Technology stocks are sending strong signals about the future of the economy – but in opposite directions.
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Chipmaker Intel Corp. on Tuesday announced stronger-than-expected sales of $8 billion and a net loss of $398 million for the second quarter. Excluding a fine from the European Commission, the world's largest semiconductor manufacturer earned 18 cents a share, more than double what a survey of analysts anticipated. It's considered a bellwether for other technology stocks.
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On the same day, PC-maker Dell Inc. said lower revenues and higher prices for parts would squeeze its profit margins this quarter. Its shares dropped 8.1 percent Tuesday. Sun Microsystems Inc. also lowered its earnings guidance, ahead of its projected merger with Oracle Corp.
About the only clear trend is the change in the technology pecking order.
Microsoft Corp. will release its new operating system, Windows 7, this fall. In high tech's go-go years in the '90s, the release of a new Windows operating system always sparked new sales of computers. This time, even Microsoft's usually ebullient CEO was hedging his bets, according to a report on The New York Times website.
“Hopefully, Windows 7 will be part of a catalyst,” said Steven A. Ballmer, Microsoft’s chief executive, during a speech Tuesday. “Maybe it will. Maybe it won’t.”
So which technology company is beating the odds, even in this tough recession?
Apple. Routinely trumped by Microsoft during the 1990s, it announced Tuesday that users had just downloaded their 1.5 billionth application from its App Store in just one year.
“The App Store is like nothing the industry has ever seen before in both scale and quality,” said company CEO Steve Jobs in a statement. “With 1.5 billion apps downloaded, it is going to be very hard for others to catch up.”