Second quarter earnings season is in full gear for the week of July 23. Technology bellwether Apple Inc. (Nasdaq:AAPL), which accounts for a high percentage of the overall S&P 500 earnings and has been driving the index performance for the year, reports on Tuesday and will likely set the tone for the technology industry, as well as total stock market for the week, going forward.
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Rovi Corp (Nasdaq: ROVI) sells digital entertainment software. This includes program guides that help users find information about television, movies, music, and game content. It recently lowered its second quarter outlook and said it expects sales of $158 million, down nearly 12% from the $179 million reported in last year's second quarter. It also upped its projected loss to a range of 15 cents and 18 cents. The stock lost nearly half of its value as a result of the update.
Credit rating firm Moody's detailed that Rovi "slashed its projections" and determined that the event is a credit negative given the weaker expected cash flow for the entire year. It also cited the company's high leverage and uncertainty that management will be able to deliver on its new growth strategies, which includes licensing deals and new product introductions. However, it held off from a full credit downgrade given Rovi still has plenty of liquidity, as measured by around $900 million in cash, though long-term debt recently weighed in at more than $1.4 billion.
SEE: A Brief History Of Credit Rating Agencies
Apple Inc. reports third quarter results on Tuesday, July 24. Analysts are currently calling for sales growth above 30% to above $37 billion and earnings of $10.35 per share. There is speculation that the results could disappoint given slower global growth trends. For instance, growth in China is slowing and could impact the sales of iPads, which just started selling there. An upcoming introduction of the next generation of iPhones could also cause consumers to hold off on phone purchases until the new release.
Netflix (Nasdaq:NFLX) also reports on Tuesday. Analysts project sales growth of nearly 13% to a hair under $889 million and earnings of a nickel per share. Investors will be waiting for indications that subscriber growth continues. Netflix recently reported 26 million streaming members that are paying $7.99 per month.
Other earnings this week include Corning (NYSE:GLW) on Wednesday and Amazon (Nasdaq:AMZN) on Thursday.
SEE: Earnings Forecasts: A Primer
The Bottom Line
Earnings releases will continue their steady pace for the next couple of weeks. Indications from the technology space have largely been within expectations and there have been few surprises. A number of large companies will report this week, which should have a big impact on sentiment for the next several weeks.
At the time of writing, Ryan C. Fuhrmann did not own shares any company mentioned in this article.