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EBIT refers to the operating income the company earns by conducting its operations. It means the company’s net Income (Revenue-Expense) to calculate which tax and interest expenses are not deducted.
The formula for Earnings Before Interest and Tax (EBIT)
Earnings before Interest and Taxes(EBIT) is calculated as follows:
Revenue or sales xxx
(-)Cost of material xxx
(-)Cost of Labor xxx
(-)other direct expenses xxx
Gross Profit xxx
(-)indirect expenses xxx
(excluding interest and taxes)
Net profit before interest and Taxes xxx
It can also be calculated in another manner where:
EBIT = Net Profit After Deducting Interest and Taxes +interest Expense + Tax ExpensesExample of Earnings Before Interest and Tax (EBIT)
For Example, The income statement of XYZ Inc is as follows:
Amount (in $)
Revenue from a sales operation 70,000
cost of raw material 25,000
cost of labor directed toward manufacturing 18,500
other direct expenses 6,500
Indirect Expenses 16,000
Interest expenses 425
Income from interest 112
Net non-operating income 415
Total Earnings before deduction of taxes 4,102
Income taxes 3,500
Net earnings 602
To calculate Earnings before Interest and Taxes, we have to deduct direct and indirect expenses from the Net revenue, excluding interest and tax expenses. Other incomes are also included in the calculation of EBIT. So, the calculation of EBIT is as follows:
Amount (in $)
Revenue from a sales operation 70,000
(-)Direct Expenses 50,000
Gross Profit 20,000
(-)Indirect Expenses 16,000
Net operating Profit 4,000
(+)Net operating income 415
(+)Interest Income 112
EBIT is calculated as
EBIT = Net Earnings +Income Taxes+ Interest Expenses
EBIT = 602 + 3,500 + 425
EBIT = $4,527EBIT and Net Profit
For the calculation of EBIT, interest expense and Tax Expenses has to be ignored. The government, shareholders, or lenders use EBIT to analyze the company’s profitability. It includes deducting operating expenses like Rent of office, Salary of employees, electricity bills, printing, stationary, etc. So, before calculating the Net Profit of the company, a calculation of EBIT should be done. While calculating the company’s Net profit, the cost to operate a business, like interest expense, depreciation on assets, and tax expenses, has to be deducted from Earnings before interest and Taxes. Net profit is used while calculating earnings per share of the company. The company’s shareholders commonly use this figure as a dividend from this profit. The relationship between EBIT and Net Profit is shown below:
Revenue or sales xxx
(-)Cost of material xxx
(-)Cost of Labor xxx
(-)other direct expenses xxx
Gross Profit xxx
(-)indirect expenses xxx
(excluding interest and taxes)
(-)Income taxes xxx
Net Profit xxxEarnings Before Interest and Tax (EBIT) Analysis
EBIT is calculated in different ways, and it is not included in the company’s financial statements. It always starts with revenue from sales operations and subtracts direct and indirect expenses, excluding interest and tax expenses. Non-operating incomes are also included in the calculation in some cases. Interest income is included or excluded from the calculation of EBIT based on its source. If credit is provided to the customer as a crucial portion of its business, then this income is treated as operating income and included in the EBIT computation. If interest is received on investment or in the form of late fees from customers, it may not be included in the EBIT computation. EBIT is also calculated in reverse order by taking Net profit after interest and taxes and adding interest and tax expenses.Importance of Earnings Before Interest and Tax (EBIT)
It is important to calculate Earnings before interest and Taxes as it provides ideas to the owners about the profits generated by the company from its core operations without taking the cost of capital and income taxes into account.
Net Profit can be calculated only after Earnings before interest and taxes.
The shareholders use the net profit for calculating their Earnings per share.Advantages of EBIT
Advantages are provided and discussed below-
With the help of Earnings before Interest and Taxes (EBIT), investors can compare different companies in the same industry. For example, suppose an investor wants to purchase a share. In that case, the EBIT of different companies with different rates of taxes under the same industry can be compared to ascertain the base profitability of the companies because the tax rate may vary from company to company.
Some industries require huge investments in fixed assets to produce goods and services. To Finance, these investment companies have to raise debt. Companies in the same industry can raise debt based on their need. So, the amount of interest may vary from company to company. So to analyze the company’s earning potential, interest expense is excluded from operating income by the investor.
EBIT is a more reliable source of comparison among different companies as it is not considering the effect of tax rates and interest expenses, which may vary from company to company.
As the calculation of EBIT includes the deduction of depreciation, sometimes it can lead to misleading results when different companies are compared under the same industry. For example: If an investor compares a company with a huge investment in fixed assets with another company with few fixed assets, the EBIT of the former company turns out to be lower as depreciation expense reduces the profit of the former company.Conclusion
Thus, EBIT is calculated by reducing operating expenses from the operating income before considering interest and tax expenses. It is calculated before the calculation of the final profit of the company. It is a more reliable source of comparing the profitability of the companies in the same industry than Net profit, as taxes rate and interest expenses may vary from company to company.Recommended Articles
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In terms of product announcements during that timeframe, Apple was relatively quiet; it expanded iTunes Radio to Australia and added NPR support, rebranded iOS in the Car as CarPlay with compatible cars arriving later this year, introduced a cheaper 8GB iPhone 5c in several non-US markets, replaced the iPad 2 with the iPad 4 at the same price point, and announced its worldwide developer conference scheduled for June 2. Apple is currently positioned to save new products for the latter half of the year as it did in 2013.
Investors and analysts are sure to raise this point during the call, and we’ll be listening and bringing you coverage starting at 5pm EST/ 2pm PST.
-20 minutes ahead of the call, very relaxing piano playing, this should keep everyone alert!
-After hours $AAPL jump after earnings/stock split announcement:
-11 minute warning…
-Tim Cook: “We have a lot to share with you over the next hour..”
-Cook: “Strongest non-holiday quarter ever”
-Cook: “New March quarter record” with iPhone sales
-Cook: “iTunes is a very important driver of our business… nearly 800 million iTunes account… most with credit cards”
-Cook: iPad sales above Apple’s expectations, below analysts expectations
-Cook: Continue to believe tablet market will surpass PC market in the next few years and Apple will be a great beneficiary
-Cook: Angela Ahrendts joining Apple next week to head retail
-Cook: Over half of added iPhone users with new to the product
-Discussing stock split now
-Cook: “Expanding into new categories”
-Cook: “We solicit input from a broad base of shareholders” Icahn comes to mind…
-Cook: “We believe our current stock price does not reflect the value of the company”
-Cook turning the call over to Luca Maestri
-Maestri cites China Mobile and iPhone 4s as source of record iPhone quarter
-Maestri citing both geographical and enterprise iPhone growth
-Maestri points out higher App Store revenue over Google Play Store despite fewer iOS devices
-Apple continuously points to reductions in channel inventory as reason for YOY iPad sales decline
-Maestri: iPad 95% of US education tablet market
-Apple after hours trading up 8.15% as of 5:20
-Maestri repeating that current stock price does not reflect value of the company
-Maestri says Apple planning on continued dividend increases
-Maestri cites tax consequences to domestic its offshore funds, will raise more debt
-Maestri offers Q3 guidance at $36-$38 billion for revenue
-Cook is back up to discuss stock split and his “dear friend” Peter Oppenheimer
-Cook thanks Oppenheimer for his time at Apple, 10 years
-Oppenheimer leaves in September as previously reported
-First question on making money on future install base
-Cook says Apple can monazite more in new areas and existing areas better
-Follow up question regarding charging more for highly innovative products in the future after being surprised with iPhone 5s demand
-Cook says products are priced fair, decisions made with each thing as it gets closer to time to come to market
-Next question about March quarter and what drove the numbers
-Maestri walking back through what helped numbers and discussing upcoming Q3
-Follow up question about carrier upgrade policy changes and if demand was just strong enough to counter those changes
-Cook answers discussing stricter enforcement in the upgrade policy in the US, says strength of iPhone was generally broad based and host of other markets drove results
-Next question asking Luca Maestri about $41 iPhone ASP decline and what drove it, iPhone 4s?
-Maestri citing iPhone 4s success in emerging markets and success abroad, says as the company moves away from new product launch they see lower capacity mix
-Follow up question is asking Cook about carriers encouraging consumers to keep devices longer with new policy enforcements and that limiting upgrade cycles
-Cook says iPhone 4 sales were single percentage of sales, carrier policies could actually increase upgrade cycle with new programs offering higher price to upgrade more often, opportunity for Apple is that smartphone market is only a billion or so units and will eventually take over entire mobile phone market, certain large regions saw 80% new-to-iPhone numbers go to iPhone 4s (there’s an awful lot of talk about the iPhone 4s from two refreshes ago), cites ability to keep customers and introduce them to the “ecosystem”, Cook says some carrier plans help and some hurt but “completely unclear” to him how it will net result
-Next question about iPad sales and if Office for iPad could help
-Cook: There’s no shortage of work going into the next iPad, the next big idea
-Cook: “I am very bullish on iPad.”
-Cook discussing importance of staying focuses on products, company comfortable on expanding, working on things in the background, not ready to pull the string on the curtain
-Next question about competitive landscape for smartphones, cites Microsoft/Nokia deal and Motorola/Lenovo deal
-Cook: Lots of changes, some people giving up and pursuing other things, cites iPhone 4s as its affordable smartphone, says proud to ship that product, cites Apple’s entrance into a number of growing markets, says proud of results for Apple
-Follow up question about China specifically
-Cook likes to discuss growth in China, includes Mac growth by 13%
-Cook continues to cite 85% of iPhone 4s buyers were first time iPhone buyers, 69% iPhone 5c buyers, many switchers from Android (62% for iPhone 4s, 60% for iPhone 5c)
-Next question coming from Gene Munster (you all know him, Apple TV guru), asks about removal of hobby label from Apple TV and Amazon Fire’s HBO deal
-Cook says Apple TV being over a billion dollar market made it not a hobby, says Apple TV already has HBO GO, says Amazon got older content to fill its HBO need, says 20 million Apple TV boxes sold
-Call wraps up, will be available on iTunes for a brief amount of time
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As more people turn to the Web for help in preparing and filing their income tax returns, some familiar sites continue to beef up their offerings in hopes of attracting newcomers and enticing competitors’ customers. Most of the five online tax-prep services we looked at–versions of CompleteTax, H&R Block at Home, TaxAct, Tax Brain, and TurboTax that include guidance for individuals as well as for investors and sole proprietors–now support importing at least some (but regrettably not all) data from a PDF (the most common format for saving a return created online) of your 2010 return. This makes switching services easier than ever.
Also new: A couple of sites offer dedicated iPad and/or iPhone apps (see “Tax Prep? There’s an App for That, Too“)–or at least have eliminated technologies such as Adobe Flash that, in the past, precluded using the site on an iOS browser.
The overall competitive landscape for tax preparation sites hasn’t vastly changed since last year, though. Intuit’s market-leading TurboTax continues to charge a hefty premium for its excellent interface, extensive data importation support, and considerable guidance–which for the first time includes unlimited one-to-one access to a tax professional via phone or chat. This move appears to be a response to H&R Block’s ongoing leveraging of its brick-and-mortar tax-prep operation to enhance its online product, which is solid and moderately priced, but doesn’t quite match TurboTax’s ease of use, especially in its Schedule C business area.
Perhaps the best thing about tax sites is that you can try them before you buy: All five that we looked at will let you start a return and do everything short of printing or e-filing it, without charging you a dime. Remember, too, that people with an adjusted gross income (income after deductions) of $57,000 or less are eligible for free tax prep software and e-filing through the government’s Free File website–and anyone who simply wants to fill out IRS tax forms online without third-party guidance can do so for free, also through the FreeFile program.TurboTax Online Home and Business
TurboTax remains the priciest of the online services. This year, using TurboTax Online Home and Business edition to prepare and e-file one state return and one federal return will set you back $115, compared to $85 for comparable services from archrival H&R Block at Home. But Intuit’s venerable tax-prep software continues to set the bar for its thoughtful user interface and great data import features–and the addition of free, unlimited access to a tax professional (in case you can’t find answers to your tax questions in the very helpful user forums) makes the price premium easier to swallow.
The “Ask a Tax Pro” service–accessible via a button on every screen–is open from 5 a.m. to 9 p.m. PST daily, and will now answer your questions for free; previously, Intuit permitted you to ask one question and then charged for additional ones. (TurboTax still makes you pay extra for audit defense service, which Block throws in as a freebie.)
TurboTax supports electronic import of W-2 (payroll), 1099 (investments), and–for the first time–1098 (mortgage interest) data from 400,000 employers, payroll services, and financial institutions, more than any other service. This feature saves time and tends to improve accuracy.
Unfortunately, TurboTax Online doesn’t support importation of 2010 returns prepared by competitors; it can only bring in information from a 2010 TurboTax return prepared online or with desktop software. Nor does the online service support importation of financial data from Quicken or QuickBooks. If this ability matters to you, consider using the desktop version of TurboTax, which does support transfers of information from competitors’ PDF returns, along with QuickBooks, Quicken, and other financial data.
Turbotax’s flexible approach to navigation is particularly effective in its sole-proprietor (Schedule C) area, which many users will want to fill out in dribs and drabs. Finding a specific business expense page was much easier in TurboTax than in other services. I also appreciated how relatively painlessly the program handles business assets, making it easy to take the Section 179 option of completely writing off the purchase price of a new asset in the year you acquire it. TurboTax also does a fine job of explaining what you need to know about various business issues, providing essential information without drowning you in arcane details.
Intuit has had years to perfect TurboTax; and while it can’t completely remove the pain of doing your taxes, it continues to shine at mitigating the suffering. People whose tax situations are very simple may not be able to justify spending the extra money, but if you have lots of data to import and you need guidance (especially in connection with self-employment issues), TurboTax is well worth buying.
Next: H&R Block at Home and TaxAct Online Ultimate BundleH&R Block at Home
Not to be confused with the heavily marketed H&R Block Live (a videoconferencing tax-consulting service), H&R Block at Home Premium ($85 for one state and federal return, including e-filing charges) offers a wealth of options for adding human help to your tax software experience. Block also has beefed up its ability to import data from a previous year’s return–though people who invest in H&R Block and Home Premium might be disappointed at how little Schedule C (sole proprietorship) data shows up.
Block at Home Premium lets you import 2010 tax data from the online or desktop versions of TurboTax, TaxAct online, or any H&R Block return. In my test importation of a PDF version of a TurboTax Online return, the fields that Block completed for me (most of the personal information) looked good. But I was disappointed to see no records of depreciated assets for my freelance writing business. Block also supports importation of payroll and investment data, but its partner roster is much smaller than TurboTax’s.
I also found Block’s approach to some business issues a little confusing. To enter the purchase of my iPad, which I wanted to write off as a Section 179 deduction, I first had to go through screens asking me to choose a standard accounting depreciation method. Eventually I reached the Section 179 option, but the process would have been a lot simpler if I could have seen it up front.
Block does provide some basic FAQ-style information in a pane to the right of each interview question, along with a search box. However, to get personal tax assistance from an H&R Block Tax professional–which is part of the service–you have to leave the Q&A completely and navigate to the main menu, where you type in your question. Block asks you to limit yourself to one tax topic per message, but you can send multiple messages.
On the other hand, Block’s service does include audit defense help, which costs extra if you go with arch-rival (and already more expensive) TurboTax. If you want a tax pro to review and e-file your entire return, you can opt to pay $30 more for Block’s Best of Both service (which raises the total cost to about that of TurboTax Online Home & Business with no tax pro review or audit defense).
Block has a solid product with a clean and simple design, and access to human help via messaging. It falls a bit short in the navigation department, and it doesn’t deliver all the importing assistance you get with TurboTax, but otherwise it will amply meet the needs of many taxpayers.TaxAct Online Ultimate Bundle
TaxAct from 2nd Story Software remains the outstanding bargain option among tax sites: The TaxAct Ultimate Bundle gives you federal and state returns, including e-filing, for just $18. To sweeten the deal further, TaxAct this year supports importing of 2010 returns in PDF form from a dazzling array of competitors: ATX, CompleteTax, eSmart Tax, chúng tôi FreeTaxUSA, H&R Block At Home, IRS Free File Fillable Forms, Lacerte, ProSeries, TaxSlayer, and TurboTax.
More often than not, though, TaxAct’s skimpy help will ultimately send you to a relevant IRS publication. This is particularly true of Schedule C topics for sole proprietors, for which TaxAct provides only bare-bones assistance. Also, the import function didn’t transfer much Schedule C data from my 2010 TurboTax Online Home and Business-created PDF.
For $18, you can’t expect much in the way of personalized or human help, and TaxAct doesn’t provide it. But if you have a relatively simple return with no novel peculiarities, and you don’t view importing W-2 or financial institution data as crucial, but you do want some inexpensive and straightforward guidance as an alternative to filling out the forms on your own, TaxAct may be all you need.
Next: TaxBrain 1040 Premium and CompleteTax PremiumTaxBrain 1040 Premium
Petz Enterprises’ TaxBrain 1040 Premium dispenses with the pretty colors and icons that other sites use in favor of a no-nonsense, blue-and-gray questionnaire and worksheet approach. You fill out a lengthy questionnaire, and TaxBrain decides–based on your answers–which forms you should be filing. It then presents you with the worksheets for those forms (also on a long list), and fills out the forms based on your input to the worksheets.
This method certainly gets the job done, but why would anyone pay $100–the second highest cost for federal and state returns with e-filing in this roundup–for such a bare-bones service? TaxBrain does not support importation of W-2 forms or of your previous year’s returns from any competing service. It does let you import investment transactions from Gainskeeper.
Each worksheet and questionnaire item links to explanations, but there’s no real mechanism for additional help (other than links to IRS forms). The available chat line is for tech support, not tax help. Navigation isn’t much of an issue since you can only go to worksheets for different federal forms. And there’s no ticker showing where you stand in terms of owing taxes or getting a refund, because TaxBrain doesn’t keep track until you’ve completed filling out all of the forms and submitted them to the service for calculation.
TaxBrain will sell you audit defense, and the site does offer a separate service for people who want to work with a tax pro. You can pay for a consulting session, hire someone to do your return, or pay even more for help in dealing with a problem such as an audit or a negotiation to reduce penalties.
But it’s difficult to justify such a high cost for, essentially, figuring out which forms you need to file and filling them out. For most taxpayers, choosing one of the alternatives to TaxBrain should be a no-brainer.CompleteTax Premium
CCH’s CompleteTax Premium has made considerable strides in recent years, and today it provides a reasonably low-cost alternative to the higher-profile services. Preparing and e-filing tax returns for the federal government and one state will set you back $70; for another $20, you can get three months of unlimited phone access to a TaxHotline tax pro to answer specific questions.
To attract customers from competing services, CompleteTax supports importation of PDFs for 2010 returns created by H&R Block at Home, TaxAct, and TurboTax. Unfortunately the feature didn’t work especially well with my 2010 TurboTax Online Home & Business return: It put my husband’s first name in both the first-name and last-name fields. As was the case with the other services I tested, the transfer didn’t bring much–if any–Schedule C (sole proprietorship) information with it.
CompleteTax supports importation of W-2 data from employers who use ADP or TALX W2eXpress payroll services, though I wasn’t able to test this functionality. The service doesn’t support importation of data from financial institutions.
Overall, CompleteTax delivers good value for people who want some tax guidance (especially those who can import W-2 data from their employers’ payroll provider) and are willing to forgo design niceties to save a few bucks. I wouldn’t get too excited about the ability to import last year’s return data, though, since it basically just saves you the trouble of entering a little personal information.
Those figures translating into a healthy profit for the company, which reported non-GAAP earnings of $6.76 per share, topping analysts’ forecast of $6.58, and surging 24 percent ahead of the year-earlier mark of $5.16.
“Google performed very well in the first quarter, with 23 percent year-over-year revenue growth driven by strength across all major verticals and geographies,” CFO Patrick Pichette said in a statement. “Going forward, we remain committed to heavy investment in innovation — both to spur future growth in our core and emerging businesses as well as to help build the future of the open Web.”
For Google, those signs of recovery had become strong enough last year that when the company reported its third-quarter earnings in October, it announced plans to start hiring again and resume acquiring smaller companies at an aggressive rate, roughly at the rate of one a month.
So far this year, Google has outstripped that pace, having announced the acquisition of six startups, with the latest coming earlier this week in the form of Plink, a U.K. firm specializing in visual search technology for mobile devices.
“We are continuing to invest heavily in people, products and in acquisitions,” Pichette said on a conference call with financial analysts.
“We expect to continue hiring aggressively throughout the year,” he added, noting that most of the positions Google is looking to fill are in its engineering and sales divisions.
But Google’s largest acquisition in the mobile space, the $750 million purchase of AdMob, remains under regulatory review.
CEO Eric Schmidt has made it clear on several occasions that Google is looking to mobile as the next major area of growth for the company. The AdMob buy would give Google one of the largest mobile ad networks, which has given antitrust authorities at the Federal Trade Commission pause.
But Schmidt has also noted Apple’s recent foray into the mobile ad sector as evidence of a “highly competitive market.” With the launch of the iAd ad platform, Apple (NASDAQ: AAPL) deepened the growing rivalry of the two Silicon Valley titans, companies that already compete in handsets, browsers and operating systems.
Company officials touted the success of the Android platform, noting that the operating system now powers 34 devices that collectively are seeing more than 60,000 sales and activations each day. They said that the Nexus One, the smartphone that Google is marketing directly to consumers, is a profitable business, but declined to divulge specific figures.
Some analysts on the call asked about Google’s precarious situation in China, where it recently announced it would offer unfiltered search results to the mainland populace by redirecting traffic to its servers in Hong Kong, beyond the reach of Chinese censorship laws. The executives had little new to offer about the situation, saying only that they remained committed to what they described as a principled stand for an unfettered Web, and reminding analysts that Google’s relatively small Chinese business was “immaterial” to the company’s overall financial prospects.
But MySpace is hardly the powerhouse that it was in August 2006 when the deal was signed, having been long ago eclipsed by rival Facebook. Without offering any specifics about the negotiations, Pichette hinted that any renewal would come with sterner terms from Google, reminding analysts that the original deal was “done a number of years ago with completely different industry dynamics.”
Kenneth Corbin is an associate editor at chúng tôi the news service of chúng tôi the network for technology professionals.
Get ready for a perfect storm of earnings news. With tech bellwethers including IBM, Microsoft, Intel and Google set to issue financial reports next week, earnings season will pick up in earnest and judging from recent forecasts and profit warnings, it could be a bumpy ride.
“While economic uncertainty in Western Europe had an effect on consumer PC shipments, expectations of a healthier economic outlook in North America could not stimulate consumer PC demand in that region,” said Mikako Kitagawa, principal analyst at Gartner , in the company’s report on quarterly PC sales Thursday. “The healthy professional PC market as well as growth in emerging markets could not compensate for the weaknesses in mature markets, with overall growth still negative.”
Worldwide PC shipments totaled 92.2 million units in the fourth quarter of 2011, a 1.4 percent decline from the fourth quarter of 2010, according to Gartner.
On its part, IDC Wednesday also said that sales of personal computers slowed in the last three months of 2011, due to a weak economy, scarce hard drives as a results of flooding in Thailand and the competition from tablets. According to IDC’s calculations, global PC shipments totaled 92.7 million in the fourth quarter of 2011, down 0.1 percent compared with the same quarter in 2010.
Intel in part blamed supply disruptions from the flooding in Thailand when it issued an earnings warning last month. The company forecast fourth-quarter sales of US$13.7 billion, plus or minus $300 million. Its previous estimate was for $14.7 billion, within a range of $500 million.
But earnings warnings have not been the sole province of hardware and components makers lately. Juniper Networks, for example, said Monday that its fourth quarter 2011 results will be softer than expected due to a weakening in demand for carrier routers. Juniper said revenue for the quarter is now expected to be in the range of $1.11 billion to $1.12 billion, compared to the company’s previous forecast of $1.16 billion to $1.22 billion.
“Our expected fourth-quarter financial results have been affected by the weakness in Europe, which has impacted our healthcare business, as well as pricing in our consumer lighting business,” said CEO Frans van Houten.
While economic indicators in the U.S. appear to be looking up, the outlook for Europe, plagued by a sovereign debt crisis, is still dim, said Ashok Vemuri, member of the board and head of Americas at Infosys.
On Friday, for example, SAP issued preliminary fourth-quarter results, reporting revenue would rise 11 percent to €4.5 billion. Results will be aided by a cut in money set aside to deal with a lawsuit Oracle filed against SAP and its former subsidiary TomorrowNow. The judge in the case overturned the $1.3 billion jury award to Oracle, giving Oracle the choice of accepting $272 million or undergoing a new trial.
But growth is mainly coming from SAP’s core applications business and momentum for analytics and mobile applications, the company said.
Software is likely to be the engine of growth for the global IT industry this year. Software, accounting for about 25 percent of total IT spending, is the largest category of spending, according to Forrester.
Still, that’s likely to be more than twice the U.S. GDP (gross domestic product) growth this year. So while IT spending slows, the tech sector is still likely to be a beacon of light in a troubled world economy.
Market news Friday morning appeared to be a sort of microcosm of what economy watchers might expect over the next month or so. All major indexes were down after earnings fell at JPMorgan Chase, the U.S.’s largest bank. In addition, reports swirled that Standard & Poor’s would downgrade ratings on several governments in the Euro zone because of problems created by high borrowing costs.
Through Thursday, the Nasdaq computer index was up 4.43 percent since the first trading day of the year. But the gloomy sentiment on the markets did not spare the tech sector Frdiay morning. The Nasdaq computer companies were down by 0.88 percent as of late morning trading.
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