Today: Apple rises to a record, and Yahoo also gets a post-earnings pop. Also: Yelp tanks after its report.
The Lead: Silicon Valley turns around post-earnings performance
After suffering several post-earnings declines in the first week of earnings season, Silicon Valley tech firms have turned the momentum around this week, with Apple rising to record highs and Yahoo earnings getting a boost.
After nearing new highs Tuesday, Apple topped $104 for the first time Wednesday, after adjusting for stock splits, and ended the session just short of its record closing high of $103.30 thanks to a 0.5 percent increase to $102.99. Yahoo had the second-highest percentage gain among Silicon Valley’s 150 largest tech companies, adding 4.5 percent to $42, while other companies that reported earnings Tuesday joined Yahoo in Wednesday’s top three: Super Micro Computer, up 8.8 percent to $28.81, and Abaxis, up 3.6 percent to $51.11.
Apple continued to advance on the strength of record third-quarter revenues and projections for a bountiful holiday shopping season, despite an iCloud security concern that prompted a meeting between Apple CEO Tim Cook and a Chinese official, and an early stumble in the rollout of its Apple Pay mobile-payments offering. The main concern about Apple’s run of record revenues is a reliance on the iPhone, Bernstein Research analyst Toni Sacconaghi reporting that smartphone sales have contributed 90 percent of Apple’s revenue growth in the past 12 months.
“While we expect a very robust iPhone 6 product cycle, buoyed by share gains and an accelerated replacement cycle, we worry that the flip side of an accelerated iPhone replacement cycle in fiscal 2015 is that the cycle may revert ‘back to normal,’ potentially pressuring unit sales in fiscal 2016,” Sacconaghi wrote in a research note.
Yahoo’s bounce followed an earnings report that beat expectations, providing Marissa Mayer with a brief respite from loud concerns about her stewardship of the Sunnyvale Web company. Analysts were not overjoyed with the report despite the beat, basically saying that Yahoo should be beating expectations that have been greatly diminished by the poor performance of the past few years.
“The fundamental performance of the business is nothing to write home about,” Bernstein analyst Carlos Kirjner wrote, despite pushing his price target on the stock from $42 to $50.
“It wasn’t a train wreck, but there was nothing in the core business that made me say, ‘Wow, look at this,'” BGC Partners analyst Colin Gillis told Bloomberg News.
While those gains seemed to reverse a trend of strong post-earnings declines that claimed Netflix, Intel and Google among others last week, gains were not universal: VMware plunged 7.1 percent to $81.95 after the Palo Alto software company released earnings that caused concerns about future growth. Fremont’s Electronics for Imaging lost 1.8 percent to $40.84 after its earnings report and faces a federal fine for underpaying workers. Tuesday’s other SV150 earnings report, from Intuitive Surgical, resulted in a 2.8 percent decline to $481.81 for the Sunnyvale robotics company.
SV150 market report: Winning streak ends, Yelp plunges after earnings
Silicon Valley’s three-day winning streak on Wall Street came to an end Wednesday as stocks dipped overall, and Wednesday’s earnings reports received mixed initial reviews.
Yelp plunged more than 13 percent in after-hours trading Wednesday after beating expectations for third-quarter earnings but not in its holiday-quarter projections. The San Francisco online reviews site revealed profits of $3.6 million, or 5 cents a share, on sales of $102.5 million, revenue growth of 67 percent year-over-year. However, Yelp expects that growth to decrease in the fourth quarter, predicting a year-over-year increase closer to 50 percent with a forecast of $107 million to $108 million, lower than the consensus on Wall Street of $110 million. After closing with a 1.5 percent slide to $70.23, Yelp stock plummeted to less than $61 in late trading. Fremont chip company Lam Research dipped to a lesser degree after releasing its earnings report Wednesday afternoon, but fellow SV150 members Polycom, Fortinet, ServiceNow and Infinera all gained in late trading.
Google introduced a new email offering that seeks to better organize users’ correspondence, and the Mountain View company gained 0.9 percent to $542.69. Twitter kicked off its Flight developers conference with the introduction of a software development kit called Fabric, and its shares declined 3.1 percent to $49.08. Oracle declined 1.9 percent to $37.64 while denying involvement in a Silicon Valley no-poaching scandal and having its ties to Oregon’s bungled health care website officially severed. Cisco dropped 1.1 percent to $23.26 after ending a joint venture with EMC and Pandora fell 1.1 percent to $22.71 after introducing a new analytics tool for musicians.
Up: Yahoo, Netflix, NetApp, Google, Apple
Down: VMware, AMD, SunPower, LinkedIn, SolarCity, Twitter
The SV150 index of Silicon Valley’s largest tech companies: Down 9.28, or 0.6 percent, to 1,557.99
The tech-heavy Nasdaq composite index: Down 36.63, or 0.83 percent, to 4,382.85
The blue chip Dow Jones industrial average: Down 153.49, or 0.92 percent, to 16,461.32
And the widely watched Standard & Poor’s 500 index: Down 14.17, or 0.73 percent, to 1,927.11
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