Recap Of The Tech Sector After Hurricane Sandy

By Aaron Levitt | November 05, 2012 AAA

With Hurricane Sandy causing a shortened trading period last week, there's plenty of activity on deck for the technology sector. Aside from restoring server and power services for a variety of popular websites - for example AOL's (NYSE:AOL) The Huffington Post was down due to the storm - earnings continue to roll in as well as new product launches.

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Technology-Related Events
Speaking of Sandy, the storm had a dramatic impact on the eastern seaboard's telecommunications infrastructure. A variety of wireless towers, switch gear and other necessary equipment failed during the unprecedented super-storm. However, residents of New York, New Jersey and other states along the Atlantic may have finally received some good news. AT&T (NYSE:T) reported that it has restored 97% of network capacity in the region with New York City cell sites running at 90% capacity. The telecomm had placed satellites on trucks and light-rail cars in the region to create 25 temporary cell sites and fill the gaps in its network. The efforts of AT&T along with Verizon (NYSE:VZ) to restore service will ultimately be seen as step towards normalcy.

Carl Icahn made news again after his latest 13-F filling revealed that the corporate raider had taken a 10% stake in online entertainment provider Netflix (Nasdaq:NFLX). According to the regulatory filing, Icahn - through his Icahn Enterprises fund (Nasdaq:IEP) - spent about $169 million to acquire 5.5 million Netflix shares and call options. Those call options that are set to expire in September 2014, make up the bulk of his stake in the company. Icahn has professed that despite Netflix's recent struggles with performance, the company would make an ideal buy-out candidate for a larger firm like Microsoft (Nasdaq:MSFT) or Amazon (Nasdaq:AMZN). Analysts are betting that Icahn will wage a proxy battle and try and gain control of the firm in order to force a sale. Icahn was once the largest shareholder in Netflix's rival Blockbuster video before it filed for bankruptcy.
In the world of gadgets, Apple (Nasdaq:AAPL) continues to prove it's the king of the tablet-hill. The Cupertino-California tech giant reported that since Friday's launch of its new iPad Mini, the firm has sold over 3 million of them. That was more than double Apple's previous three-day sales record of 1.5 million iPads. That record was set back in March after the debut of the third generation iPad. Even in storm-damaged New York City, Apple's flagship store had "practically sold out" of iPad minis. As of the third quarter, Apple's iPad's make up roughly 50% of the tablet market. That market share amount is more than double the market share of its closest competitor Samsung. However, other competitors have slowly been eating away at that dominate position. A successful launch of the iPad Mini could help Apple regain that recently lost mojo.

Upcoming Earnings
Earnings in the tech sector are starting to die down as most of the major firms have already reported their earnings. This week will see the earnings from social deal stock Groupon (Nasdaq:GRPN). The company's shares have fallen hard since their IPO and the company continues to bleed money as competition from Amazon and Google (Nasdaq:GOOG) deal based sites heats-up. Investors will be looking for any signs of good news after Groupon was criticized for having special "Hurricane Sandy" deals in damaged New York during the storm. Overall, analysts expect another sour quarter for the social stock.

Finally, the semiconductor space will see a pair of earnings announcements this week from Qualcomm (Nasdaq:QCOM) and Nividia (Nasdaq:NVDA). Analysts expect Qualcomm to report a 2.9% gain in earnings of 70 cents per share versus a year ago. Overall, the company has enjoyed double-digit year-over-year percentage revenue growth for the past four quarters. As for graphics chip specialist Nividia, analysts also expecting 2.9% growth in EPS, while the company's revenues will expand by 12%.

Bottom Line
In the aftermath of Hurricane Sandy, the tech sector continues to grind forward with new deals and robust product sales. The number of earnings announcements continues to drop as most of the heavy hitters have already reported. Expect more of the same as the United States presidential election will garner much of the attention in the upcoming weeks.

At the time of writing, Aaron Levitt did not own any shares in any company mentioned in this article.

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