The nonfactor of the technology stock earning report

Earning reports came out for many of the big tech firms this week, such as Amazon, Apple, and Google, and as always, it was a mixed bag.

Amazon’s stock jumped on news of a profit.

Apple had a large piece in the New York Times about how it overtook arch-rival Microsoft and has been overwhelmingly successful, selling nearly 75 million iPhones this past quarter.

Google’s CFO took the stage to reassure the marketplace that lower earnings were not a sign of slipping dominance.

The technology sector loves to crown winners, to herald the ‘next big thing’, but when it comes to profits, there is much less fanfare. And the reason why there is less noise about tech financials boils down to the underlying conviction of silicon valley that being full of potential energy is much more valuable that any amount of kinetic energy.

For better or worse, the Jetson’s colored our view of technology, meaning that a modern day Tesla – such as Elon, Jobs, or Zuckerberg – is markedly more impressive than the constant plotting of a modern day Rockefeller –such as Buffet, Gates, or Winfrey. All is forgiven when the envisioned future comes up short when the books have more red ink than black when a company suggests its R&D lab is building “something” revolutionary.

Google and Amazon continue to innovate in ways that push conceptions and expectations, although not necessarily in ways that are financially explosive. Their sins are absolved because the market still believes in their ability to creatively dazzle. Apple is an example prime of this, where the potential of turning magic into an electronic reality was tolerated, and ultimately rewarded with iDevice profits.

Internet companies have, and continue to (read: Twitter), struggled with converting users into revenue, but ultimately, if one company is a financial letdown two more will spring up in its place.

Investors are itchy to reward those with ballooning user bases, and conversely to abandon those with sinking notoriety, but these are not concerns that consumers should harbor. Microsoft is a bastion of consistent profits but has garnered many fewer headlines due to its more mundane products, though their success never being in doubt is the perfect example of why earning reports mislead and misunderstand the importance of the news.

Earnings reports share many similarities with flying cars, both exciting in promise but distract from the more nuanced reality. So ignore the stock prices and revenue numbers for Amazon, Apple, and Google, and instead take a look at product adoption rates, at the success of their competitors, and at consumers’ confidence in their ability to create the future.