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Today: Yelp posts strong revenue growth despite continuing to lose money, as forecast and mobile growth give investors the opposite reaction from Facebook and Zynga. Also: Federal Reserve doesn't act, Wall Street doesn't panic.
Yelp posts impressive earnings report that sends stock soaring
Facebook and Zynga sent social media on a Wall Street roller coaster with earnings reports last week that did not live up to investors' expectations in different ways, but Yelp seemed to avoid the same pratfalls Wednesday, posting revenue growth and projections that sent its stock shooting higher in after-hours trading.
The San Francisco online-reviews site posted record revenue of $32.7 million in the second quarter of 2012, 67 percent higher than the same quarter a year ago. While the company is still losing money overall, its net loss of $2 million, or 3 cents a share, was its best showing to date. Analysts were expecting a loss of 5 cents a share on revenues of $30.5 million, according to Bloomberg News research.
"We achieved record results across all of our financial and operating metrics," Chief Financial Officer Rob Krolik said in the company's news release.
Importantly, Yelp shared projections for the rest of the year, unlike Facebook, which disappointed investors and analysts by declining to share expectations for its business. Yelp expects its rate of growth to remain high through the end of the year, with a projection of $135 million to $136 million in net revenue for the 2012 calendar year, which would equal 62 percent to 63 percent growth from 2011.
Yelp is accomplishing its returns from growth in active users, mostly on mobile devices, and therefore reviews: Average monthly unique visitors grew 52 percent, with 7.2 million mobile devices reached every month on average, and reviews increased 54 percent.
"We are now active in 90 Yelp markets around the world and are seeing an increase in our consumer engagement, especially on mobile, where their connection to local businesses is enhanced by the location-based capabilities of their mobile devices," Yelp CEO and co-founder Jeremy Stoppelman said in the announcement. Stoppelman added in a conference call that the company's mobile advertising is outperforming the desktop counterpart, and that ads on the company's mobile app are coming "sometime soon."
"It's pretty strong revenue growth," San Francisco-based Raymond James analyst Aaron Kessler told Bloomberg. "Mobile is definitely helping drive traffic."
While Facebook and Zynga continued to reach new depths on Wall Street, Yelp stock rebounded from a late nose-dive in regular trading Wednesday with a gain of more than 14 percent in after-hours trading. After falling 5.7 percent to $18.82 in the regular session, Yelp was trading close to $21.50 at 2:30 p.m. Pacific time.
Slowing revenue growth and the lack of a forecast has sent Facebook down 22.2 percent since its earnings report Thursday, after Wednesday's 3.8 percent loss led the stock to close lower than $21 for the first time, at $20.88. Zynga's drastically reduced forecast in its earnings report last week has sent the stock down a whopping 44.7 percent in one week, with shares closing at another all-time low of $2.81 Wednesday.
Silicon Valley's social media receives its last large test of earnings season Thursday, when Mountain View professional-networking site LinkedIn reports. The stock took a noticeable dive Wednesday, falling 6.8 percent to close at $95.64, only its second closing price in double digits since mid-June.
Fed doesn't change stance, European Central Bank up next
If the Federal Reserve says exactly what economists expected, and Wall Street fails to freak out, is it news? Apparently so, as the Fed's declaration that the U.S. economy is looking worse but that it was not going to take any immediate action to counterbalance it still became the leading talking point for financial journalists and analysts nationwide Wednesday.
The central bank finished off its two-day meeting and said basically what it has been saying for months -- that it "is prepared to take further action as appropriate."
"They clearly underscored the downside risks to the economy and made it very clear they would be as accommodative as needed," Prudential market strategist Quincy Krosby told Reuters.
Investors, who continue to hope for a flood of cash from the Fed in the form of a large round of bond-buying, did not send stocks markedly lower after the decision, as slight losses similar to results the previous two days held mostly steady.
With little change in the Fed's stance, investors eyes now turn to Europe, where that continent's central bank will meet Thursday. Friday, attention turns back to the U.S. when the July job numbers are released.
Tech stocks struggle as Netflix hits 52-week low
The Nasdaq had Wednesday's biggest fall at 0.7 percent, as tech stocks struggled; the Dow Jones declined 0.2 percent and the Standard & Poor's 500 dropped 0.3 percent on a day when technical glitches at a trade processor caused wild swings in the prices of some stocks early in the session.
Hewlett-Packard (HPQ) had one of Wednesday's largest declines in the Dow, falling 3.2 percent after analysis firm Canalys reported that the company fell farther behind Apple (AAPL) in global PC shipments if iPads are counted as PCs. HP had a slight comeback of 0.4 percent in after-hours trading following a ruling that gave the Palo Alto tech giant a big victory over Oracle (ORCL), with a judge saying that Oracle must continue to support HP's Itanium servers. Oracle gained 0.4 percent in regular trading, but declined 0.8 percent after-hours.
Oracle's Redwood City neighbor, video game maker Electronic Arts (ERTS), gained 6 percent Wednesday after announcing mixed earnings and a stock-buyback program. Netflix (NFLX), which has suffered greatly in the past two weeks after announcing slower subscriber growth than projected, hit a new 52-week low of $54.10 in Wednesday trading and closed with a 4.1 percent loss at $54.50.
Silicon Valley tech stocks
Up: Electronic Arts, Symantec, Juniper, Yahoo (YHOO), Intel (INTC), Oracle, Applied Materials, Cisco
Down: LinkedIn, Yelp, Tesla, Zynga, Netflix, Jive, Facebook, SunPower (SPWRA), Hewlett-Packard, VMware, Palo Alto Networks, Splunk, Gilead, Nvidia, eBay
The tech-heavy Nasdaq composite index: Down 19.31, or 0.66 percent, to 2,920.21
The blue chip Dow Jones industrial average: Down 32.55, or 0.25 percent, to 12,976.13
And the widely watched Standard & Poor's 500 index: Down 4, or 0.29 percent, to 1,375.32
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.
