Today: Yelp earnings come in with larger losses than analysts expected, but CEO touts growing user base and mobile efforts. Also: Netflix (NFLX), Zynga and Shutterfly succeed on a flat day for Wall Street.
Yelp misses projections, boasts of growing user base
San Francisco online review site Yelp disappointed investors with losses larger than analysts expected Wednesday, but the company's growing revenue stream and membership helped keep its stock from taking a large, immediate hit.
The company announced Wednesday that it lost $5.3 million, or 8 cents a share, on revenues of $41.2 million in the fourth quarter of 2012. The company's performance was leagues better than the same quarter in 2011, when Yelp lost 56 cents a share on revenues of $24.9 million, but the losses were larger than analysts expected. the average projection for Yelp was a loss of 5 cents a share on revenues of $40 million, according to Thomson Reuters.
For the full year, Yelp posted a net loss of $19.1 million, or 35 cents per share, on revenues of $137.6 million. The company focused on its efforts to push into new markets and gain new users, as it arrived in Poland and Turkey in the fourth quarter and boasted of a 31 percent boost in visitors for 2012.
"2012 was a tremendous year for Yelp," CEO and co-founder Jeremy Stoppelman said in Wednesday's news release. "We completed a successful IPO, launched new products to improve the Yelp experience for consumers and business owners, expanded into new markets while increasing our presence in existing ones, and completed our first acquisition."
Investors were unhappy with Yelp's performance, and erased the company's 5.7 percent gain in Wednesday's regular trading session after-hours. The losses turned around, however, after Stoppelman issued a blog post highlighting even more growth in 2013: The company surpassed 100 million unique visitors in January, the first time the company has hit that mark in a single month. Yelp said it attracted approximately 86 million monthly unique visitors in 2012.
"While that number is huge, it doesn't even include the 9.4 million unique mobile devices that used the Yelp mobile app in January," Stoppelman wrote.
While Stoppelman was able to staunch losses with talk of a growing user base and the company's success in the mobile sphere, analysts still doubted Yelp would be able to capitalize properly.
"We still have questions about Yelp's ability to profitably scale its business in its newer, including international, markets," Macquarie Capital analyst Tom White told Bloomberg News.
Even analysts who believe Yelp is a solid long-term investment doubt the company's ability to produce profits rapidly.
"We're positive on Yelp's ability to monetize its mobile apps over time, given that Yelp's mobile Web ads have higher engagement than desktop," JPMorgan Chase analyst Kaizad Gotla wrote in a note. "However, we do not view this as a driver of significant near-term revenue upside."
Yelp also faces pressure from Facebook, as the company's recently announced Graph Search is seen as an opportunity for the largest social network in the world to push into Yelp's sphere, just as Google (GOOG) already has with its purchase of Zagat and Frommers.
"That's a big negative ... Facebook has the opportunity to replicate a lot of these smaller network players like Yelp pretty easily over a much larger audience," National Alliance Securities analyst Mike Hickey told Reuters.
Yelp closed at $22.38, but dipped below $22 in late trading. Facebook gained 1.4 percent on the day to close at $29.05.
Netflix shoots higher as postal delivery change could help
Many would expect Netflix to be negatively affected by the United States Postal Service's announcement Wednesday that it will end delivery on Saturday this year -- the Los Gatos company still has millions of DVD-by-mail customers -- but investors sent the stock soaring and analysts said the move would actually benefit Netflix.
The news is not good for subscribers, as they will have one fewer day to receive and send back the DVDs. However, that should cut costs for the company, which has already made it blatantly clear that it sees its streaming service as the future of the company.
Janney Montgomery Scott analyst Tony Wible projects that Netflix could cut its postal expenses from $300 million to $200 million in 2013, and Wedbush Securities analyst Michael Pachter noted that it would likely negatively affect only the most high-volume DVD customers.
"Those guys cost (Netflix) money, so if they quit, it won't hurt them," Pachter said.
Netflix stock shot 5.8 percent higher Wednesday, continuing a hot streak since its most recent earnings report, and closed at $184.41, the highest closing price for the stock since September 2011.
Zynga and Shutterfly move higher after earnings, solar stocks get boost
Most of Wall Street was quiet Wednesday, as none of the three major stock indexes moved more than 0.1 percent on the day.
In Silicon Valley, Zynga reached $3 a share for the first time since September thanks to a bounce from its Tuesday earnings report, which showed a surprising profit. The San Francisco online gaming company ended the session at $2.99 after a gain of 9.1 percent. Redwood City online photo-services company Shutterfly also moved rapidly higher after realizing its earnings report Tuesday, closing with a 20.3 percent gain at $40.40.
Palo Alto's Jive Software went the other way after its Tuesday earnings report, dropping 6.3 percent to $13.65 after its projections disappointed analysts. Apple (AAPL) treaded water, losing 0.1 percent while announcing the sale of its 25 billionth iTunes song.
One bright spot was the solar sector, as Citigroup established coverage of three of the largest U.S. solar companies -- First Solar, San Jose's SunPower (SPWRA), and MEMC Electronic Materials -- with "Buy" ratings. SunPower gained 4.4 percent, First Solar increased 7.3 percent and MEMC moved 5 percent higher.
Silicon Valley tech stocks
The tech-heavy Nasdaq composite index: Down 3.1, or 0.1 percent, to 3,168.48
The blue chip Dow Jones industrial average: Up 7.22, or 0.05 percent, to 13,986.52
And the widely watched Standard & Poor's 500 index: Up 0.83, or 0.05 percent, to 1,512.12
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.