Apr 21, 2010

Art Hogan on pent-up tech demand and top line revenue growth

I think obviously the comps [comparisons] are pretty easy, but the thing is, it's not just the fact that we're getting easy comps from a year ago on a year-over-year basis, it's the sequential growth that we're seeing and the fact that the estimates are so conservative regardless of how disastrous a year or so ago was. So, think about it like this-- when we came into the earnings reporting season we thought we were going to earn about 35%, now we think we're going to earn about 40% in the S&P 500 on a year-over-year basis.

I think if you look at Microsoft and everyone remembers the Vista roll out, and what an utter failure that was, people aren't giving them enough credit for two things: the fact that the latest roll out, the 7 roll out, is a huge success; but also there's pent-up demand coming from the enterprise side. We're actually seeing a successful roll out at a time when enterprise really needs to update their software.

When you think about it, we've had 80% of the companies that have reported so far beat the bottom line, 63% of them are beating the top line, so the revenue growth is actually there. That's the one thing we were lacking three quarters ago and two quarters ago, but the last two quarters top line is actually coming in. That's the important thing, I think we're actually seeing real demand coming back into this economy.

~Art Hogan, global equity product director, Jefferies & Company, Power Lunch, CNBC, April 19th, 2010

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