Apple Gains on Record Earnings; Tech Absorbs Optimism Surrounding Deficit Slashing Plan

Brittney Barrett  |

A solid rally for stocks accelerated into the afternoon on Tuesday marking the fastest gains for many stocks since April, as a bi-partisan group on senators introduced the most viable deficit reduction plan yet. The optimism surrounding the $3.7 trillion deficit reduction place, embraced by President Obama, was absorbed quickly into the market, with good news impacting the market more steeply than usual. The tech sector was among the recipients especially boosted by the news on several positive earnings reports.

Apple (AAPL) made significant gains before the bell today on expectation of impressive quarterly earnings, but it was largely what happened after the bell that is news worthy. The company’s third-quarter release led shares to soar in after hours trading. Following the release of their fiscal third-quarter earnings, shares began to soar. The company’s earnings blew forecasts, averaging around 66 percent revenue growth, out of the water.  Apple posted a revenue increase of 82 percent with a profit gain of 125 percent. Third-quarter net profit equaled $7.31 billion, or $7.79 per share, more than twice that of the company’s earnings of $3.25 billion, or $3.51 per share in the year ago period. Revenue reached $28.57 billion against the previous year’s $15.70 billion.

In the company release, Steve Job’s announced it was the “best quarter ever,” for the company and expressed optimism concerning fall’s release of the i0S5 and iCloud.

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Apple’s remarkable earnings nearly eclipsed those of IBM, but the distance between earnings announcement allowed IBM to benefit fully from their own growth. IBM (IBM) began a strong rally following the release of second-quarter results. Profit of $3.66 billion or $3 a share outperformed the $3.39 billion or $2.62 a share in the same period a year ago. Revenue for IBM surpassed analyst expectations, up 12 percent o $3.09 billion. The company said revenue rose 12 percent to $3.09 billion. Alongside the news, IBM increased its full-year earnings forecast to $12.87 a share from a previous estimate of $12.73.

Meanwhile, Cisco Systems (CSCO), amid the positive earnings of its peers announced the next tier of its restructuring plan. The networking goliath, which has been suffering for months said it would slash 6,500 jobs and sell a set-top box manufacturing facility to Foxconn. The sale of the facility would result in an additional 5,000 jobs being removed from Cisco’s currently heavy pay roll. Investors approved of the change and Cisco shares pushed higher.

Intel (INTC), the world’s largest chip maker, was also higher in advance of earnings, expected for tomorrow. The company is thought to be sitting on a record cash balance and has experienced solid growth while other tech ventures and chip companies have suffered from economic and other catastrophes. For the most part, stock prices have not matched analyst expectations; however, second-quarter earnings are expected to change that. Analysts are anticipating Intel will suffer marginal decline in second-quarter adjusted earnings just over 50 cents but sales are thought to have increased by close to 20 percent of 13 billion.

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