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Wall Street Beat: Mobile, cloud are key to tech earnings

Marc Ferranti | April 28, 2014
Tech industry bellwethers, including Facebook, Microsoft, Apple and Amazon, weighed in this week with quarterly earnings and -- surprise! -- mobile and cloud offerings appear to be the key to their health.

Microsoft shares closed Friday at $39.91, up by $0.05.

Also reporting Thursday, Amazon said revenue for its latest quarter rose 23 percent year over year to $19.74 billion, beating analyst estimates of $19.4 billion. Net income was $108 million, compared to $82 million a year earlier.

It's hard to say exactly how much the company's cloud computing business adds to the bottom line since numbers for Amazon Web Services are not broken out separately — they are lumped in with the "other" category. But sales in that category rose 58 percent year over year to $1.26 billion, and Web Services, according to company officials, plays a big part in that.

However, excluding one-time transactions, Amazon operating profit, weighed down by spending, dropped 19 percent to $146 million. The decline weighed heavily on Amazon shares Friday, which closed at $303.83, down $33.32.

Advertising business on mobile devices, meanwhile, helped Facebook report a solid quarter.

Revenue for its latest quarter was $2.5 billion, jumping 72 percent year over year, Facebook reported Wednesday. That exceeded analysts' estimates of $2.36 billion, according to Thomson Reuters.

Net income was $642 million, up by close to 300 percent from the $219 million a year earlier.

Facebook of course makes most of its revenue from advertising and last quarter total advertising was up by 82 percent year over year to $2.27 billion. The key figure: mobile advertising was about 59 percent of that total.

The best may be yet to come for Facebook, if CEO Mark Zuckerberg is to be believed. He said on the company's conference call that Facebook is still in a phase where it is trying to increase the user base for many of its services and hasn't even really tried to monetize them yet.

Facebook shares closed Friday down by $3.16 to $57.71.

Meanwhile, smartphone sales were key to earnings for the world's largest tech company as measured by market capitalization (number of shares times share price) — Apple.

Apple, whose market cap Friday edged over a half-trillion dollars, said Wednesday that net quarterly profit was $10.2 billion for the second fiscal quarter of 2014, up from $9.5 billion a year earlier. Revenue was $45.6 billion during the quarter, up from $43.6 billion. Analysts had been expecting revenue of $43.5 billion.

The iPhone was clearly the star of the show. IPhone shipments jumped to 43.7 million units, up from 37.4 million a year earlier. They made up for a decline in iPad shipments to 16.35 million units, falling from 19.48 million units.

Bucking the hardware trend, Mac shipments rose to 4.13 million units during the quarter from 3.95 million units a year earlier.

Apple shares closed up by $4.17 at $571.74 Friday.

Despite the bright spots in the earnings this week, the Nasdaq Computer Index closed down Friday by 29.01 points, to 2036.35, with Amazon blamed for putting a damper on the index.

 

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