Social networking companies Facebook FB and Twitter TWTR dropped post-earnings results, as did review site Yelp YELP; but GrubHub GRUB, Expedia EXPE and Lam Research LRCX rose.
Social Networking Stocks Tanked
The three major social networking companies are not comparable in any way. Facebook is by far the leader, Twitter is a short messaging outfit that limits social interaction and LinkedIn is more professional than social. But last week they had a few things in common: they all reported revenue that was ahead of expectations and they all lost some market value.
In Facebook’s case, investors couldn’t handle the increased spending that led it to miss the Zacks Consensus Estimate. But Facebook’s spending seems justified given the continued solid growth in users, ARPU and mobile and the good visibility going forward.
The Twitter story was different in the sense that the company managed to beat the Zacks Consensus Estimate, but management’s asking users not to expect notable user growth any time soon sent shares crashing. The revenue and user growth numbers weren’t that bad, but when the interim CEO can’t make up his mind about whether he should stay or not and the earlier CEO was so afraid to adapt to the times that product innovation all but stopped, it’s apparent that there’s too much uncertainty in the business. At the end of the day, a social network needs to facilitate social networking, or it fails.
LinkedIn’s top and bottom line results were ahead of the Zacks Consensus Estimate although estimates were adjusted following its guidance update in April. LinkedIn saw a notable increase in total revenue, premium subscriptions, unique mobile visiting members and member page views. There seems to be some concern about growth in the core business since the Linda.com acquisition will be a major growth driver this year.
GrubHub Shone, Yelp Could Have Done Better
The local business review site Yelp beat the Zacks Consensus Estimate on revenue and missed on earnings. The good news was that it saw mobile user and local advertising account growth. The bad news was that it is phasing out the display ad business, which not only impacted performance in the last quarter but also led to a weaker-than-expected guidance for the next quarter. Full-year guidance was also lowered. Yelp is also likely seeing increased competition. A lot of analysts downgraded the shares.
Food delivery service GrubHub solidly beat the Zacks Consensus Estimate on the back of solid double-digit growth in active diners, daily average diners, gross food sales and therefore, also revenues. The company also raised guidance.
Expedia Shares Jumped On Strong Travel Trends
Semiconductor Equipment Maker Results Mixed
Both Lam Research and KLA-Tencor saw the same trends, although results varied quite a bit because Lam is more focused on memory makers while KLA is more dependent on foundries and logic. Most of the current spending is on the memory side, where manufacturers are building 3D NAND capacity. Foundry spending will accelerate through the rest of the year due to FinFET additions.
Since the trends are currently very favorable for Lam’s served markets, the company beat on both the top and bottom lines and provided guidance that was above expectations. KLA on the other hand beat on earnings with revenue falling slightly short and guidance also disappointing. Some logic spending got pushed out further than expected and memory is not exactly its strong point, although the company has built capabilities in recent years.
|
Company |
Last Week |
Last 6 Months |
|
AAPL |
-2.44% |
+3.52% |
|
FB |
-3.02% |
+21.30% |
|
YHOO |
-5.61% |
-25.82% |
|
GOOGL |
+0.42% |
+22.50% |
|
MSFT |
+1.85% |
-0.47% |
|
INTC |
+3.16% |
-19.14% |
|
CSCO |
+0.07% |
+1.617% |
Other stories you might have missed–
Corporate
Google Express Workers Want Higher Pay, Etc.: Some 140 Google GOOGL Express contract workers that are employed by contractor Adecco have filed a petition to join the Teamsters labor union. They are asking for higher pay, better working conditions and a reversal of the Adecco policy that terminates them compulsorily after two years. Google employees have thus far stayed away from labor unions, but the labor unions’ ability to negotiate with tech companies like Apple AAPL and Facebook to pass on more of their profits are changing things in Silicon Valley.
Legal/Regulatory
Google Fighting RTBF In France: Google has appealed a French court’s ruling to scrub results from all its records when a citizen applies under Europe’s ruling on the right to be forgotten (RTBF). RTBF is highly controversial and sets a dangerous precedent since it opens the door to influential people and governments using their power to remove incriminating information about their activities related to other countries and people and could therefore also promote terrorist activity.
Moreover, it appears to condone censorship in countries where the government has more control over their people. So it directly opposes the right to information. Google maintains that the government of one country shouldn’t be able to decide what the citizens of another country are allowed to see, although it has scrubbed most of the results requested from its EU pages.
New Technology/Products
Facebook Testing Solar-Powered Drones
Intel-Micron Announce New Memory Class
Yahoo Launches Livetext: Snapchat may soon have some competition. A new app from Yahoo called Livetext allows users to chat voice-free using live video and text with the whole conversation “disappearing” after the session. Some of the technology used appears to have come from MessageMe, which the company acquired in October last year. Yahoo is focused on building a user base at the moment (and a young one, considering what the product is about) to increase its presence on mobile devices. So while this isn’t expected to have an impact on results any time soon, management focus on Mavens (mobile, video, native, social) is apparent.
New Google Glass Means Business: The WSJ reported that Google has released the second version of Glass to app developers. The new Glass, which comes with a more powerful Intel processor, increased battery life and other enhancements, is being targeted at healthcare, manufacturing and energy industries. Google hasn’t said anything about this but it’s been reported that it plans to have several users by fall this year.
Google Helps You Avoid Lines At Stores
Google Improves Google Translate: Google’s Translate app added 20 languages and the ability to instantly translate anything written. By pointing the camera at the writing, users can see the translated text on their screens. The enhancements will soon be made available to iOS and Android users.
Next-Gen Android One Phones for $176: The Lava Pixel V1 kicks off Google’s second attempt to grow its Android One user base in India. The first attempt failed because of the significant restrictions Google placed on phone makers that hindered their ability to differentiate their devices. There is cut-throat competition in the lower-end segment and since Android One wasn’t restricted to a single phone maker, all Android One phones appeared similar. Google said earlier that it had rethought its strategy and would do better the next time. And that time is now it seems. .
Amazon Dash Buttons Available Now
M&A and Collaborations
Google Partners with Smartphone Maker:Google’s Android for Work will be used in privacy-centric phones made by Silent Circle, a Geneva-based company. Silent Circle’s flagship device is the Blackphone, which encrypts users’ calls, texts and data, allowing companies better control over their sensitive information. The Android for Work software suite allows the creation of separation of personal and professional use in BYOD devices, opening up the professional side (Gmail, Contacts, Calendar, Docs, Sheets, and Slides) to corporate management.
Sri Lanka Government Wants Google Balloons
Some Numbers
Some Other Important Earnings Reports: Seagate, Western Digital, Monster Worldwide, Corning, Nielsenand Electronic Arts, Automated Data Processingand Fiserv.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment