The technology bellwethers have largely already reported second quarter and most recent quarterly results over the past two weeks. This week will see a number of tech-related firms weigh in with their business trends, and merger and acquisition activity has continued. Firms with exposure to Europe have a number of challenges to overcome, with sovereign debt concerns still to be more fully addressed by politicians. Below is a more detailed overview of technology events to keep track of this week.
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Credit rating firm Moody's reported a positive view on the announcement that virtualization software firm VMware (NYSE:VMW), which is a tracking stock for the business unit owned by data storage giant EMC (NYSE:EMC), would be acquiring Nicera, a privately-held firm that is a "pioneer in the emerging software defined network market." The deal is for an estimated $1.3 billion and, in Moody's opinion, will help VMware build on its market leadership position in data center automation. It thinks this will help keep industry rivals Cisco Corp (Nasdaq:CSCO) and Juniper Networks (NYSE:JNPR) at bay as they also look to build out their SDN capabilities.
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Moody's also saw the suspension of European telecom giant Telefonica's (NYSE:TEF) November dividend as a credit positive. Telefonica is based in Spain and has seen difficult mobile subscriber trends in its home country. It also has a heavy debt load, as demonstrated by a debt to equity ratio of around 260%. Moody's is holding off on a full debt rating downgrade, based off of a pending review of Spain's sovereign debt rating. For the time being, the company remains on review for a downgrade.
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After the market close on Tuesday, animated motion picture firm DreamWorks SKG (Nasdaq:DWA) will report its latest second quarter earnings results. Analysts project earnings of 25 cents and a nearly 15% fall to just over $186 million in sales. Also on Tuesday after the close, video game developer Electronic Arts (Nasdaq:EA) will report its second quarter results. The consensus calls for a sales decline of more than 4%, total sales of just over $500 million and negative earnings of 42 cents per share.
On Wednesday before the market open, American Tower (NYSE:AMT), which owns and rents out cell tower structures on its real estate, will report. Analysts project rapid sales growth of 17%, total sales of nearly $700 million and profits of 40 cents per share. Cable giant Comcast (Nasdaq:CMCSA) also reports on Wednesday, as does rival Time Warner Cable (NYSE:TWC).
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The Bottom Line
Earnings season will slow pretty quickly after this week, but there should still be a trickle of activity for at least a couple of more weeks. Merger and acquisition activity will likely also continue as the largest players in the space try to fend off smaller and more nimble upstarts in the industry.
At the time of writing Ryan C. Fuhrmann was long shares of Cisco but did not own shares any other company mentioned in this article.