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TwitterIt was another good day for the markets. With Google, IBM and Goldman Sachs all declaring better than expected results for the third quarter. Results for Citi Group and AMD were not as impressive as the other three but were encouraging to say the least. The good news pushed the Dow Jones industrial average (INDU) up by 47 points for its highest close of 2009. Nasdaq and S&P 500 were up by 0.05 and 2.14 percent respectively.
This has been a good week with more and more corporations returning with better than expected results. Technology companies seem to be leading the way here. Google joined the party today with their results coming in after the end of day and pushing their shares up by 2 percent in extended trading.
Google beat forecasts by over 3 % and recorded revenue collections at $4.38 billion a gain of 7%. After dismal figures because of cost cutting and revenue slowdown for nearly an year, things seem to have turned for the better now. The net income went up by 27% which roughly translates to a gain of about $5.13 per share. For the same period last year Google has posted revenue earnings of $4.04 billion.
Goldman Sachs brought more cheer to floor with their reports which showed quarterly profit figures at $3.2 billion. A gain of nearly two and a half times from the numbers from the same quarter of last year. Goldman Sachs also beat forecasts by nearly a dollar for every share. Revenue has $12.37 billion in the third quarter. Despite hitting their 52 week high just two days back, the positive results could not bolster the share further up as it dropped 2.7% on Thursday. Though its hopeful to recover that on Friday. Goldman’s results follow closely after JPMorgan Chase had declared their results and gone beyond expectations.
Another technology firm IBM beat market expectations too. They registered higher quarterly earnings but dropped on the revenues side. The company said that they will be able to achieve a return of nearly $9.85 per share, a gain of nearly 1.5% per share value and above projections.
AMD too seemed to get some respite. They were projected to be in the red and yes, no surprises there they indeed are but not as much as people had expected. Even though revenue is down nearly a quarter from the same period last year, but it has improved by over 18% over the second quarter of the current year. The company hopes to keep the trend alive and post much better revenue earnings for the final quarter of the year.
Another corporation having a tough time is the Citi Group. Despite absorbing in billions of dollars in Government funds. They still could not climb out of the trench and posted $3.2 billion in losses for the third quarter. The report triggered a 19 cent drop in the shares price. The loss was estimated to be much bigger, but with certain areas of business showing improved performance that was avoided much to the relief of many. The major factors towards the loss were credit losses and massive one-time items related to the conversion of preferred shares to common stock. If those are excluded, the figures do go green and profit is listed at $101 million.
Analysts are expecting beyond expectation results from most of the corporations and there is talk that these figures are not the result of cost cutting and other cost saving methods implemented by organizations in the past year. There is hope that growth is real and the economy is moving in the right direction albeit slowly.
Facts which support this theory are that Google is expecting to get good results from its core revenue generator – online advertising. Ad spending is going up this year and that is a very encouraging factor. Google hopes that the last quarter will keep the trend going but the real spurt will not be coming till the first quarter of the next year, when they expect revenue percentage growth to be back in double digits. Google’s Chief Executive Eric Schmidt has said that the worst of the economic slowdown is behind them and they are looking to go back on the offensive with more spending and return to their acquisition game.
Goldman Sachs and JPMorgan Chase on the other hand are racking up billions to give away as bonuses. While Goldman has stashed over $16 billion in the first three quarters of the year. JPMorgan has managed over $11 billion in the same period. These organization want their employees to know they are doing well and the year end bonuses for the employees this year might even top the record setting numbers of 2007. An extremely favorable indicator of the fact that these corporations have indeed weathered the beating of the slowdown.
AMD and Citi Group which did not post impressive numbers like the others are also hopeful that the current quarter will be better for them and will set the base for a strong start to next year.
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