Though U.S. political leaders managed to spark some good news for the economy Friday, technology stocks are down for the week, showing a continued lack of confidence in the sector.
The problem has been earnings. Tech bellwethers including Microsoft, IBM, Intel, Apple and SAP have reported mixed results for the past quarter. The big problem for most of these vendors is that economic uncertainty caused by recession in Europe and political deadlock over the U.S. budget has curbed enterprise spending on IT.
Share values of IT companies ticked up slightly Friday on news that political leaders were expressing confidence that they could reach a compromise on the so-called "fiscal cliff," a series of drastic budget cuts that will go into effect if a deal on taxes and spending is not worked out.
After a meeting between President Barack Obama and top congressional leaders, House of Representatives Speaker John Boehner, a Republican from Ohio, told reporters, "I believe that we can do this," according to the Associated Press.
The Nasdaq Computer Index rose by 2.2 points to close at 1,472.99. The index was nevertheless down by 260.84 for the week.
Tech company earnings this week were mixed, as they have been all quarter.
Dell Thursday said revenue for the quarter that ended Nov. 2 was down 11 percent year over year to US$13.7 billion, lower than the $13.9 billion that financial analysts had been expecting, according to a poll by Thompson Reuters. Net income was $475 million, down from $893 million.
Dell CTO Brian Gladden said in an earnings release that the company was experiencing "a difficult global IT spending environment."
Also Thursday, Autodesk said quarterly revenue was down slightly to $548 million, compared to $549 million a year earlier, while net income plunged to $29.3 million from $72.8 million.
"Our revenue results were disappointing and were primarily caused by a weakening demand environment," said CEO Carl Bass, in the company's release. "While we experienced pockets of relative strength in the U.S., northern Europe, and Russia, most other markets around the world slowed during the quarter, most notably emerging markets."
Applied Materials, a maker of manufacturing equipment for chip makers, said Thursday that quarterly sales were down to $1.65 billion from $2.34 billion a year earlier and net income for the same period slipped to a loss of $515 million from a profit of $322 million last year.
PC sales have suffered this year and chip makers have been hit as a result, affecting Applied Materials' business.
It was up to Cisco to provide a beacon of light for IT this week. The company said Tuesday that quarterly revenue was up 6 percent year over year to $11.9 billion, while net income rose by almost 18 percent to $2.1 billion.
Chairman and CEO John Chambers said the company has succeeded in efforts to cut costs and that while European sales were still weak the company's business in the U.S. was strong during the quarter.
In the coming weeks, all eyes will be on political leaders in the U.S. as they struggle to compromise on a budget deal. Reports of strong holiday sales for PCs would also help IT.