Jan 25, 2010: Apple, TI

I do want to apologize to my friends and any readers who were expecting a Friday post, especially after a very tough week in the markets. I had a family emergency and was unable to write or even go on line as often. Apple [AAPL:NASD] and Texas Instruments [TXN:NYSE] kicked off the week with quarterly earnings and both stocks beat expectations. Apple beat the estimates easily, netting $3.38B or $3.67 a share against estimates of only $2.07. Texas Instruments, well-known for its TI-83 Graphing Calculators we all endured in high school, posted positive numbers as well. TI made a profit of $655M or 52 cents a share. Both companies saw revenues climb during the holiday season, but both stocks remained tame after hours. According to many writers, new accounting rules allowed Apple to recognize all sales of iPhones and Apple TVs into their revenue at the time they are sold. The news should come as a relief to investors with housing data released earlier in the day showing negative signs. 2009 proved to be the first year in four where sales of houses previously owned were up, but prices were down 12 per cent, the largest year-over-year drop since The Great Depression. Home sales were boosted by low prices and government tax credits, pulling buyers to purchase homes earlier in the year. Expectations for housing sales for the remainder of 2010 look sour. For traders, this week could prove critical. Last week, there was a steep sell-off in the last few days, with the Dow Jones losing over 500 points and the TSX losing just as much. The earnings of key consumer staples and discretionary will be released. Following Apple and TI today, Yahoo! [YHOO:NASD] and Microsoft [MSFT:NASD] will post earnings Tuesday and Thursday respectively. Tomorrow, Johnson & Johnson [JNJ:NYSE], famous for Band-Aid, Neutrogena, and Listerine, will post earnings, as well as Pfizer [PFE:NYSE]. The reason I find this week so critical is because we have some of the largest companies from the needs and the wants posting earnings. If both the needs, like toilet paper, soap, and medication, and the wants, like laptops, music players, and smart phones both show rises, we could see signs that consumers are spending again, which accounts for two-thirds of most economies. Rising consumer spending equates to a rising economy.