escapefromblogland

Sunday, October 22, 2006

Google's doing great, SanDisk under pricing pressure, and Rambus isn't telling

The Wall Street earnings season is still going strong, and yesterday, we got earnings reports from three more companies with relevance to what we do around here. So, just like we did yesterday and the day before, here's a rundown on the day's earnings reports. And remember, none of this should be construed as investment advice of any kind. Do your own research before you invest your life savings in the market.

Thursday's Telling

  • Google saw a 70 percent revenue boost to $2.7 billion, while net income skipped from $381 million last year to $733 million now, a 92 percent increase. The company also hired 1,436 new employees during the quarter, increasing headcount by 18 percent. Sergey Brin said his company has shifted from developing new features to improving and bundling the ones already in place, because the cornucopia of Google tools can be confusing. "We're concerned that if we continue to develop new products, you have to do searches before you get to use them," Brin said. Whatever the strategy, there's no arguing with the results as Google knocked this one out of the park.
  • SanDisk, the #2 in today's digital media player market after Apple's iPod line, reported $751 million of sales, up 27 percent year-over-year, and 61¢ of earnings per share excluding one-time items, up from 51¢ last year. These results are slightly better than the average analyst forecast, but the company also reported precipitous drops in average price per megabyte across its flash-based product assortment to the tune of 60 percent. Operating expenses spiked on the massive retail promotion programs devised in response to every other flash-gadget manufacturer's retail price drops.
  • Last but least, memory maverick Rambus was supposed to report earnings, but instead just gave us revenue numbers. The gross take of $45.9 million was a 20 percent improvement over 2005, but short of the $48.9 million expected by Wall Street. So why the abbreviated report? It's that old, sad stock option accounting song. An internal review of past practices found inappropriate backdating events as far back as 1996, and there will be significant restatements of financial results. Rambus expects over $200 million in aggregate charges over the years to correct the problems.

    Geoff Tate, Rambus' CEO from 1990 to 2005, was the only member of the company's stock option committee when these problems occurred, and reaped much of the benefit himself. He is no longer with the company after giving up his board seat in August.

In after-hours action, Google saw its stock price jump up nearly 8 percent, while the other two experienced that sinking feeling—3.5 percent in Rambus' case, and nearly 9 percent for SanDisk. And for once, not one of these reactions seems unreasonable.

That concludes our Wall Street coverage for this week, as nothing remarkable is supposed to happen on a stock market Friday. Next week, another handful of Arsian companies are slated to deliver results (Netflix, Amazon.com, Blockbuster, Akamai, Microsoft, Sun, and a handful of telecom and cable operators), so we just might do some more of this. Stay tuned.

Monday, December 05, 2005

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