Technology earnings releases continue to trickle in, but the quarterly update flow will continue to be slow through September until the end of the third quarter occurs. For the time being, the industry continues to be driven by merger and acquisition announcements and a few smaller company earnings releases.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Tech-Related Developments
Recently, technology services and software giant International Business Machines (NYSE:IBM) announced it was acquiring Kenexa (NYSE:KNXA), a human resources software firm. The purchase price was $46 per share, or $1.3 billion. IBM detailed that this will beef up its social media capabilities and the company will be folded into its software and information technology consulting operations. Kenexa specializes in providing software as a service (SaaS), or online-based software that helps a company carry out its key human resources functions.

Ratings firm Moody's provided its opinion on the transaction and concluded it was a credit positive for IBM. The purchase price was rich and represents a P/E of 34 off of Kenexa's earnings expectations for the coming full year. However, the price-to-sales multiple was 3.5, which it saw as more reasonable given similar software deals have recently taken place at sales multiples between four and six. For IBM, it can easily handle the purchase price. It should generate around $10 billion in free cash flow for the year and currently has more than $11 billion in cash and cash equivalents on its balance sheet.

SEE: 5 Must-Have Metrics For Value Investors

Upcoming Earnings
On September 4, prior to the stock market opening following the Labor Day weekend, bandwidth management firm Sycamore Networks (Nasdaq:SCMR) reported its fiscal third quarter earnings. Revenue was flat at $11.9 million and its reported net loss rose to $5.1 million, or 18 cents per share, up from a loss of $4.1 million, or 14 cents per share in last year's third quarter.

On September 5, electronics retailer Conn's (Nasdaq:CONN) is set to release its second quarter earnings results. Analysts currently project solid sales growth of nearly 12% and total sales of almost $206 million. The current profit expectation is 35 cents per share, which would be more than double the 17 cents Conn's reported in last year's second quarter.

Infoblox (NYSE:BLOX), which sells a device to corporate clients that helps them assign Internet addresses to its employees and related corporate networks, is set to report after the market close on September 6. Analysts project sales of nearly $46 million and earnings of only a penny per share.

RF Industries (Nasdaq:RFIL), a provider of radio, wired and wireless communications equipment, is set to report its third quarter earnings results on September 7. No analyst currently covers the stock, largely in part because its market capitalization is quite small at below $30 million. However, it does currently sport a dividend yield of 5.1%. Last year, it reported third quarter sales of $5 million and earnings of a penny per share.

SEE: A Primer On Investing In The Tech Industry

The Bottom Line
The larger technology firms continue to seek acquisitions to beef up their offerings in SaaS and other cloud-computing capabilities. Look for smaller firms to continue to be snapped up by the leading, cash-rich firms in the industry. Third quarter earnings season will kick off in about a month, with smaller firms reporting up until then.

At the time of writing, Ryan C. Fuhrmann owns shares of IBM.

Related Articles
  1. Investing

    The Rise of Corporate Venture Capital

    After the success of Google Ventures, corporate venture capital is an increasingly popular diversification and hedging tool for many large corporations.
  2. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  3. Investing

    What’s Plaguing Twitter and Yelp?

    Yelp and Twitter have recently become grounded in reality and unable to justify their sky-high stock valuations.
  4. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  5. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  7. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  8. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  9. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  10. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  3. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  4. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  5. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
  6. BHD (Berhad)

    The suffix Bhd. is an abbreviation of a Malay word "berhad," ...
RELATED FAQS
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
  6. What happens to the shares of stock purchased in a tender offer?

    The shares of stock purchased in a tender offer become the property of the purchaser. From that point forward, the purchaser, ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!