Wall Street Beat: Tech Earnings Provide Bright Spot for Markets

Google, Apple, Facebook, and even Yahoo shares are up

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Fri, January 31, 2014

IDG News Service (New York Bureau) — Positive earnings news from the likes of Facebook, Google and Apple helped boost tech shares in what was otherwise a gloomy week for the markets.

The Dow Jones Industrial Average, Standard and Poor's 500 index and the Nasdaq stock exchange closed down Friday. The slide made January the worst month for Wall Street since May 2012.

Concerns about slowing growth in China and emerging markets around the world depressed share prices this month. But on Friday, some bellwether tech stocks managed to make gains, as the Nasdaq computer index rose 16.01 points to close at 2,007.95.

Internet superstar Google Thursday reported a 17 percent rise in both sales and profit for the three months ending Dec. 31, as total revenue increased to US$16.86 billion and net income came in at $3.38 billion.

One disappointment: earnings per share, at $12.01, was under analyst estimates of $12.26.

On the whole, analysts applauded the results, and were happy with the company's announcement earlier in the week that it was selling its Motorola Mobility handset unit to Lenovo. Even thought Google bought the company in 2012 for more than $12 billion and is now selling it for $2.91 billion, it is getting rid of a business that was not contributing to profit.

Motorola handsets also put Google in competition with manufacturers that are using -- or may use -- the Google-developed Android OS. Google is keeping Motorola-related patents, so it is retaining important intellectual property.

"In addition to the strong top line, sentiment appears bolstered by the announced sale of the MMI handset business to Lenovo, which should help restore higher revenue growth and margins at the corporate level," according to Canaccord Genuity analyst Michael Graham in a research note. "We are slightly raising estimates and continue to believe Google is a healthy core Internet and Tech holding," Graham said.

Google closed Friday at $1,180.97, up by $45.58.

Meanwhile, Facebook shares hit an all-time high Thursday and kept going Friday, after it showed growth in mobile advertising. In its Wednesday earnings report, the social networking company showed that mobile advertising has potential. Facebook said mobile advertising accounted for 53 percent of revenue in the fourth quarter, up from 23 percent a year earlier.

The total numbers were stellar. Total revenue for the December quarter jumped 63 percent year over year to $2.59 billion while net income skyrocketed 700 percent to $525 million.

Facebook shares Friday closed at $62.57, up $1.49 for the day.

Not all is well in the Internet sector, however. While Yahoo profit was up, showing cost controls under CEO Marissa Mayer, revenue slipped. Yahoo on Tuesday reported that net earnings for the December quarter increased 28 percent year over to $348 million, but revenue dropped 6 percent to $1.3 billion.

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