Microsoft Corp. failed to impress and Apple Inc. filled investors with fear.
In the fickle world of smartphone sales, the company enjoying the best week is the only one that didn't make any major announcements: Research In Motion Ltd. The company's stock jumped another 2.25 per cent on Thursday, continuing a tear that has seen the stock more than double in recent months, flirting this week with its 52-week high of just over $18.
Whether the Waterloo, Ont.-based tech company can maintain that momentum might be answered on Wednesday, when the long-delayed BB10 operating system makes its public debut – putting the firm under no less scrutiny than rivals Microsoft, Google Inc. and Apple endured this week.
Indeed, the Windows maker's shares dipped almost 2 per cent in after-hours trading on Thursday after reporting it generated quarterly revenue of $21.46-billion (U.S.) and earnings per share of 76 cents, almost exactly in line with analysts' expectations. Even as overall profit and entertainment division sales fell from the same period a year earlier, revenue from Microsoft's Windows division jumped 24 per cent – positive news for Microsoft given the latest iteration of the operating system, Windows 8, is aimed primarily at the mobile market.
But sales of the company's own tablet offering, the Surface, don't appear to have impressed investors, and neither did the company's earnings results. Also on Thursday, shares of Nokia Corp. – Microsoft's closest ally in the smartphone wars – dropped more than 8 per cent despite somewhat optimistic earnings numbers, as it failed to convince the market of its strategy to rely primarily on phones powered by Windows.
Those declines, however, appeared positively tame compared to Apple's massive 12-per-cent slide on Thursday, a day after the company posted earnings that left many investors worried about how long the iPad and iPhone can continue to generate blockbuster profit numbers.
"It would appear that last night's disappointment has translated that the record profits growth so reminiscent of previous quarters has come to an end for Apple," said Michael Hewson, senior market analyst at CMC Markets UK, in a note. "While that doesn't for one moment suggest that the success story is over, it is likely that Apple will have to run that much faster to stand still and justify its valuation in the face of increasing competition from rivals like Samsung, Nokia and Research in Motion."
The last few months have been relatively cataclysmic for smartphone and tablet makers (Google shares jumped 5 per cent this week after the company posted positive earnings numbers, but those results were influenced primarily by gains in the company's core search advertising business). But while that uncertainty is proving detrimental to Apple, the current dominant player, it is very good news for companies such as RIM and Microsoft, which are fighting to regain relevance in a still fast-growing industry.
"2013 may prove to be the year when the smaller players make a resurgence in the competitive smartphone market following a year when we saw a two-horse race with Samsung and Apple," RBC Capital Markets analyst Mark Sue wrote.
"The true measure of success will not be just units, but also profitability … the competition is cutthroat with Windows convinced it will be the No. 3 ecosystem player."