Today: eBay (EBAY) provides yet another quarter of strong growth on the back of PayPal and mobile apps, but shares slide on weak forecast. Also: Apple (AAPL) tumbles to a new low as Wall Street dives.
eBay's earnings continue to grow, SanDisk follows suit
One of Silicon Valley's biggest 2012 success stories, eBay, continued to post strong profits and revenues in the first three months of 2013, but a cautious forecast concerned analysts and sent the company's stock down in late trading.
The San Jose e-commerce company reported profits of 63 cents a share on revenue of $3.75 billion, a solid increase from 55 cents per share of profit on revenues of $3.28 billion in the same quarter last year. The report was right in line with the average analyst forecast of 62 cents a share in profits on revenues of $3.76 billion, according to Thomson Reuters.
The company's forecast for the current quarter was below analyst estimates, however, with eBay saying it projected its numbers to be roughly the same: 61 to 63 cents per share on revenues of $3.8 billion to $3.9 billion. Analysts were expecting a forecast of 66 cents a share on revenues of $3.95 billion.
The weak forecast seems to go against eBay's rosy view of its future, which it laid out in a meeting with analysts last month. However, Morningstar analyst R.J. Hottovy told Reuters that the weak forecast was in line with eBay's plan for dominance in 2015.
"These investments are building for the future so that should be taken positively, even if they come at the expense of short-term profits," Hottovy said, adding that eBay maintained its strong full-year forecast.
eBay's strongest components continued to drive the company's gains, with PayPal growing 18 percent year-over-year -- growth that seems "sustainable over the next several years," Pacific Crest Securities analyst Chad Bartley told The Mercury News -- and mobile apps bringing in another 2.8 million customers.
eBay dropped 1.6 percent in regular trading Wednesday to $56.10, then dropped another 3 percent to less than $54.50 in late trading.
Milpitas memory chip maker SanDisk also announced earnings Wednesday after the close of normal trading, also announcing strong gains in revenues. SanDisk reported an 11 percent year-over-year increase in revenues to $1.34 billion and profits that beat expectations, but shares slipped slightly in late trading following a 3.1 percent decline in regular trading.
Apple falls lower than $400 as earnings concerns continue
SanDisk's earnings report was one of many factors analysts and investors were watching for signs of health at Apple, and their earlier findings led to a severe downturn in the stock that pulled shares lower than $400 for the first time since 2011.
Less than a week before its earnings report is scheduled to arrive, Apple stock plummeted by as much as 6.3 percent in Wednesday trading to a low of $398.11, 43.6 percent lower than the peak of its value, $705.07, reached Sept. 21.
Analysts pointed at the earnings report released by Cirrus Logic late Tuesday as a pressure point for the Apple sell-off. The maker of audio chips used in Apple devices projected current-quarter revenues far short of expectations and said that they have more inventory than expected due to reduced demand for a product by one, unnamed customer.
Reuters pointed out that 90 percent of Cirrus's business at the end of 2012 was delivering components to Apple, which makes it more than just likely that the unnamed customer is Apple.
Jeffries analyst Peter Misek reported that the Cirrus news meant that Apple was unlikely to release a new iPad Mini this quarter, and any new iPad release would be toward the end of the quarter, which would not help its quarterly results.
Needham analyst Vernon Essi Jr. blamed weak demand for Apple's newest smartphones.
"This was simply an inventory overbuild for the iPhone 5 relative to Apple's forecast," he told Bloomberg News.
The Cirrus negativity arrived on top of moves by other component suppliers to seek extra business, presumably due to weaker demand by Apple. Also, expectations that Apple will announce its first year-over-year profit decline in more than a decade on Tuesday, with analysts pulling their forecasts down daily. And investors are already salty about a lack of an Apple plan to return some of its cash hoard to them, a sticking point in February's annual shareholders meeting that has not been addressed since by CEO Tim Cook.
Apple closed at $402.80, a decline of $23.44, or 5.5 percent, and ended the day once again behind Exxon in the race for most valuable company in the United States.
Wall Street falls and tech stocks lead the way down
Apple's fall helped pull the rest of Wall Street down Wednesday, but other tech stocks did their part to contribute to the weakness as well. The SV150 index of Silicon Valley's largest public tech companies plummeted 2.7 percent and the tech-heavy Nasdaq declined 1.8 percent, while the more broad-based Standard & Poor's 500 fell 1.4 percent and the blue-chip Dow Jones industrial average lost 0.9 percent.
Yahoo (YHOO) and Intel (INTC) managed to avoid extreme weakness despite their less-than-stellar Tuesday earnings reports: Intel actually gained 0.1 percent as it reportedly snapped up a San Francisco startup, and Yahoo dropped 0.4 percent after one analyst actually upgraded the stock despite the advertising weakness apparent in the Sunnyvale company's report.
Those performances seemed stellar when compared with other big-name valley tech companies: Oracle (ORCL) dropped 2.8 percent, Hewlett-Packard (HPQ) declined 2.6 percent, Cisco (CSCO) fell 2.5 percent and Netflix (NFLX) gave back 3.6 percent.
Google (GOOG) declined 1.4 percent as some of its popular Web services suffered outages, but the Mountain View search giant landed a third civic partner for its Google Fiber effort, and this one already has the infrastructure in place. Google's most prominent rival in Web advertising, Facebook, lost 1.1 percent despite a high-profile hire of an Apple veteran, as Twitter announced a plan to rival both companies in targeted advertising.
Silicon Valley tech stocks
Up: Yelp, Intel
Down: Apple, Netflix, Applied Materials, NetApp, Oracle, HP, Cisco, SunPower (SPWRA), VMware, Juniper, Zynga, SolarCity, Electronic Arts (ERTS), Juniper, Intuit (INTU), Workday, AMD, eBay, Symantec, LinkedIn, Google, Nvidia
The tech-heavy Nasdaq composite index: Down 59.96, or 1.84 percent, to 3,204.67
The blue chip Dow Jones industrial average: Down 138.19, or 0.94 percent, to 14,618.59
And the widely watched Standard & Poor's 500 index: Down 22.56, or 1.43 percent, to 1,552.01
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.