As two legacy technology stocks reported earnings recently – with contrasting stock price movements – Capital.com looks at these “tech dinosaurs” to see if they still have value for investors.
FAANG stocks and other modern-day tech firms may be grabbing attention – and order flows – but old-school 20th century technology stocks may still have some surprises.
IBM (IBM) stock
The day after Netflix (NFLX) stock fell as it lost subscribers, 111-year old International Business Machines (IBM) stock was up 3% as it reported first-quarter adjusted earnings of $1.40 (£1.09, €1.29) per share on revenue which rose 8% to $14.2bn, the biggest sales increase in a decade at IBM on strong demand for its cloud computing services.
Analysts were expecting earnings of $1.39 per share on revenue of $13.78bn, according to figures widely available on financial news sites.
For the full year, IBM expects constant currency revenue growth at the high end of the mid-single-digit range.
An important part of IBM’s cloud division is software firm Red Hat, which makes an enterprise version of the Linux operating system widely used in IT infrastructure.
Once known for its sturdy ThinkPad laptops (which are now made by Lenovo) IBM has mainly shifted away from physical hardware (it spun off infrastructure services business Kyndryl late last year) and moved into consulting and software.
IBMOne Wall Street bank is bullish on IBM: Morgan Stanley (MS) recently upgraded the stock to “Overweight” and upped its target price to $157, as reported by Barron’s.
Xerox (XRX) stock
Tracing its origins back to a photographic paper company in 1906, Xerox (XRX) reported a first-quarter adjusted loss of 12 cents per as revenue fell 2.5% to $1.67bn on supply chain disruption costs and inflationary pressures, sending the stock down by as much as 17%.
Analysts were expecting earnings of 13 cents per share on revenue of $1.64bn, according to figures widely available on financial news sites.
As offices emptied out over the pandemic, few businesses were investing in printers and photocopiers as employees worked from home and offices embrace paperless cloud solutions.
One company that has leaned into the work-from-home movement is Palo Alto Networks (PANW), which launched Okyo Garde, a home security device intended for remote corporate workers to help secure their home network.
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Xerox issued a business update and answered key investor questions in a presentation to investors and analysts released at the same time as its latest set of earnings.
XeroxThe company still keeps up with tech innovation at its Palo Alto-based PARC business, which is pursuing AI, clean technology and Internet-of-Things research.
Hewlett-Packard (HPQ) stock
Originally known as Hewlett-Packard, HP (HPQ) is the original Silicon Valley start-up which can trace its origins to a Palo Alto, California garage in the 1930s.
HP shares received a surprise boost earlier this month when it was revealed that legendary US investor Warren Buffett had taken a $4.2bn stake in the company.
In February, HP said fiscal first-quarter revenue rose 8.8% to $17bn with net earnings up 1% to $1.2bn.
HPInvestors will get an update on HP’s business with second-quarter earnings due in late May.
