Two tech titans — Google (GOOGL) and IBM (IBM) — reported Q2 earnings after the bell on Thursday, with mostly positive results for both companies: IBM posted earnings of $4.32 per share on revenues of $24.4 billion in the quarter; Google's earnings (including traffic acquisition costs, or TAC) reached $5.09 in the quarter on revenues of $15.96 billion.
Google's sales number in particular stands out as a big positive; the Zacks consensus expected quarterly revenues in the $12.4 billion range, and year over year Google's sales jumped 22%. The company missed yet again on the bottom-line, however — we had expected $5.16 per share (accounting for TAC). Whereas IBM beat earnings by a penny, it also managed to bring in revenues a couple hundred million dollars higher than anticipated. This is important for followers of IBM, who were by now conscious of a long string of revenue estimate misses, going back 8 quarters.
While most of IBM's expansive business sectors were in-line with expectations, hardware sales hit $3.3 billion in the quarter, which was better than anticipated. We should get more articulation during the conference call, but it's possible Intel's (INTC) narrative earlier in the week about stronger enterprise spending on tech hardware may be showing its effects here.
Google's most closely-followed metrics were again decent-to-good, with paid clicks up 25% and cost-per-click a better-than-expected -6%. Its TAC percentages of ad revenues are still costly, but fell 2% year over year in the quarter. However, a couple big moves on Google's board recently may signify a shift for the company beyond the tea leaves from its Q2 earnings report:
Following the addition of former Ford (F) CEO Alan Mullaly to Google's board of directors earlier this week, Google after the bell today announced Chief Business Officer Nikesh Arora will be stepping down after 10 years with the company. Arora is reportedly headed to SoftBank. This could amount to a changing of the guard in Google's focus; time will tell.
Neither stock is doing much particularly noteworthy after the bell: Google has made back roughly the full point and a half it lost in regular Thursday trading, and after an initial spike up in after-hours trading, shares have traded down more than a point. But as this is a very irregular news day — a Malaysian commercial airliner crashes in the Ukraine and Israel sends soldiers into Gaza — we don't expect earnings news to eclipse anything today.
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