Earnings Season: Winners (And Losers) In Tech
Nathan is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Earnings season - when blue chips trade like pennies and fortunes are won and lost.
This article will briefly showcase a basket of technology stocks that have shocked and surprised investors during this season's earnings call.
LinkedIn (NYSE: LNKD)
On Feb 8. the social network for the business community wrapped up one of the most impressive sessions of this earnings seasons. Shares of the company soared - closing up over $26.00 (or 21.27%) per share at a record high - on news that recent earnings had eviscerated analyst expectations. The company posted a bottom and top-line beat after achieving success with new product innovations like Talent Solutions and growth in premium subscriptions, while forecasting above-consensus revenue for the current quarter.
“Rapid product innovation and high engagement drove upside to growth in all segments, and LinkedIn passed the 200M+ members milestone in the quarter,” JP Morgan analysts said in a note. They added: “We expect shares to respond favorably to the better than expected 4Q results and solid 2013 outlook.”
JP Morgan raised its price target on LinkedIn to $163 from $142.
Netflix (NASDAQ: NFLX)
Netflix absolutely killed it this earnings seasons. Investors of the company could not be happier, as their shares climbed from $100 on Jan. 23 to over $180 three weeks later. During its earnings call in January, Netflix reported a surprise profit of $0.13 per share while announcing it had signed up an additional 2.05 million subscribers in the fourth quarter. This brings Netflix's total US streaming subscribers to 27.2 million, with another 6.1 million in global markets.
Netflix’s DVD-by-mail subscriptions continued to shrink, falling 380,000 to 8.2 million.
Netflix has been working hard to add new content to its constantly evolving media library, including recent deals with Disney, Time Warner, and Warner Bros. Analysts are conflicted - as usual - on which direction the company will head from here. One thing is certain, however: optimism for Netflix's long-term growth potential is growing stronger day-by-day, as illustrated by Wall Street's heavy dose of recent buying activity in the company's shares.
Apple (NASDAQ: AAPL)
On Jan. 23, Apple - just before reporting record breaking earnings and the sale of 18 million more iPhones and iPads - traded at a hair over $500 per share. On Jan. 25, the company hit a 52-week low of $435 per share. So, what happened?
Depends on who you ask. Sales were record-breaking, but profits were flat. Even worse, Apple executives predicted growth would continue to slow. The company expects revenue to grow at about 7% after reporting an 18% gain in the holiday quarter. This earnings report - even before it was released - proved to be one of the most important for the company in recent history, as investor concerns over demand for the iPhone 5 and iPad tablets eroded the stock from its all-time high of $705+.
However, it's important to note that Apple has growing cash reserves in excess of $137 billion. That's enough to give every American $437, or shareholders a one-time dividend of close to $146 per share.
Google (NASDAQ: GOOG)
On Jan. 22 Google reported earnings that beat analyst expectations but fell short on revenue. Shares of the company jumped from their close of just over $700 on the 22nd to nearly $750 on the morning of the 23rd. On Feb 8., shares of Google had just finished a record-setting session - paving an all-time high of $786.67 per share.
Google increased in some of their core positions this quarter, strengthening its grip on the search, mobile phone, advertising, maps, and email sectors while increasing their position in social, mobile advertising, and mobile browsing.
Google - as a company and investment - appears strong as they continue to innovate and take risks on new and exciting projects. The company has recently made major investments in mobile hardware, consumer web applications, mobile software development, mapping & GPS technologies, and is even making an attempt at becoming the best new Internet Service Provider in the US with Google Fiber.
However, some investors fear that Google's growth - like many of its peers - will slow over the coming years as competition closes the gap and exponential growth rates become more difficult to achieve.
Yahoo! (NASDAQ: YHOO)
Yahoo!'s freshly appointed CEO Marissa Mayer reported mixed earnings on Jan 28. Revenue was up and cost-per-ad on search rose, but display ad sales weakened and projected growth throughout 2013 remained flat. Shares of Yahoo! rallied in after-hours and morning trading following the report, but quickly retreated in the following sessions.
Since then, Yahoo!’s stock has performed well - setting multiple new 52-week highs. The company has announced the acquisition of another small mobile application development company and speculation surrounding an IPO by Alibaba - one of Yahoo!’s key Asian assets - is growing at a rapid pace.
The struggling company is currently undertaking a major turnaround effort led by a fresh management team that promises to revamp some of its popular products, return equity to shareholders, and invest aggressively in some of today's hottest technologies. Shares of Yahoo! have gained 30% since Mayer took over in July.
I wish I had the space to cover all of this earnings season's fantastic and memorable stories. While I'm sure many of you have made great (or horrible!) memories with companies that I didn't mention, these are just some of the stocks that I personally follow that have made waves this earnings season. Feel free to leave your earnings season stories (good or bad!) in the comments section! Thanks, and I hope you enjoyed the post!
As always, this is by no means an endorsement of any stock or advice to buy or sell any stock. My goal is simply to educate, amuse, and enrich. Good luck to all of you! And thanks for reading.
nbradham has a position in Yahoo!. The Motley Fool recommends Apple, Google, LinkedIn, and Netflix. The Motley Fool owns shares of Apple, Google, LinkedIn, and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!