Today: eBay's (EBAY) growth continues as Silicon Valley's tech earnings season begins, but it may not be a good one. Also: Apple (AAPL) stock bounces back higher than $500 a share, HP rises on reports of interest in Autonomy.
eBay growth continues as tech earnings season begins
Silicon Valley's earnings season truly began Wednesday with eBay's report, which showed that the San Jose e-tailer's massive positive stock movement was for good reason. The rest of the technology sector may not be as fortunate, however.
eBay's focus on mobile shopping resulted in a strong 2012 that was capped off with a successful holiday-shopping quarter. Excluding one-time costs in the fourth quarter of 2012 and the $8.5 billion sale of Skype in the fourth quarter of 2011 -- which pushed that quarter's profits wildly high -- eBay's revenues increased 18 percent in the holiday quarter and profits increased 17 percent. For the full year of 2012, eBay had revenues of $14.1 billion, up from $11.7 billion in 2011, and produced profits of $2.6 billion, or $1.99 a share.
The stellar growth appeared throughout the company's different offerings, with PayPal growing by 24 percent and the company's Marketplaces sector increasing 16 percent while the company attracted 5 million more new account holders, its largest quarterly membership growth in eight years.
"These are great numbers," Bill Smead of Smead Capital Management told Reuters. "The marketplace business used to be a noose around their neck, but now it's a key destination for people wanting to buy new goods as well as existing goods."
Much of eBay's growth in 2012 came from mobile, which CEO John Donahoe embraced much earlier than other tech companies. eBay's mobile apps have now been downloaded to more than 120 million devices, which should lead to PayPal and eBay Marketplaces processing more than $20 billion apiece in mobile transactions in 2013, Donahoe said.
"Mobile is quickly becoming the new normal, and we are leading this new way consumers shop and pay," Donahoe said in Wednesday's conference call.
eBay shares increased 1.7 percent in after-hours trading, tempered by 2013 estimates that have a low range below Wall Street expectations -- the company says it expects to bring in $2.70 to $2.75 a share in profits on revenues of $16 billion to $16.5 billion, while analysts expect revenue of $16.3 billion and profit of $2.74 a share, according to Thomson Reuters. The company's stock shot 68 percent higher in 2012 thanks to increasing revenues and profits.
While Silicon Valley's earnings season started off with a bang, it could whimper pretty quickly. Wall Street expectations are for a 1.1 percent decrease in year-over-year earnings for tech companies, the first such dip in more than three years.
Chip companies are at the center of that decline, as behemoths like Intel (INTC) and Advanced Micro Devices are focused on an ailing personal computer industry. Intel will continue the earnings bonanza with a report on Thursday in which it is expected to report profits dropped more than 30 percent in the fourth quarter, contributing to a 16 percent dip for the full year.
Apple back above $500 a share, but analysts still mixed
The most intriguing earnings report from a valley company this quarter will undoubtedly come from Cupertino, as Apple's stock price has swung wildly on expectations-turning-to-doubts about iPhone sales.
After the stock closed lower than $500 for the first time in nearly a year Tuesday, following two straight days of heavy losses following reports of weak iPhone demand, the stock rebounded above that mark Wednesday. The tech giant gained $20.17, or 4.2 percent, to close at $506.09.
Amid the gains, analysts continued to differ on Apple's value. Pacific Crest analyst Andy Hargreaves downgraded Apple stock and cut his price target, saying Apple's high prices will not serve it well in today's environment. "We believe the high ends of the smartphone and tablet markets are quickly becoming saturated, which is likely to limit Apple's growth by pressuring unit volume and driving a mix shift to lower-margin product," he explained. Bank of America and Stifel Nicolaus also cut their price targets.
Morgan Stanley, however, reaffirmed its rating of Apple and its price target of $714 a share, explaining that it believes demand is still high for Apple's consumer products and the company performed at its expected high rate in the holiday shopping season. Meanwhile, Tom DeMark -- known for his ability to time the market -- told CNBC that Apple had likely hit its bottom and would begin rebounding.
Apple will report earnings next Wednesday.
Tech leads some indexes higher, as HP and Yahoo gain
Apple's rebound helped the tech-heavy Nasdaq and broad-based Standard & Poor's 500 gain slightly Wednesday, while the SV150 index of Silicon Valley's largest tech companies leapt much higher with a gain of 1.2 percent as several tech titans moved higher on speculation of big moves.
Hewlett-Packard (HPQ) gained 4.1 percent after reports that it had received offers for troubled software units acquired in the Autonomy and EDS deals, though multiple news sources reported that the interest would not result in a sale of the Palo Alto company's enterprise software offerings. Yahoo (YHOO) gained 2.8 percent after Bloomberg News reported that Chinese Internet giant Alibaba -- which Yahoo still owns part of -- had hired bankers to execute an initial public offering; Alibaba denied the report.
On the negative side, Facebook dropped below $30 a share with a 0.8 percent decline one day after it announced a new search function; San Francisco online review site Yelp continued to suffer more on fears that Facebook's new offering will harm its business eventually, falling 1.2 percent. Netflix's (NFLX) recent gains turned around, as the company posted a 4.1 percent loss that took it out of triple digits at $97.48.
Silicon Valley tech stocks
The tech-heavy Nasdaq composite index: Up 6.76, or 0.22 percent, to 3,117.54
The blue chip Dow Jones industrial average: Down 23.66, or 0.17 percent, to 13,511.23
And the widely watched Standard & Poor's 500 index: Up 0.29, or 0.02 percent, to 1,472.63
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/mercbizbreak.