Investors appeared nervous about the tech sector last week, punishing Pandora (P), Yelp (YELP), Expedia (EXPE) and ActiVision (ATVI) shares. Twitter (TWTR) and Linked (LNKD) did well.
Earnings Highlights
Twitter: The company’s quarterly loss was lower than expected, as it saw strong revenue growth, easily beating the Zacks Consensus Estimate. The monthly user number continues to disappoint, but ad engagement remains encouraging. Mobile and international remain important drivers.
There’s also news that Twitter is introducing promoted tweets and getting back together with Google (GOOGL) again, which should further drive advertising revenue. Other revenue should benefit from the new deal with IBM (IBM).
LinkedIn: The professional networking firm that primarily relies on job postings to generate revenue had a very good fourth quarter, beating our estimates on both the top and bottom lines. The last quarter also saw marketing and premium subscriptions grow strong double-digits from the prior year. Monthly active and unique users also increased double-digits. LinkedIn continues to generate the bulk of its revenue overseas where most of its subscribers are located. Shares were up nearly 8% post announcement.
Pandora: Pandora noted that hours of music listened to increased 20%, active users increased 7% from a year ago and share of listener hours increased to nearly 10%. Monetization also improved. Revenue, both total and mobile, also jumped double-digits as a result. But investors were disappointed with the earnings miss of 33%, revenue miss of over 3% and the disappointing guidance, sending shares down more than 20% following the announcement.
Take-Two: The gaming company posted a strong quarter with both revenue and earnings topping our estimates. The Grand Theft Auto series (vital to its growth), NBA 2K15, Borderlands and Sid Meier’s Civilization: Beyond Earth franchises drove results. Catalog products were stronger than virtual currency, DLCs and online games and the domestic business was stronger than international.
ActiVision: Activision earnings beat the Zacks Consensus Estimate while revenue fell short. The FX-impacted guidance pummeled shares, which plunged over 6%. ActiVision is working on new games, as its popular games like Destiny, Call of Duty, etc. lose their shine. The company saw weakness in product sales that was partially offset by strength in subscription, licensing and other revenue. International revenue grew while domestic dropped.
Expedia: Online travel booking company Expedia saw shares plunge post earnings as results missed expectations. Negative FX impact was the strongest driver of the miss, although the company is also investing heavily in highly-competitive fast-growing markets. A stronger mix of domestic versus international and business versus leisure were positive for margins.
Yelp: Yelp beat our top and bottom line estimates, but the stock crashed 20% following the results. While some said that investors were scared off by the user growth rate which went from 39% in the year-ago period to 13% in the last quarter; sentiments were already down following news that Facebook (FB) was testing “Place Tips,” which does pretty much what Yelp does. When user growth (particularly mobile) flattened sequentially, investors took it as a call to sell.
|
Company |
Last Week |
Last 6 Months |
|
AAPL |
+1.51% |
+25.53% |
|
FB |
-1.89% |
+1.31% |
|
YHOO |
-2.41% |
+17.50% |
|
GOOG |
-0.66% |
-7.34% |
|
GOOGL |
-0.68% |
-8.31% |
|
MSFT |
+4.98% |
-2.20% |
|
INTC |
+0.77% |
-2.22% |
|
CSCO |
+3.31% |
+8.25% |
GOOG = Class C shares (new, non-voting)
GOOGL = Class A shares (old, 1 vote per share)
Other stories you might have missed–
Corporate
Netflix Also Borrows Some: Netflix (NFLX) is raising $700 million in principal value of 5.5% senior notes due 2022 and $800 million in principal value of 5.875% senior notes due 2025. Moody's has assigned a B1 rating to the issue.
Microsoft Appoints New VP of Design: Michael Gough has left Adobe Systems (ADBE) to join the software company as its corporate VP of Design, Applications and Services Group to report to chief experience officer Julie Larsen Green.
Microsoft Insider Buying Shares: Mason Morfit, a member of Microsoft’s (MSFT) board has picked up 1.03 million Microsoft shares for around $42.5 million when Bill Gates sold some under his 10b5-1 plan.
Twitter’s Next R&D Center in India: Twitter has chosen Bangalore, India as its first R&D center outside the U.S. The ZipDial team, which it recently acquired for $40 million will start this effort. India and Indonesia are expected to be high-growth markets this year, so Twitter likely intends to boost user growth through focused effort on the region.
Amazon Pickup Location at Purdue: Amazon@Purdue, Amazon’s (AMZN) first campus location, allows Purdue students to easily and safely pick up their packages from store lockers that can be accessed by typing in a code. Store employees will help students with returns and answer queries.
New Technology/Products
Apple Mystery Vans: Apple (AAPL) minivans were seen crawling over the San Francisco Bay Area leading to speculation that Apple was either testing self-driving cars, or testing its in-dash solution (CarPlay), or taking pictures to improve Apple Maps.
Google Developing Uber Competitor
Collaborations and M&A
Yahoo Offloads Small Biz Unit: SpinCo, as the new company to own Yahoo’s Alibaba holdings is referred to, will also take over Yahoo’s running small business unit.
Some Numbers
Yahoo Search Share Rising: A StatCounter report confirmed that Yahoo’s Mozilla gain in the U.S. is fetching it search market share. In January, Yahoo (YHOO) touched 10.9% share, the highest in 5 years, with Google’s 74.8% share making it the first time its market share fell below 75%. Google’s search share could slip further if Yahoo also becomes the default on Apple’s Safari. Since Yahoo sustained the gains from December, it has become apparent that customers bank on the default in most cases and generally don’t switch to a competitor even if it is better.
Amazon Leads in the Cloud: Synergy Research Group has put out numbers indicating that Amazon is the leading cloud infrastructure provider with 30% market share followed by Microsoft with 10%. But Microsoft was the fastest-growing (up 96%). Google is also not to be discounted, growing 87% for a smaller share mainly because it was the latest to the party. IBM leads in the hybrid cloud area.
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