Today: Google (GOOG) stock plunges after earnings come in below analysts' expectations, and Silicon Valley's semiconductor companies mimic Intel's (INTC) troubles. Also: Wall Street indexes hit new records, but tech stocks stutter.
The Lead: Google earnings depress stock price, chip companies hurting
Google's high-flying stock took a hit in late trading Thursday following an earnings report that showed growth, but not as much as Wall Street analysts had expected. Meanwhile, expectations for the chip industry continued to fall after more Silicon Valley semiconductor companies followed Intel's lead in posting depressing earnings results.
Mountain View search giant Google reported earnings of $9.54 per share on total revenues of $14.11 billion, reflecting year-over-year gains of 16 percent and 19 percent, respectively. Adjusted for one-time costs, Google posted profits of $9.56 a share, but a Thomson Reuters survey of analysts showed average expectations of $10.78 per share on that basis, as well as revenues of $14.4 billion.
The results showed weaker ad revenue in the metric of cost-per-click, which is the amount Google receives each time a user clicks on a Google-supplied advertisement. That price slipped 6 percent despite clicks increasing 23 percent overall.
"Most of these incremental clicks (on ads) are either coming from international or mobile (users), which are not as high-priced as domestic or desktop clicks," B. Riley analyst Sameet Sinha explained to Reuters. "International and mobile don't monetize as well. That's the main concern. Those businesses are less profitable."
Google shares, which had jumped more than $200, or about 29 percent, so far this year, shed more than $40 in late trading.
Three Silicon Valley semiconductor companies also announced earnings Thursday, one day after the world's largest chipmaker, Santa Clara-based Intel, was forced to trim its full-year forecast as the personal-computer industry sinks. All three showed effects from the PC industry's downturn but promised to make up for it in new arenas.
The largest of the three, Sunnyvale's Advanced Micro Devices, posted an overall loss, but one that was less than the massive losses recorded in the previous quarter, and CEO Rory Read promised profits in the current quarter. AMD lost 10 cents per share on revenues of $1.16 billion after losing 19 cents per share on $1.09 billion in revenues in the first three months of the year. Read, however, said that AMD's revenues would be back above $1.4 billion in the current quarter, a jump of more than 20 percent, and profits would return to the company as it diversifies -- AMD will supply the chips powering both next-generation gaming consoles debuting this year, Microsoft's Xbox One and Sony's PlayStation 4. AMD shares gained 5.9 percent to $4.64 in Thursday's regular session, but fell more than 4 percent in after-hours action.
Fairchild Semiconductor underwhelmed analysts by posting lower-than-expected earnings and a weak forecast, but the San Jose company also pointed to non-PC routes to revenues -- "Mobile sales are expected to increase in the third quarter due largely to one major customer," CEO Mark Thompson said Thursday. Fairchild provides chips to Apple (AAPL), which is expected to introduce a new iPhone model later this year, to which Thompson may have been referring. Still, Fairchild shares had the worst performance of SV150 companies Thursday after announcing earnings in the morning, falling 10.8 percent to $12.77.
Fellow San Jose chipmaker Cypress Semiconductor also suffered declines in revenues and profits year-over-year, though it exceeded expectations thanks to the success of a new touch-screen chip. Large sequential gains and the ability to beat expectations led to the stock gaining 4.5 percent to $12.46 after Thursday's morning's report. San Jose's Ultratech, which provides equipment used in semiconductor fabrication, announced a loss for the quarter, and shares declined 7.7 percent to $32.45.
Other Silicon Valley earnings reports were mixed. Foster City digital-printing company Electronics for Imaging reported record revenues, and San Jose's Align Technology, which makes the Invisalign series of teeth-straightening products, increased profits and revenues. Two Sunnyvale companies posted a loss, however: Rambus lost 6 cents a share, though that was an improvement both year-over-year and sequentially, and Cepheid lost 10 cents per share but grew revenues healthily from last year.
Outside of the valley, Microsoft took a big tumble after missing estimates due to a charge of nearly $1 billion for unsold Surface RT tablets. The software giant, which recently discounted Surface RTs by $150, posted profits of 59 cents per share on revenues of $19.9 billion, while analysts expected earnings of 75 cents per share, on revenues of $20.7 billion. Shares declined more than 6 percent in late trading after falling 0.8 percent to $35.44 in the day's normal session.
SV150 market report: Tech stocks sit out Wall Street's run to more records
The Dow Jones industrial average and Standard & Poor's 500 closed at record highs again Thursday, but post-earnings weakness from Intel and eBay (EBAY) kept the Nasdaq from gaining and pushed the SV150 down on the day.
After disappointing investors with their earnings reports Wednesday afternoon, eBay and Intel both took a dive on Thursday. eBay fell 6.7 percent to $53.52 while suffering a downgrade from Needham, and Intel declined 3.8 percent to $23.24 on its 45th birthday. The most successful company in Wednesday's raft of earnings report was boosted Thursday, however, as Milpitas memory maker SanDisk gained 3 percent to $61.20 despite a downgrade from Morgan Stanley.
Netflix (NFLX) stock fell 0.6 percent to $266.41 even though the Los Gatos video-on-demand company broke through the Emmys' glass ceiling for online content with major nominations. Yahoo (YHOO) hit a new five-year intraday high of $29.83 Thursday but closed even at $29.66 after confirming the acquisitions of Admovate and Chinese startup Ztelic. Facebook also confirmed a deal Thursday, picking up the employees of British startup Monoidics; the Menlo Park social network's stock fell 1.8 percent to $26.18. Yelp fell 0.6 percent to $39.75, but recovered that and more in late trading after announcing the acquisition of SeatMe, which rivals OpenTable for online restaurant reservations.
The SV150 index of Silicon Valley's largest tech companies: Down 6.29, or 0.49 percent, to 1,268.91
The tech-heavy Nasdaq composite index: Up 1.28, or 0.04 percent, to 3,611.28
The blue chip Dow Jones industrial average: Up 78.02, or 0.5 percent, to 15,548.54
And the widely watched Standard & Poor's 500 index: Up 8.46, or 0.5 percent, to 1,689.37
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.