We are joined today by Zacks senior technology industry analyst
Steve Biggs, CFA for his opinions on how earnings season is progressing for tech companies within his coverage, now that we have passed the mid-way point of fourth quarter earnings reports.
I want to get to some earnings results in a moment, but first I thought I would ask you what type of impact you see the Microsoft-Yahoo saga currently having on the industry as a whole. Do you have any general comments on that?
Well, it could have an impact on the online advertising market, which Microsoft (MSFT) has been working to get in through acquisitions and through its internal developments on MSN. This would certainly give them a bigger presence. I guess time will tell if it goes through, but I would have to think, with the premium being offered, that the Yahoo (YHOO) shareholders would certainly be in favor of the deal, and the board might have a hard time holding off Microsoft permanently.
So it would certainly give them a stronger presence in online advertising, and as it relates to my universe, Marchex (MCHX) is the one remaining independent Internet advertising firm that's still around - so that would probably have a negative impact on them as the market becomes more consolidated.
Is Marchex, then, much more of a takeout candidate at that point?
Well, there were a number of acquisitions in the space last year, and Marchex was considered a takeout candidate, but then the market kind of slowed. Most people who were in the market to buy something in the space had already acquired, and credit got a little tighter, making it less attractive for a financial buyer. At this point, it doesn't really look like it would be a buyout candidate, although it has been identified as one in the past.
Let's turn to earnings season. Has this gone pretty much as expected, or have there been some surprises worth mentioning?
I think what we've seen, for the most part, is fourth quarter earnings have actually come in pretty good. A lot of the companies I cover beat expectations. But then on the other side, guidance for the first quarter and then the full year 2008 has been a little on the light side. And I think that's to be expected given the outlook for the economy.
Have you seen some pullback in the tech stocks in general?
Yeah, well I think the market - tech stocks included - went through a pretty big pullback in January, and I think people are just getting expectations re-set for 2008.
