Financial results from technology companies including and Google continued to buffet the market this week, though the Nasdaq Composite Index managed to claw its way up to finish its best January, in terms of percentage growth, since the trough of the dot-com bust in 2001.

Some technology leaders have disappointed investors this earnings season, leading to concerns about ongoing strength in the technology industry, especially in the internet arena, where the cost of doing business has been greater than expected for several leading companies.

There was enough good news about the fourth quarter of 2005 over the last few weeks from a cross-section of tech bellwethers including Microsoft, Advanced Micro Devices and Ebay to offset the bad news to a certain extent. The Nasdaq index (symbol: IXIC), weighted with a broad range of tech stocks, gained 4.6 per cent during January, closing at 2305.82 Tuesday, Jan 31. Earnings reports after the markets closed Tuesday, though, caused overall share prices to sink.

Amazon's results after the market closed Thursday, for example, are bound to cause some more concern in the e-commerce sector. Though the company handily beat analysts' earnings forecast, the downside was that the company's quarterly sales came in at $2.98 billion, below the $3.08 billion consensus expectation of analysts polled by Thomson Financial, and profit plunged by 43 per cent from one year earlier. Part of the reason for the earnings drop is that expenses for order fulfillment, marketing and technology - everything it takes to attract and retain new customers - have skyrocketed. Within an hour of Amazon's announcement, shares dropped by $3.58 to sell at $42.78 in after-market trading.

Google misses

Google results Tuesday were the big news this week, however. Though the company met the $1.29 billion consensus expectation of analysts for revenue, it reported $1.54 earnings per share for the quarter, excluding one-time charges. That missed the consensus forecast of $1.76. The main reason for the miss was an unusually large one-time tax hit, and greater than expected capital spending and overhead costs. Chief Executive Officer Eric Schmidt took pains to say that the core business is strong and that the company will continue to spend on search technology to maintain its edge.

Google's (GOOG) shares price dropped $30.88 Wednesday to close at $401.78. Analysts' reaction was mixed. Credit Suisse First Boston increased its price target to $500 from $475, while UBS Investment Bank dropped its price target to $425 from $500. However, most analysts are still positive about the company, which holds a commanding lead over Yahoo and Microsoft in search. Of analysts polled by Thomson Financial, 29 advise a strong buy or buy, eight counsel a hold and only two suggest dumping shares.

Time Warner, which was usurped by Google last year as the world's biggest media company in terms of market capitalisation, Wednesday reported quarterly results showing that its AOL unit has been losing subscribers. Time said overall quarterly profit rose by 21 per cent while operating earnings at AOL also increased. However, AOL lost 2.8 million US members in 2005. Officials said that AOL earnings will further increase as the unit moves more users from dial-up to broadband, where there is a broader array of attractive services. The company also will be helped in advertising and search by its renewed partnership with Google, which invested $1 billion in AOL last year. Time Warner shares (TWX) gained $0.69 to close at $18.22 Wednesday.