Article By Michael Krey
Here you go, a quick look at the IBD 50 tech companies that had the best earnings in this latest cycle of quarterly financial reports.
Now hold on a second, we realize that word “best” in one of those funny ones. There are many ways to define best in this case (and most cases, in fact).
We’ve taken the easy way out. You decided. What we’re calling best are the companies whose stock prices rose by the highest percentage the first trading day after they reported. (Most companies report after the close, so we’d be looking at the next work day. For companies reporting before the open, we look at trading that same day.)
We’re only looking at companies that had their last earnings report in Jan. or Feb. Alas, a few miss the cycle, some just barely. As our Capital Hill blog points out, Priceline, InterDigital and MercadoLibre report this week.
But most have reported, and here’s their ranking by first-day pops:
1. Acme Packet (APKT). It’s No. 5 on this week’s IBD 50, where it has set up shop for many months now. After reporting its Q4 results late Feb. 1, the stock jumped 20.4% on Feb. 2. Results and Q1 outlook were far above analyst views. And the stock is up more than 8% since, so it was in no danger of falling off the IBD 50 (though it is actually down from No. 4 last week; tough list). It has ranked no lower than No. 30 over the past six months-plus.
Acme sells hardware and software to companies and service providers to enable their IP networks to carry voice, video, instant messages and multimedia over various wireless and, especially, wireline IP (Internet Protocol) networks. It enables such things as VoIP. Businesses are moving from telephone network connections for voice to IP for voice and video, one big trend helping Acme.
2. Aruba Networks (ARUN). It’s No. 12 on the IBD 50. The company late Thursday reported fiscal Q2 results that beat views, as did its outlook for this quarter. Its per-share profit minus items has at least doubled each of the past three quarters, when compared with the year-earlier quarter. So, the stock shot up a mere 17% on Friday. This rise came despite the unexpected resignation of six-year CFO Steffan Tomlinson. It did appear to be a friendly move, as he and CEO Dominic Orr spoke nice on their earnings conference call. But the CFO is leaving March 31, pretty soon, and Aruba is searching for a replacement. Still, the company is seeing big growth for its hardware and software to securely control wireless communications going in and out of corporate networks and data centers. It’s No. 2 in its sector, behind only Cisco Systems (CSCO), the world’s largest network gear company. Aruba shares are at an all-time high.
3. Netflix (NFLX). It’s No. 4 on the IBD 50. Late Jan. 26, the seller of movies streamed to TVs and PCs via the Internet, and DVD movies by mail, said its EPS jumped 55% to 87 cents in Q4. It ended the year with 20 million subscribers, up 63% over the past year. No. 1 U.S. cable TV firm Comcast (CMCSA) is not far ahead, with its 22.8 million subscribers. It raised its Q1 outlook as well, the stock shot up 15.2% on Jan. 27. On Feb. 14, it hit an all-time high of 247.55. That’s up from less than 50 in January 2010. Needless to say, Netflix is another charter member of the IBD 50. When President Obama met privately on Thursday with a select group of Silicon Valley business movers-and-shakers, sure enough, Netflix CEO Reed Hastings was in the club, along with Apple’s Steve Jobs, Google’s Eric Schmidt, Oracle’s Larry Ellison and others.
4. Open Text (OTEX). It’s No. 44 on the IBD 50, and maybe one of the surprises in this select company. It, naturally for this list, beat expectations when it reported its latest results late Feb. 2, and the stock shot up 10.7% the next day. At one point, it was up 16.9% that day. Still, it ended the day at an all-time closing high, and has since risen another 2.6%. This is another company benefiting from the mobile trend. The Canadian company makes enterprise content management software. ECM software helps enterprises – businesses and other organizations—bring together e-mails, instant messages, documents, videos, images, Web pages and marketing campaigns across an entire work force. And it has a software suite that runs on smart phones on the iPad. ECM is on the rise. Market research firm Gartner says global ECM software sales will rise more than 10% per year through 2014, when it says sales will hit $5.7 billion.
5. ARM Holdings (ARMH). It’s No. 15 on the IBD 50 and, like all of the above except Open Text, has been a longtime regular on our top-stocks list. It reported sterling Q4 results early Feb. 1 and jumped 8.3% that day. And then rose 5.8% the next day, an unusually strong two-day post-earnings run for a stock, especially a stock that has tripled since just late May. But it’s by far the No. 1 designer of chips used in … cell phones. And not just cell phones, but also tablet computers, regular computers, set-top boxes and more. Its licensees include some of the biggest chipmakers, such as Texas Instruments (TXN). Licensees also include some product makers that use some of their own chips, such as a company named Apple (AAPL). ARM’s designs are so strong it’s managed to keep No. 1 chipmaker Intel (INTC) still mostly on the outside in cell phones, despite Intel’s big push into mobile markets.
IBD’s Capital Hill previews the 7 IBD 50 stocks reporting earnings this week.
Check out the entire IBD 50 list (subscription required). If you don’t have a subscription, you can sign up for a free trial and get full access to the IBD 50 and investors.com.
Feb. 14: IBD 50 tech companies with upcoming earnings
Feb. 7: The top 5 networking stocks
Jan. 31: The top 5 chip stocks
Jan. 24: The top 5 China tech stocks
Jan. 18: The top 5 Internet stocks
Jan. 10: The top 5 techs stocks in IBD 50 by market cap
Jan. 3: The top 5 tech stocks in IBD 50 that also finished among the top tech stocks of 2010
Hans Overturf 