time they were downgraded this year. I don’t believe that this news will sink U.S. futures.  Currently, pre-market futures are higher.

Inflation dropped in China. Important U.S. economic data will be released on Friday morning. Retail sales, consumer sentiment, and business inventories are on deck. Good retail numbers has the potential to drive a nice rally to close out the week.

About Johnathan Schweitzer 1468 Articles
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