The positive moods prevailed on Wall Street during the week, with indexes having positive performance and accumulating some profits against the free fall since the beginning of the month.
According to Refinitiv, the S&P earnings are expected to increase by 8.3% next year compared with this year’s 23% gain, about half of which was due to the effect of tax cuts. Morgan Stanley’s analysis said the Wall Street is overshooting that estimate and that actual corporate profits will only be up 4.3% in 2019.
The main factors on the market remain tariffs, higher input costs, and global economic slowdown. Any development on these will result in change for the earnings of the companies.
Some of the most valuable companies in the technology sector presented their earnings reports this week, all beating market expectations and having a positive outlook for the next year.
Salesforce surprised with a better-than-expected profit
The US software company Salesforce, the most direct competitor of the German SAP, reported profits above analysts’ forecasts. This suggests that the company’s top products for financial services and healthcare will help keep its rapid growth.
Billed amounts, a metric of how good sales are, rose by 27% in the third quarter to 2.89 billion USD. The company’s revenues jumped by 26% to 3.39 billion USD.
In the fourth quarter, sales revenue for the San Francisco-based company, considered a pioneer in cloud computing, could reach 3.56 billion USD.
Revenue for fiscal 2020 could exceed 16 billion USD, putting the company on track to achieve its annual sales target of 23 billion USD by 2022. Salesforce spends a lot to maintain its good performance, resulting in a 32% increase in total Q3 operating costs. International expansion and acquisitions remain among its top priorities.
Dell’s revenue grows
Dell Technologies reported a quarterly revenue growth of 15% to 22.48 billion USD after the company was forced to upgrade its systems, working with old Windows technology. The profits were also supported by the strong performance of the subsidiary VMware.
Dell reported an 11% revenue growth for its Client Solution Group, which includes products such as personal computers, laptops, tablets and branded peripherals for the third quarter, which ended on November 2. The growth is largely due to the fact that companies are turning to replace their old machines after Microsoft announced its decision to stop supporting the Windows 7 operating system from the beginning of 2020.
Dell holds 17% of the global PC market, ranking after HP Inc (23%) and Lenovo Group (21%).
For the fiscal year ending in 2019, the company expects its total adjusted earnings to be in the 90-92 billion USD range. The company reported adjusted earnings of 79.9 billion USD for the fiscal year that ended on February 2, 2018.
HP’s earnings exceed expectations
HP’s earnings in Q4 2018 exceed analysts’ expectations thanks to the growth of the personal desktop business that sells laptops and desktops, as well as the acquisition of Samsung’s printers business.
Business Personal Systems, accounting for about 60% of HP’s total revenue, posted an 11% revenue growth for the fourth quarter on an annual basis to 10.06 billion USD. The amount was over the expected 9.78 billion USD from analysts.
HP is the second-largest PC seller in the third quarter with a market share of 22.8%. It fell from 23.9% in the previous quarter.
HP said revenue from its printer business grew by 9.1% to 5.30 billion USD in the quarter on an annual basis, a little below analysts’ forecasts of 5.31 billion USD.
HP Inc predicts that its adjusted earnings will be between 0.50 and 0.53 USD per share in the current quarter. Analysts expect a profit of 0.52 USD per share.
The company’s net profit rose to 1.45 billion USD, or 0.91 USD per share, in the three months to October 31, from 660 million USD, or 0.39 USD per share, a year earlier. Excluding some items, the company earned 0.54 USD per share, which is in line with the analysts’ average forecast.
The net revenue increased by 10.3% to 15.37 billion USD. The analysts expected an average of 15.1 billion USD.