Today: Salesforce and Splunk experience record-breaking post-earnings bounces on Wall Street, but declines from Apple (AAPL), Google (GOOG) and other Silicon Valley giants lead to down day for tech stocks.
The Lead: Salesforce, Splunk hit records after earnings reports
As earnings season winds down in Silicon Valley, two San Francisco software companies followed strong earnings reports with big pops Friday on Wall Street, as cloud pioneer Salesforce and big-data front-runner Splunk both experienced gains of more than 12 percent to hit all-time highs.
Salesforce, founded and helmed by former Oracle (ORCL) exec Marc Benioff, continued to exhibit massive revenue growth, reporting a year-over-year advance of 31 percent with sales nearing $1 billion, at $957 million.
In Thursday's news release, Benioff reported that the company will cross a new threshold next quarter: "Just four years after delivering our first $1 billion revenue year, we are now poised to deliver our first $1 billion revenue quarter in the third quarter of fiscal 2014," the CEO said.
The company even managed to turn a healthy profit in the quarter, reporting earnings of $76.6 million, or 13 cents a share. Investors and analysts alike cheered the move, which JMP Securities analyst Pat Walravens characterized as justification for Benioff's early jump into the cloud.
"In terms of foreseeing the future and making the right bets, Benioff's truly been vindicated," Walravens told Bloomberg News.
Salesforce stock hit intraday and closing record prices, moving as high as $49.94 before closing with a 12.6 percent gain at $49.13 to push its market capitalization near $30 billion, at $29.1 billion.
Splunk experienced an even stronger percentage gain Friday, moving 12.9 percent higher to close at $55.21 after zooming as high as $55.83, also record intraday and closing prices. The big-data firm -- which went public at $17 a share in 2012 and saw that price double in its first day of public trading -- beat Wall Street forecasts for profits and revenue and increased its revenue forecast, which had already been higher than analysts' average projections.
The company's growth showed up in its revenues, which increased 50 percent year-over-year to $66.9 million, as well as its customer base -- Splunk added 400 new customers in the quarter and expanded deals with customers including Cisco (CSCO), Adobe (ADBE) and CalPERS. FBR Capital analyst Daniel Ives said in a Friday note that the trend should lead to more money from future contracts.
"We believe the company's strong product cycle, healthy secular trends, and a ramping sales force will translate into larger deal sizes over the coming years," Ives wrote.
At least four analysts raised their price targets and/or rating of the company Friday, including Ives, who bumped Splunk from "market perform" to "outperform," dramatically raising his price target from $48 to $61. Wedbush analyst Steven Koening raised his price target from $58 to $61 and maintained an "outperform" rating, calling Splunk an "attractive growth investment, given the company's growth trajectory, outperformance potential, product differentiation and market opportunity." Needham also raised its price target from $50 to $55 and have a "Buy" rating, while Barclays raised its price target from $52 to $61 with an "Overweight" rating.
SV150 market report: Apple drops as iPhone trade-in begins, Facebook steady
While Salesforce and Splunk soared, other stocks sank Friday, as President Barack Obama openly spoke of consideration for a 'limited and narrow' attack on Syria. All three major U.S. stock indexes declined Friday to close out August, the worst month for Wall Street in more than a year, though September could be scarier.
Silicon Valley tech stocks also declined, as some of the region's largest companies experienced declines. Apple dropped 0.9 percent to $487.22 while confirming the launch of an iPhone trade-in program that will allow customers to receive credit toward newer devices, further fueling expectations that Apple will announce new iPhone models next month. Google sank 1 percent to $846.90, its lowest closing price since early May; GigaOM reported after the markets closed that the Mountain View search giant had acquired Los Altos wearable-tech company WIMM Labs, possibly for help developing a smartwatch. eBay (EBAY) dropped 2 percent to close below $50 for the first time in 2013, at $49.99, while Gilead Sciences (GILD) dropped 1.1 percent to $60.27 and Cisco fell 0.6 percent to $23.31.
Facebook managed to avoid losses, gaining a penny to $41.29 as the Menlo Park social network confirmed a test of a Twitter-like "trending topics" offering. Competition between the two Silicon Valley social networks seems to be heating up, as Facebook lost a marketing executive to San Francisco-based Twitter; Twitter was not without its own losses, however, as general counsel Alexander Macgillivray departed. Tesla Motors (TSLA) gained 1.8 percent to close at $169, despite CEO Elon Musk admitting that "the valuation we've gotten is more than we have any right to deserve," and Oracle gained 0.5 percent to close at $31.86.
Up: Splunk, Salesforce, Tesla, Palo Alto Networks, Oracle, Juniper
The SV150 index of Silicon Valley's largest tech companies: Down 7.45, or 0.58 percent, to 1,282.56
The tech-heavy Nasdaq composite index: Down 30.43, or 0.84 percent, to 3,589.87
The blue chip Dow Jones industrial average: Down 30.64, or 0.21 percent, to 14,810.31
And the widely watched Standard & Poor's 500 index: Down 5.2, or 0.32 percent, to 1,632.97
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/jowens510.