) reported last week, but investors didn't show much enthusiasm
Facebook: Results a Non-Event, Teens Lose
Facebook's third-quarter earnings jumped from the year-ago
quarter, easily beating analyst expectations. However, investors
remained dissatisfied due to concerns about future revenue
First, Forrester released a report on the eve of the earnings
report saying that Facebook was losing teen engagement. While
Facebook's immediate reaction portrayed denial, management
commentary on the earnings call seemed to confirm the fact.
Facebook's attempt to buy rival platform SnapChat -- currently a
popular teen destination -- has not been successful so far, and
growing interest from other buyers such as Tencent has now made
Second, investors didn't like the fact that Facebook doesn't
intend to increase the frequency of ads, since this may increase
revenues. Facebook's concern remains that users should not be
further dissatisfied with its monetization efforts (something
that seems to have reduced usage among teens). The company
recently pushed back its video ad implementation wherein video
ads in the news stream would load automatically.
The possibility of higher pricing by virtue of its agreement with
Google (GOOG) has already been priced in. Therefore the cautious
approach to ad serving coupled with tougher comps in the next
quarter hurt share prices.
Apple: Results Tell Same Old Story
Apple had a decent enough quarter, but not by its own standards.
Earnings declined from the year-ago quarter but beat analyst
expectations. Competition remains its main problem, leading to
weaker pricing and gross margin contraction. Both iPhones and
iPads are seeing increasing competition from various Android
manufacturers and iPad now has a closer competitor in Microsoft's
Surface (if only in terms of price).
Pricing is a very important factor in any consumer market because
sooner or later, products tend to get commoditized. Market
leaders gain only by virtue of growth of the market itself, while
smaller players also benefit from share gains. Apple's success is
largely tied to its expansion in new geographies. So it's not
surprising that it saw strength in several emerging markets where
its products are a status symbol.
That said, Apple's margins, while on a decline, remain attractive
today and any revolutionary technology, including a wearable
device or a payments business (through iBeacon, for example) will
drive upside to the shares. An aggressive buyback program as
suggested by activist investor Carl Icahn would also be a
positive (Apple remains non-committal on the issue).
Intel: Getting Rid of OnCue TV?
) has recently been in the news more because of its uncertainties
than strengths. The company's PC business is shrinking rapidly
and success in mobile appears too slow to be able to offset this
weakness in the near term. Intel is definitely on the case and
its product roadmap does indicate progress. But the fact remains
that the company is likely to see a not-too-exciting fourth
quarter, which will mean two straight years of limited growth,
which would be bad for any stock. Another disturbing factor is
the declining estimate revision trend for 2014, indicating
increased caution surrounding its growth prospects.
So this may be a good time for the company to pare losses.
Intel's recent attempt to build a TV business has been much
criticized and even current CEO Brian Krzanich has expressed his
Last week, AllthingsD reported that based on statements from
"people with direct knowledge" of the matter, Intel and Verizon
were in talks regarding Intel's TV business. This could mean that
the business -- which has seen many challenges, primarily with
respect to content acquisition -- will be sold off. Intel's
technology (for streaming TV over broadband) is now operational
so this could be a good thing for both. Alternatively, the talks
could be about a partnership, which wouldn't be as great for
Intel since this is a lot of time and effort over a non-core
Other Stories You May Have Missed-
Google Launches Nexus 5:
On Thursday, Google announced its Nexus 5 phone running the
latest version of Android called KitKat. The device, which is
already available on Google Play, is competitively priced. It
will run on any carrier network in the U.S. except Verizon and is
also available in Europe. KitKat doesn't allow carriers to block
NFC, which could help Google's payments business.
Top-Secret Barges for Google:
Google is setting something up in a barge off the San Francisco
coast. There is great secrecy surrounding the project and even
government officials were asked to sign confidentiality
agreements. There is a lot of guessing going on, but the most
plausible appears to be a floating data center using water to
generate energy and also cooling. The advantage of floating
around could be to meet local demand.
Fresh News About NSA Snooping:
The most recent news reports indicate that the U.S. government in
conjunction with the UK's Government Communications Headquarters
(GCHQ) has been appropriating data from overseas Google and
) servers as part of a project called MUSCULAR. Both companies
have expressed outrage and Google stated that it has been
increasingly encrypting data in anticipation of such an
occurrence. Being an overseas operation, the government was not
bound by the laws of the country.
Rockstar Files Patent Infringement Lawsuit:
Rockstar, which is owned jointly by Apple, Blackberry, Ericsson,
) and Sony (the owners of 6,000 Nortel patents), filed a patent
infringement lawsuit in a U.S. District Court in Texas. In
addition to Google, the consortium has alleged infringement by
Asus, HTC, Huawei, LG, Pantech, Samsung, and ZTE.
Qunar Soars 89% on First Day of Trading:
Shares of Chinese online travel booking company Qunar, which is
55% owned by Chinese search giant Baidu (BIDU), soared on its
first day of trading on the Nasdaq. The IPO price of $15 went up
to $28.4 on its debut trading, despite the fact that the company
made losses in the first half of the year. The optimism on the
shares is because of the expected growth potential in China.
Another Chinese travel company Ctrip has also seen its share
prices escalating over the past year.
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