Technology Earnings Preview: 5 Things to Watch

A handful of technology leaders - IBM, Intel, Microsoft, Google and Apple - are all scheduled to report quarterly earnings over the next week. Here are five things to watch when the numbers come out because they may indicate prospects for 2012.

Intel: What is the pace of new orders? The world's biggest semiconductor maker, whose chips power about 90 percent of PCs and laptops, as well as servers, is expected to report fourth-quarter earnings around 61 cents a share, up 3 percent from a year ago, on revenue of $13.7 billion.

Intel already warned earnings might be lower than earlier expected because Thailand's November floods hurt disk drive makers and slowed orders.

But watch what the Santa Clara, Calif.-based giant says about the pace of new orders, especially for the Ultrabook, second-generation Core chips that are the heart of its Ultrabook strategy to compete with Apple in the ultralight- and tablet sector.

Intel only started making these chips in its most advanced U.S. factories in the fourth quarter. At last week's Consumer Electronics Show, about a dozen of its top customers, including Hewlett-Packard, Dell, Samsung Electronics and Lenovo Group, unveiled new Ultrabook laptops.

IBM: What is the overall trend, especially from Europe? The world's No. 2 computer services supplier is expected to report fourth quarter earnings around $4.62 a share, up more than 10 percent, on revenue of $29.7 billion, bringing annual revenue above $100 billion again - a technology club whose only other members are Hewlett-Packard and Apple.

IBM, based in Armonk, N.Y., derives about a third of revenue from what it calls Europe-Middle East Africa, but it's really Europe that counts. Last quarter, that sector's sales rose 9 percent but were flat because of the dollar's fall. What happened in the fourth quarter, as the European recession grew?

Other multinationals in Europe, like HP and Cisco Systems, have fared relatively well because technology was relatively immune to hard times. Companies invest in technology to sustain profits.

On another note, IBM Microelectronics, its chipmaking unit, is one of the world's largest, although far from Intel's size (IBM once owned a minority stake in Intel). Senior executives told International Business Times last week at CES the unit is thriving, selling chips for internal use but also to others, including makers of electronic games like Nintendo.

Apple: What to do with the cash? Apple, scheduled to report Jan. 24, is expected to report first-quarter results of $9.95 a share, up 54 percent, on revenue expected to leap above 40 percent to $38.58 billion.

Obviously, the company will report exactly how many new iPhone 4S models it sold, as well as older iPhones, plus all other products, including iPad2s.

But a sticking point for the Cupertino, Calif.-based giant is its cash pile, which was $85.1 billion last quarter. Apple is under pressure to tap it for acquisitions, or perhaps a special dividend to shareholders, much like Microsoft in 2004.

Now that CEO Tim Cook is running Apple without Chairman Steve Jobs, he's free to implement his own policies. As well, Cook may announce dates for new product releases throughout 2012.

Microsoft: Where's the beef? The Redmond, Wash.-based software giant is expected to report second-quarter earnings around 76 cents on revenue of $20.9 billion, a 5 percent boost from 2010.

Global PC sales for 2011 only inched up and Apple had about 75 percent market share in ultralight laptops and tablets. At CES, CEO Steve Ballmer said Microsoft is doing well with all products, including new Windows Phone sales to Nokia and other vendors using Qualcomm chips.

But how about growth forecasts for the rest of 2012? How is Microsoft tapping new customers whose use Skype? And how much cash is available? Surely it will exceed last quarter's $57.1 billion, which also might be used for another special dividend?

Google: What are expectations once the Motorola Mobility deal closes? The Mountain View, Calif.-based search engine and advertising company is expected to report net income rose nearly 16 percent to $9.03 a share on Thursday, as revenue rises 31 percent, to $8.4 billion.

Given troubles at Yahoo, Google's search hits have grown and its Google+ offering to battle Facebook may have exceeded 50 million signups. But what will CEO Larry Page say about strategy once its $12.5 billion takeover of Motorola Mobility closes, probably in the first quarter, putting Google into the hardware business for the first time?

That will set the stage for a battle royal with Apple for smartphones and tablets, the reason why Google targeted Motorola Mobility. Google also had $42.6 billion in cash last quarter, so plans for its use are key.