Today: Third quarter ends with massive positive movement from Facebook, Tesla and more, along with CEO changes and IPO drama. Also: Apple (AAPL) and Google (GOOG) fall despite branding win as Wall Street declines ahead of government shutdown.
SV150 quarterly report: Amid rise in Silicon Valley stocks, Facebook stands out
Technology companies seemed to be a target of investors in the third quarter, and Silicon valley's largest tech companies profited through booming market valuations. One company seemed to rise above the rest in terms of changing fortunes in the third quarter, however: Facebook shares doubled in the three-month period, as the social-media company that was commonly referred to as an IPO bust shot past its debut stock price amid optimism for its mobile prospects.
The SV150, which comprises the 150 largest technology companies in the Bay Area based on previous year's revenues, gained 9.2 percent in the third quarter to a Monday close of 1,334.69. Of the three major U.S. indexes, only the tech-focused Nasdaq surpassed that performance, increasing 10.8 percent for its best quarterly gain since the first three months of 2012, according to Reuters; the Dow Jones industrial average moved 1.5 percent higher while the Standard & Poor's 500 gained 4.7 percent.
Facebook was a major reason for the move, as it topped the Nasdaq 100 and the SV150 with a quarterly gain of 101.9 percent after closing Monday at $50.23. Entering the quarter, Facebook had been unable to top its IPO price of $38 since its first day of public trading more than a year earlier, as the conversation centered on the botched first day of trading and doubts about Facebook's chances to grow at a continuing fast pace.
"Looking back one year later, the Facebook IPO was an unmitigated disaster," Chicago securities attorney Andrew Stoltmann proclaimed on the anniversary of the event.
Apparently, it takes only one earnings report to change the conversation. After Facebook announced that mobile ads accounted for 41 percent of its $1.6 billion in second-quarter advertising revenue, the company's stock barreled higher beginning the next day and kept rolling as Wall Street cheered, with shares eclipsing its IPO price and the $40 and $50 levels, eventually moving as high as $51.60 in intraday trading during the quarter. Analysts lined up to cheer the Menlo Park social network, with price targets soaring amid excitement for future prospects.
"Despite the stock price's recent doubling, we believe the company is very early in generating revenue from its enormous user base," Canaccord Genuity analyst Michael Graham wrote in a note last week.
While no other SV150 companies managed to double their market capitalizations in the third quarter, two came close. San Jose networking company Ubiquiti, which has gained notoriety with its founder and CEO's purchase of the Memphis Grizzlies and subsequent fun with the team's players, gained 91.5 percent to $33.59 at Monday's close after it also put forth an impressive quarterly report, which touted record financial results. San Francisco online-reviews company Yelp was right behind, gaining 90.3 percent to $66.18 while expanding its platform to let users complete transactions with restaurants and other proprietors. Just outside of the top three was Tesla Motors (TSLA), which gained 80.1 percent in the past three months to build on record-breaking gains in the first half of the year; the Palo Alto electric car maker led by Elon Musk has now increased 470.9 percent in 2013 after setting a new record closing price of $193.37 Monday.
Poor performers in the quarter included the second largest tech company in Silicon Valley, Hewlett-Packard (HPQ). After a phenomenal stock rise in the first half of the calendar year, the Palo Alto personal-computer giant headed the other direction, dropping 15.4 percent to a Monday close of $20.99. San Jose's Cypress Semiconductor also suffered in the quarter after a late descent prompted by the chip company's announcement that third-quarter revenues would not meet expectations; shares dropped 12.8 percent in the quarter.
While the fortunes of SV150 companies moved up and down during the quarter, many companies decided to make the biggest possible change in their executive ranks, changing the chief executive. Eight companies in the SV150 dismissed their CEO, announced a new CEO or both during the three-month period, beginning on the first day of the quarter with Zynga. Fellow gaming company Electronic Arts (ERTS) closed off the quarter's changes after reportedly flirting with Don Mattrick before he took the top job at Zynga, settling on a young male executive from its own ranks, Andrew Wilson. In between, Polycom's CEO left amid an expense scandal; Juniper Networks' CEO "retired" at an early age just before the company disclosed that it was being investigated for overseas business practices; Pandora Media landed a leader with digital-advertising experience; Applied Materials changed CEOs just before a major merger; and smaller Silicon Valley companies Integrated Device Technology and Solta Medical dismissed their chiefs.
The quarter ended with a blitz of companies taking their first step toward joining the SV150, going public: After seven Bay Area companies filed for their initial public offerings in August, September ended with two straight weeks containing three Silicon Valley IPOs apiece. Milpitas security-software company FireEye, Redwood City advertising-software firm Rocket Fuel and South City's Five Prime Therapeutics had their debut day on Sept. 20, while San Mateo cloud-communications company RingCentral, Mountain View hardware maker Violin Memory and San Francisco wind-energy concern Pattern Energy joining them Friday, with the companies combining to bring more than $1 billion from Wall Street to Silicon Valley. The action should continue to be hot in the final quarter of the year, when San Francisco microblogging company Twitter and Yahoo (YHOO) investment Alibaba are expected to exercise their IPOs.
SV150 market report: Wall Street declines ahead of expected government shutdown
The final trading session of the quarter took place amid a fog of uncertainty, as politicians pushed the federal government toward a technical shutdown, which worried investors enough to send stocks down across the board. Silicon Valley tech stocks suffered, as the SV150 closed with a 0.7 percent decline, a harder fall than the tech-focused Nasdaq index, which fell 0.3 percent.
Neither Apple nor Google could advance, despite the two companies topping Interbrand's annual list of brand values, dethroning Coca-Cola, which had won 13 years in a row but slipped to third behind the two Silicon Valley stalwarts. Apple fell 1.2 percent to $476.75 as shortages of the Cupertino company's new iPhone 5S seemed to ease and CEO Tim Cook applauded his troops and gave Apple employees some extra days off. Google suffered a minuscule 48-cent drop to $875.91 as the Mountain View search giant expanded a delivery-locker test to San Francisco a week after opening up its same-day delivery service in the Bay Area; the company, embroiled in tax disputes overseas, paid $55 million in British taxes after doing $5.5 billion in business in the country, Reuters reported.
Facebook fell 2 percent to $50.23 while expanding its "Graph Search" effort to include status updates and comments; the Menlo Park social network also lost an important ad executive to Silicon Valley startup Flurry. Facebook and Twitter are launching separate efforts to share information on users' real-time reaction to television shows. Other social-media stocks also failed to gain traction: Zynga dropped 2.9 percent to $3.67 as it reached a settlement with the "Bang With Friends" app, Yelp declined 2.8 percent to $66.18 and LinkedIn fell 0.3 percent to $246.06.
Tesla Motors fought the wave of declines, again setting record intraday and closing highs by moving as high as $194.50 before closing with a 1.3 percent gain at $193.37.
The SV150 index of Silicon Valley's largest tech companies: Down 8.8, or 0.66 percent, to 1334.69
The tech-heavy Nasdaq composite index: Down 10.11, or 0.27 percent, to 3,771.48
The blue chip Dow Jones industrial average: Down 128.57, or 0.84 percent, to 15,129.67
And the widely watched Standard & Poor's 500 index: Down 10.2, or 0.6 percent, to 1,681.55
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.