Apple's Earnings Bite: Tech Weekly Recap
By Chris Ciaccia - 07/28/12 - 9:37 AM EDT
NEW YORK (TheStreet
) -- After last week's earnings bonanza
in technology, you might have expected a break this past week. It didn't happen -- by a long shot.
Results from Apple
were the major event this week, but Facebook's
first quarterly earnings report as a public company were another key event.
Other stalwarts such as Amazon
, Texas Instruments
, and others were some of the more important technology tidbits this week.
Apple's third-quarter earnings
report on Tuesday was by and large a disappointment, as iPhone sales were much weaker than forecast, with the tech giant selling only 26 million units.
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The Cupertino, Calif.-based company reported earnings of $9.32 a share on revenue of $35.02 billion for the three months ended in June. Analysts polled by Thomson Reuters
were expecting a profit of $10.37 a share on revenue of $37.18 billion.
CFO Peter Oppenheimer cited several reasons during the earnings call for the revenue and earnings miss, including economic weakness in Europe, Australia, Canada, and Brazil. He also said consumer speculation about new products was delaying some purchasing and that a delay with Intel's
Ivy Bridge chips hurt Mac sales in April and May.
Guidance for the September quarter was also very weak. Many interpret this to mean Apple is ramping up for the iPhone 5 late in the fiscal fourth quarter or early in the fiscal first quarter. Apple expects revenue of about $34 billion and diluted earnings per share of about $7.65. The current consensus expectations are for earnings of $8.57 a share on revenue of $35.21 billion in the September-ending period.
Later in the week, Apple announced
a deal to acquire AuthenTec
, a maker of mobile and network security solutions, for $8 a share.
There has already been speculation that the deal might reflect Apple's interest in making the iPhone a mobile payments device. Wells Fargo analyst Maynard Um speculates this might be the case. "We believe this deal signals the potential for fingerprint sensors in upcoming Apple devices, which not only increases device security, but could also be a mechanism to assure security needed to execute mobile payments on iPhones," Um wrote in a note.
Apple shares fell 3.2% this week to close at $585.16.
Social networking giant Facebook released its first earnings report
as a public company on Thursday, and while results were largely in line, Wall Street was not happy.
Facebook reported non-GAAP earnings of $295 million, or 12 cents a share, on revenue of $1.18 billion. The average estimate of analysts polled by Thomson Reuters
was for a profit of 12 cents a share in the June-ended period on revenue of $1.15 billion.
Many were wondering whether CEO Mark Zuckerberg would join the earnings call
, and he did, reading a prepared statement, then taking part in the Q&A session afterwards.
Zuckerberg addressed the question of mobile monetization on the call. He noted that Facebook is the most used app on a lot of platforms, adding that "we want to not have just apps, but be deeply integrated as well. We want to have apps built on top of Facebook." Zuckerberg also said it didn't make sense for the company to build its own phone.
Shares of Facebook plunged to new 52-week lows this week, falling to $22.28 before recovering to end the week at $23.70, down 17.6%.
Social gaming company Zynga announced its second-quarter earnings
on Wednesday, and results were well short of Wall Street's expectations, sending the stock into a downward spiral.
Zynga, which derives a significant portion of its revenue from Facebook, reported second-quarter earnings of 1 cent a share on $332 million in revenue. Analysts polled by Thomson Reuters
expected the San Francisco-based company to generate earnings of 6 cents a share on $344.85 million in revenue.
The online gamer also sharply cut its forecast for fiscal 2012, citing "delays in launching new games, a faster decline in existing web games due in part to a more challenging environment on the Facebook web platform, and reduced expectations for Draw Something
." It now expects earnings of 4 to 9 cents a share. Wall Street analysts were looking for earnings of 27 cents a share.
Shares plunged approximately 40% Thursday, and closed the week down 35.7% at $3.09.
beat investors' expectations on Tuesday, but the outlook for the rest of the year could have significant losses.
Netflix reported earnings of 11 cents a share on revenue of $889.2 million for the three months ended in June. The average estimate of analysts polled by Thomson Reuters
was for earnings of 5 cents a share on revenue of $888.9 million.
The company's outlook for the third-quarter ranges from a loss of 10 cents a share to a profit of 14 cents a share on revenue between $890 million and $911 million, but the commentary sounded a much different note, as the company expands its international efforts.
"Q3 has begun strongly for us, and we expect to be profitable again in Q3. In Q4, we will launch our next international market, which will drive us temporarily back into the red," the company said in its earnings release. Wall Street's current expectations are for earnings of 6 cents a share in the third quarter and a loss of 8 cents a share in the fourth quarter.
Shares sank 28% this past week to $58.92.
AT&T's second-quarter earnings
were boosted by its wireless division, which had record margins.
The telecom giant earned 66 cents a share, up from 60 cents a share in the prior year's quarter, and above the consensus estimate of 63 cents a share. AT&T generated $31.6 billion in sales, just short of the $31.7 billion Wall Street was expecting.
Total wireless revenue came in at $16.4 billion, a year-over-year increase of 4.8%. Wireless data revenue was $6.4 billion, an increase of 18.8% over the same period.
AT&T's wireless operating income margin was 30.3%, compared to 26.9% in the second quarter of last year.
Late Friday, AT&T announced it would be buying back an additional 300 million shares.
Shares of AT&T rose 5.2% during the week to $37.14.
Texas Instruments beat second-quarter expectations
on Monday but gave extremely weak guidance, which signaled to some the recovery in semiconductors is not quite materializing.
Second-quarter earnings were 44 cents a share on $3.34 billion in revenue. Wall Street analysts were looking for 41 cents a share on $3.35 billion in revenue.
Despite the earnings beat, the Dallas-based company expects a weak third quarter, with revenue between $3.21 billion and $3.47 billion and earnings between 34 and 42 cents a share. Analysts surveyed by Thomson Reuters
were looking for sales of $3.54 billion and earnings of 50 cents a share.
Shares of Texas Instruments edged up 0.3% this week to close at $27.34.
shares spiked following the ouster of its CEO, Enrique Salem, and strong earnings results on Wednesday.
The security software maker reported second-quarter
earnings of 43 cents a share on revenue of $1.67 billion, well above analysts' forecast of $1.65 billion and 38 cents.
Symantec also announced that CEO Enrique Salem has stepped down after three years at the company's helm, to be replaced by board Chairman Steve Bennett.
Shares of Symantec jumped 17.3% to close at $15.93.
Chinese Internet giant Baidu
blew past Wall Street expectations on Monday, sending shares higher for the week.
Baidu reported second-quarter earnings
of $1.26 a share on $858.8 million in revenue, an increase of 59.8% year-over-year. Analysts polled by Thomson Reuters
expected the Chinese-based Internet company to generate a profit of $1.12 per share on $850.8 million in revenue.
CEO Robin Li said he was pleased with the quarterly results but acknowledged the impact of macroeconomic headwinds. Li said the company plans to continue to expand its sales processes.
For the third-quarter, Baidu forecast revenue between $983 million and $1.01 billion. The current consensus view is for revenue of $993.17 million in the September-ending quarter.
Shares of Baidu soared during the week, gaining 12.22% to close at $123.70.
reported second-quarter earnings
on Wednesday, missing on the top line, as sales at the company's display technologies segment fell year over year.
The Corning, N.Y.-based company, which provides glass for LCD televisions, computer monitors, and other information display applications, reported earnings of 31 cents a share on revenue of $1.9 billion. Analysts were looking for 31 cents in earnings on revenue of $2.02 billion.
Earnings fell 35% year over year while revenue declined 5% during the same time period, largely driven by the 16% drop in sales at the company's display technologies segment over last year's second quarter. LCD glass prices fell moderately from last year as well.
Shares of Corning fell 6.0% during the week to $11.53.
Online retailer Amazon.com
reported earnings Thursday, delivering mixed results.
The Seattle-based company reported second-quarter earnings
of $7 million, or a penny per share, on revenue of $12.83 billion. Analysts polled by Thomson Reuters
were looking for 2 cents a share on revenue of $12.88 billion.
Amazon expects an operating loss for the third quarter. For the quarter ending in September, Amazon is forecasting an operating loss between $50 million and $350 million, on revenue ranging from $12.9 billion to $14.3 billion. Wall Street's current estimate is 14 cents a share in earnings on revenue of $13.99 billion.
Shares of Amazon gained 4.0% during the week to $237.32.
Next week is the beginning of the end of earnings season, especially in technology, with just a few major releases.
Investors will peruse reports from Electronic Arts
and BMC Software
Enjoy your weekend everyone.
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-- Written by Chris Ciaccia in New York
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