Must do better
This is a strange time for earnings announcements. The global recession really set in in Q4 2008, so Q4 2009 results generally showed a big year-on-year jump from that exceptional nadir. So now that Q1 earnings season is upon us, big year-on-year jumps are already priced into share prices, and they're tending to get punished if the jumps aren't big enough.
Both Google and AMD reported their earnings yesterday, and both beat analyst estimates. But in after-hours trading both companies' shares were trading down nearly five percent.
Google's revenues of $6.77 billion in Q1 were 23 percent up on a year ago. Its EPS was $6.76 - beating the analyst consensus of $6.60. Furthermore Google took on nearly a thousand more employees and it has $26.5 billion in the bank up a cool bil on the previous quarter.
Nonetheless it's thought that analysts were secretly expecting even better results and in this climate of recovery, it seems you gave to genuinely surprise investors with your earnings to see a share-price lift.
AMD is at the other end of the economic health spectrum, having undergone a major corporate restructure in the past year in an attempt to return to profitability. It managed to scrape a non-GAAP profit of $63 million in Q1, but was once more dependent on a one-off injection of cash - this time $325 million resulting from the deconsolidation of GlobalFoundries - to move into the black.
What has weighed down AMD's shares, however, will be that Intel saw far better year-on-year improvement in revenue and a pessimistic outlook at the end of the report, which said simply: "AMD expects revenue to be down seasonally for the second quarter of 2010."
