Main Amazon numbers unimpressive, but analysts and investors send stock soaring
After Apple stock sank following last week's announcement of record holiday sales, Amazon's record-breaking fourth quarter had the opposite effect: The e-tailer's stock shot up to record territory after an earnings report that included a loss on the year.
Amazon reported 22 percent growth in revenues for the holiday shopping season, as customers deposited $21.27 billion in Amazon's coffers. However, the company's profits dipped markedly from the same period in 2011, from 38 cents a share to 21 cents a share, as Amazon continued its habit of plowing funds into its infrastructure.
Neither the revenues nor the profits matched analysts' expectations, which were for 28 cents per share on revenues of $22.2 billion. Amazon's forecast was also light, with the company projecting revenues for the current quarter to range from $15 billion to $16.6 billion, with Wall Street consensus at $16.86 billion, according to FactSet. For the full year, Amazon reported a loss of 9 cents a share.
Despite those issues, investors still sent Amazon stock up more than 10 percent in after-hours trading, surpassing the company's all-time high of $284.72, established Friday
The stock jump "boggles the mind," BGC Financial analyst Colin Gillis told the Associated Press. "A lot of people scratch their head at the valuation given to Amazon and the support the stock has."
Gillis and other analysts pointed to Amazon's operating income and margins, which take away the cost of operations, as a reason for the stock increase. Amazon's operating income was $405 million, almost double the expected $212.1 million, while operating margin increased from 2.9 percent a year ago to 5 percent, Bloomberg News reported.
"The fourth-quarter operating income was up more than expected," Morningstar equity analyst R.J. Hottovy told Reuters. "This supports the bull case that Amazon can monetize its growth over the longer term."
Amazon CEO Jeff Bezos had a different take-away from the report, focusing on the fact that e-book purchases increased 70 percent in 2012 from 2011, while physical books sold only 5 percent more -- good news for the company's Kindle tablets, through which it sells e-books.
"We're now seeing the transition we've been expecting," Bezos said in Tuesday's news release. "After five years, e-books is a multibillion-dollar category for us and growing fast ... We're excited and very grateful to our customers for their response to Kindle and our ever expanding ecosystem and selection."
Amazon stock closed down 5.7 percent at $260.35 before the massive after-hours increase.
Apple, Microsoft do battle in the mobile arena as Apple rebound continues
Apple continued to rebound Tuesday, increasing 1.9 percent for its second straight day of gains. The Cupertino company announced it would introduce a larger-capacity iPad on Tuesday, with 128 gigabytes of memory, twice the size of the previous largest version.
Apple's new fourth-generation iPad will go on sale Feb. 5, coincidentally (of course) a few days before the new version of Microsoft's tablet offering, the Surface Pro, hits the market. The Surface Pro also offers up to 128 GB of storage, but the Windows 8 operating system takes up a large chunk of that room, and the Surface is pricier: the 128 GB iPad starts at $799, while the Surface Pro's pricing begins at $899.
Microsoft is not defenseless in its fight against Apple, however. The tech giant launched its new subscription service for its popular Office software suite Tuesday, allowing users to access the software and documents produced through it from any device. While the new version of Office is designed to play well with touchscreen devices, it does not yet work on devices running Apple's iOS or Google's (GOOG) Android operating system, the two dominant mobile operating systems.
Apple, which has received trademarks for the design of its retail stores, gained $8.44 to close at $458.27. Microsoft increased 10 cents, or 0.4 percent, to $28.01.
VMware suffers after earnings release, Facebook drops ahead of its report
While the Dow Jones and Standard & Poor's 500 indexes gained on Tuesday despite mixed economic reports that showed plunging consumer confidence and skyrocketing housing prices, tech stocks struggled, led by VMware. The Palo Alto company declined a whopping 21.5 percent Tuesday after announcing layoffs and a disappointing 2013 financial forecast.
Social-networking stocks also had a difficult day with investors, as Facebook declined 5.2 percent ahead of Wednesday's earnings report, which is expected to show fruit from mobile efforts; and Zynga followed up large, unexpected gains Monday with a decline of 8.5 percent Tuesday. Other decliners included Sunnyvale's Fortinet, which suffered a rating cut that cited competition from Cisco (CSCO) and Palo Alto Networks, leading to a 6.4 percent dip; Yahoo (YHOO), which declined 3 percent as investors worried about near-term effects of CEO Marissa Mayer's turnaround efforts; and Pandora fell 2 percent amid more concerns about an Apple entry into streaming music.
Silicon Valley stocks that performed well Tuesday included Netflix (NFLX), which continued its recent run of success with a 4.3 percent increase; and Google, which gained 0.4 percent amid reports that YouTube would begin charging for premium content. Mountain View-based Audience gained 4.5 percent, but only after a Twitter hoax caused shares to dive more than 25 percent in midday trading.
Silicon Valley tech stocks
Down: VMware, Zynga, Facebook, SolarCity, Hewlett-Packard (HPQ), Yahoo, Advanced Micro Devices, Juniper, Nvidia, LinkedIn, Splunk, Jive, Cisco, NetApp, Applied Materials, Applied Materials, Palo Alto Networks, Workday, Yelp
The tech-heavy Nasdaq composite index: Down 0.64, or 0.02 percent, to 3,153.66
The blue chip Dow Jones industrial average: Up 72.49, or 0.52 percent, to 13,954.42
And the widely watched Standard & Poor's 500 index: Up 7.66, or 0.51 percent, to 1,507.84
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.