Tech stocks fueling today’s market action as big gains from Oracle (ORCL) and BlackBerry maker Research In Motion (RIMM) have propelled the major market indexes back into positive territory.
Oracle, seen as an industry barometer because it sells lots of software to a variety of businesses, said its quarterly profit rose 12% from a year ago and sales exceeded expectations. Results are good sign for the broader economy as corporate tech spending may finally be ready to rebound.
Analysts were pretty bullish about Oracle’s results. JPMorgan says better-than-expected results come “on the back of solid execution in the Americas, offset by softer international performance, though all regions showed marked improvement from the previous period.
FBR says profitability levels continue to impress. “Just when you think Oracle cannot deliver upside to margins, the company finds more leverage in the model, and this quarter was no different.”
Research in Motion also reported strong third-quarter results and offered better-than-expected fourth-quarter guidance, driven by surging international growth.
Thomas Weisel stays at overweight, but raises its price target to $90 from $85. Firm said some investors may be concerned with management’s hints at some friction with Verizon (VZ), which “has been ramping Android phones and is speculated to be wooing Apple (AAPL) and Palm (PALM).”
Still, “we also can’t overlook the fact that RIMM continues to gain traction with multiple carriers across many regions, all the while managing margins quite well,” firm adds.
Dow Industrials bouncing all over the place, up as much as 60 in early trading, but also down as much as 44. Recently up 13, with Hewlett Packard (HPQ), Intel (INTC) and 3M (MMM) leading the gains. Oracle up 6.5% and RIMM up 10%, boosting Nasdaq more than 1%.
Still, not all is well and dandy in the tech sector. Palm reports its 10th loss in a row and analysts expect the streak to continue.
“The company gave mixed messages about its future and appears to be taking a few steps back before it moves forward,” Thomas Weisel says.
Problems: Palm has had to increase marketing spending to get attention in a crowded smartphone market; sales at Sprint Nextel (S) – its largest customer – were weaker than expected; and 27% of its second-quarter shipments were unsold, though that may’ve been affected by timing of Blac Friday and Palm’s quarter end.
Shares, which have risen more than six-fold from a year ago, were recently off 16% at $9.81.
(John Shipman and George Stahl contributed to this post.)