Forbes.com - Magazine Article

Forbes.com - Magazine ArticleGoogle Likely Range-Bound Post-Offering
David Ng, 08.19.05, 5:00 PM ET

The technology sector saw more mixed earnings results this week. Still, investors had a lot to mull over as an Internet giant filed a significant public share offering. In the computer sector, another giant revealed crucial information about a highly anticipated product.

Google (nasdaq: GOOG - news - people ) said on Thursday that it has submitted a U.S. Securities and Exchange Commission filing to issue 14.1 million common shares. The total offering is valued at approximately $4 billion. Various reports stated that Google is likely to use the capital to pursue acquisitions. Shares of Google fell nearly 3% on Thursday's news and were down by slightly more than 3% for the week overall. The public offering announcement came a day before the one-year anniversary of the Internet company's much-heralded 2004 IPO. Merrill Lynch (nyse: MER - news - people ) reiterated a "neutral" rating on Google, saying the stock will likely be range-bound until investors have more information regarding the use of the proceeds of the offering.

Microsoft (nasdaq: MSFT - news - people ) announced on Wednesday it will roll out two versions of its highly anticipated Xbox 360. The software company expects both versions to be available by the holiday season in the U.S., Europe and Japan. The Xbox 360 Core System will go for a $299.99 retail value, while the premium Xbox 360, which features a wireless controller and a 20 gigabyte hard drive, will sell for a hundred dollars more. UBS reiterated a "buy" rating on Microsoft, saying the decision to sell two versions may result in potential upside to its Xbox franchise revenue estimate of $3.7 billion in fiscal 2006.

Hewlett-Packard (nyse: HPQ - news - people ) showed signs of a turnaround when it reported strong third-quarter results on Tuesday. The hardware company's operating earnings beat consensus estimates for the period, even though net income fell year-over-year. For the quarter, HP posted net earnings per share of 3 cents, down from 19 cents in the year-ago period. Operating earnings were 36 cents per share, beating the analysts' estimates of 31 cents. Revenue rose approximately 10% to $20.76 billion. UBS maintained a "neutral" rating on HP, saying CEOMark Hurd has made a quick impact on the company. The research firm raised the fourth-quarter earnings estimate to 46 cents from 44 cents.

Gateway (nyse: GTW - news - people ) disappointed investors when it cut its 2005 forecast, sending shares of the hardware company down sharply on Monday. For the week, shares of Gateway were off approximately 17%. Gateway swung to a second-quarter earnings per share of 5 cents, versus a year-ago loss of 91 cents. Revenue was $873.1 million, up from $837.6 million. For full-year 2005, Gateway lowered its full-year GAAP earnings-per-share guidance to a range of 11 cents to 13 cents, from a previous range of 15 cents to 17 cents. Revenue guidance was lowered to a range of $3.9 billion to $4.0 billion, from a previous range of $4.0 billion to $4.25 billion. The company cited on-going tax settlements and margin pressure in several businesses.

Autodesk (nasdaq: ADSK - news - people ) rose more than 5% on Friday on heavy volume following a positive second-quarter earnings report. The maker of design software posted net earnings per share of 30 cents, almost double from the year-ago period. Revenue was $373 billion, up from $238.4 billion. Autodesk said in a press release that its performance was driven by strong growth in revenue from new seats, upgrades and subscriptions, increasing penetration of its vertical and 3-D products and continued improvement in profitability. Following the earnings announcement, Piper Jaffray reiterated an "outperform" rating on Autodesk and raised the target price to $46 from $42. The research firm cited the prolonged life cycle of the company's AutoCAD 2002 product as a positive announcement from the company.