Today: Despite being older than their hypergrowth Silicon Valley neighbors, eBay and SanDisk continue to produce strong growth. Also: Intel gains and Yahoo falls after earnings reports.
The Lead: eBay and SanDisk join earnings parade
eBay and SanDisk, elder statesmen in Silicon Valley among younger competition, continued to post revenue gains in the second quarter, though only one of them was rewarded on Wall Street after releasing earnings reports Wednesday.
eBay revealed that it racked up profits of $676 million, or 53 cents a share, on sales of $4.4 billion in the second quarter, gains of 5.6 percent for net income and 12.6 percent for revenues from the same quarter a year ago despite an environment that CEO John Donahoe described as "challenging."
Specifically, Donahoe mentioned a cyberattack that caused the San Jose e-commerce company to ask users to change their passwords, saying in Wednesday's news release, "eBay's growth was hampered by its global password reset for all users."
Despite that challenge, sales on eBay's main e-commerce offering gained 12 percent in the quarter while the company's PayPal online payments service saw revenues boosted by 20 percent despite the loss of its president, David Marcus, who defected to Facebook last month and hasn't been replaced.
eBay's concerns were more apparent in the company's forecasts than its second-quarter results: The company reduced the rosiest end of its full-year forecast by $200 million and predicted results in the third quarter that were less than analysts expected.
"They're facing intense competition from Amazon," Topeka Capital Markets analyst Victor Anthony told Bloomberg News. "It's going to be a tough slog for them over the next several years."
Investors mildly rewarded eBay in late trading, with shares pushing past $51 after closing with a 0.2 percent decline at $50.70.
SanDisk stock sank suddenly after the Milpitas flash-memory company released its results, which showed similar profit and sales growth to eBay. SanDisk reported net income of $274 million, or $1.14 a share, on sales of $1.63 billion, representing profit growth of 4.5 percent and a revenue increase of 11 percent from a year ago. SanDisk continued to show strength in the enterprise space, with solid-state drives pushing the company's revenue growth as it looks to bolster its sales to businesses with the planned $1.1 billion acquisition of Fusion-IO.
Despite the growth, SanDisk's shares -- which hit another all-time high Wednesday and closed with a 2.2 percent gain at $107.83 -- dropped more than 8 percent to less than $100 in late trading. Critics pointed to a gross margin figure of 46 percent, down from 50 percent in the previous quarter and below expectations, as the culprit, but SanDisk's year-plus of success may be the biggest reason.
SanDisk shares gained 62.2 percent in 2013, and have jumped another 52.9 percent so far this year, through Wednesday's session, leading Summit Research Partners analyst Srini Sundararajan to declare the stock "priced to perfection" in a note earlier this week.
SV150 market report: Intel, Yahoo head in opposite directions
Intel helped push Wall Street to yet another record close Wednesday, as the Santa Clara chipmaker blasted off following Tuesday's strong earnings report, but Silicon Valley tech stocks were balanced by a post-earnings collapse from Yahoo.
Intel surged to its highest prices in more than a dozen years Wednesday, gaining 9.3 percent to $34.65 for a market capitalization of $172.3 billion. More than two dozen analysts increased their price targets on the stock Wednesday morning, according to The Wall Street Journal, with an average increase of 13 percent despite the company foregoing mobile profits for the sake of gaining market share in the sector. Intel's success in personal computers had a halo effect, as well: Rival AMD gained 2.9 percent to $4.66, PC manufacturer Hewlett-Packard added 2 percent to $34.82, and Microsoft increased 3.8 percent to $44.08. Yahoo headed the other way after its earnings report showed profit and revenue declines from last year due to increased weakness from its display advertising business, and not even a deal to sell less of its Alibaba stake could help the Sunnyvale company with investors. Yahoo dropped 5.1 percent to $33.79 in Wednesday trading, as analysts updated their models to show that the bulk of Yahoo's worth is its stake in Alibaba; FBN Securities analyst Shebly Seyrafi cut his estimate of Yahoo's worth without its shares in the Chinese e-commerce giant from $13 a share to $11. A Yahoo executive who was recently sued for sexual harassment fought back at the allegations, countersuing the alleged victim for defamation and contending that the accusations are completely fabricated.
Apple reached yet another 52-week high Wednesday after announcing an enterprise partnership with former rival IBM, but eventually closed with a 0.6 percent decline at $94.78 after agreeing to pay consumers up to $400 million for illegally boosting the prices of e-books. Tesla Motors fell 1.1 percent to $217.16 after revealing that it will name its next sedan the Model 3 and expects to begin selling the lower-priced electric sedan in 2017. Google declined 0.4 percent to $582.66 while reportedly planning an ad blitz in India for its smartphones, as venture capitalist Jim Breyer predicted the Mountain View company would be worth $1 trillion within a decade.
Up: Intel, AMD, Electronic Arts, SanDisk, HP, Cisco, Facebook, SunPower
Down: Yahoo, Zynga, Gilead, Pandora, GoPro, Juniper, Yelp, Twitter, Tesla, Netflix
The SV150 index of Silicon Valley's largest tech companies: Up 5.6, or 0.37 percent, to 1,532.68
The tech-heavy Nasdaq composite index: Up 9.58, or 0.22 percent, to 4,425.97
The blue chip Dow Jones industrial average: Up 77.52, or 0.45 percent, to 17,138.2
And the widely watched Standard & Poor's 500 index: Up 8.29, or 0.42 percent, to 1,981.57