Today: LinkedIn surpasses Wall Street expectations for quarterly revenue, sending its stock higher, but not as much as Yelp, while Facebook dips below $20 for the first time and Zynga continues to struggle. Also: Wall Street falls after little action from European Central Bank, and retail sales provide hope for U.S. economy.
A social-media dichotomy -- LinkedIn, Yelp succeed while Facebook, Zynga fail
LinkedIn provided the second consecutive happy day for Silicon Valley's social-media sector Thursday, providing a positive quarterly-earnings report one day after Yelp did the same. Facebook and Zynga continued their steep descent, however, with both again hitting all-time lows on Wall Street as Facebook dipped lower than $20 for the first time.
Mountain View professional-networking site LinkedIn reported 89 percent revenue growth year-over-year, with the company's second-quarter total of $228.2 million in revenues easily outpacing analysts' estimate of $216.3 million, according to Thomson Reuters. The company reported unadjusted earnings of 3 cents a share
Amid reports of growing revenue from its premium subscriptions and enterprise offerings, LinkedIn also increased its full-year revenue guidance, telling investors it now expects to bring in $915 million to $925 million this year, instead of a maximum of $900 million quoted earlier.
A strong quarter from LinkedIn shouldn't surprise onlookers: This marks the seventh consecutive quarter that revenues have grown more than 80 percent year-over-year.
"Another fantastic quarter," said Morningstar analyst Rick Summer told Reuters. "This is a company that continues to execute quite well with surprising visibility into demand."
"Their execution since becoming public has been the best of the newly minted Internet companies," Telsey Advisory Group analyst Tom Forte told Bloomberg News. "This has been a consistent beat-and-raise story."
LinkedIn stock got a bump from the news, rising 6 percent in after-hours trading to near triple-digits, after a second consecutive losing session caused shares to close at $93.51 Thursday.
LinkedIn will have to grow more than 6 percent Friday to match Yelp's post-earnings bounce. The San Francisco online-reviews site rose 16.9 percent Thursday on Wall Street after announcing quarterly results and full-year guidance that obviously pleased investors.
Facebook and Zynga hope that the positive momentum being foisted on Yelp and LinkedIn manages to rub off on them, as the two social-media companies continued to suffer Thursday from less-than-stellar earnings reports issued last week.
Facebook stock dipped lower than $20 for the first time Thursday, falling as low as $19.82 before rising slightly to close at $20.04. While the Menlo Park company obviously hoped attention would be focused on its new site rolled out Thursday -- Facebook Stories, which seeks positive stories about how the social network has touched users' lives -- more bad news received the lion's share of the focus.
Facebook was forced to admit that almost 9 percent of its users may be fake and faced accusations of strong-arm tactics from a developer, which a Google (GOOG) executive immediately jumped on. The company was also mentioned as a reason for declining projections of California budget revenues, due to the falling stock price, and faced doubts about its advertising business in the wake of recent acquisitions by Google, Oracle (ORCL) and Salesforce. And all of this negative action occurred one day after two executives announced their departures.
Zynga also hit an all-time low Thursday, trading down as far as $2.68 before closing at $2.70, a daily drop of 3.9 percent. After a shake-up in the San Francisco company's management ranks, it faces two more class-action lawsuits, on top of one already filed earlier this week.
Wall Street falls on lack of action in Europe, but Gilead hits new high
Wall Street had another down day Thursday, as disappointment in the lack of action from the European Central Bank sent stocks tumbling. Tech stocks avoided much of the downfall, however: The Dow Jones and Standard & Poor's 500 fell 0.7 percent apiece, but the tech-heavy Nasdaq declined at half that rate and the SV150 index of Silicon Valley's largest tech companies declined only 0.2 percent.
Investors had expected the ECB to act to bolster flailing European economies after ECB President Mario Draghi's tough talk last week sent markets soaring. However, Draghi said the central bank would only act to buy bonds after bailout funds take the first step.
"Today people were looking for concrete steps and an outline of exactly what path the ECB would take to do that, and there weren't any," Cetera Financial Group market strategist Brian Gendreau told Reuters. "Just as the market went up on the 'whatever it takes' comments, it is coming down on the lack of specificity."
However, there were Silicon Valley success stories besides Yelp: Foster City-based Gilead Sciences (GILD) hit a new 52-week high on news that its plan to push more of its HIV/AIDS drugs to the developing world was paying off with a deal in India; Gilead closed with a 6.8 percent increase at $57.29. San Jose solar company SunPower (SPWRA) also experienced a healthy bump, rising 5.3 percent one day after the solar sector leader, First Solar, announced strong earnings.
Economic numbers provide hope ahead of Friday's critical jobs report
The markets' losses may have been pared by good financial news out of the United States, as retail chains reported strong July sales, and a slight rise in unemployment benefits applications wasn't enough to throw off a generally positive trend.
Consumer spending is key to the economy, and retail companies reported 4.6 percent revenue growth in stores open at least a year, when economists predicted just 3 percent to 3.5 percent.
"I think the U.S. consumer surprised a lot of people," Chris Donnelly, global industry managing director for retail at Accenture, told AP. "When you look at income, the savings rate, and unemployment, there's still a lot of cause for pessimism, but the U.S. consumer is amazingly resilient and has spurts of spending."
The biggest economic indicator in the U.S. arrives Friday morning, when the Labor Department reports on job growth in July.
Silicon Valley tech stocks
Up: Yelp, Gilead, SunPower, Symantec, Nvidia, Apple
The tech-heavy Nasdaq composite index: Down 10.44, or 0.36 percent, to 2,909.77
The blue chip Dow Jones industrial average: Down 92.18, or 0.71 percent, to 12,878.88
And the widely watched Standard & Poor's 500 index: Down 10.14, or 0.74 percent, to 1,365
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.