Today: Google's (GOOG) ability to continue leading in Web search ads while advancing in newer fields leads to big profits, while Apple (AAPL) falls to new lows and Microsoft, IBM, AMD and Intuitive Surgical announce earnings.
Google's profits move higher as advertising pays off
Google's 2013 is shaping up to be a monster in terms of profits, as the Mountain View search giant announced better-than-expected earnings that showed strength on the Web and in mobile advertising.
Google raked in gross revenue of $13.97 billion, 31 percent higher than the total in the same quarter last year, with net income of $3.35 billion, up 16 percent from a year ago. The earnings per share, $9.94, blew away analyst expectations of $8.81, despite revenue coming in a tick below the average forecast of $14.2 billion, according to Thomson Reuters.
Google's bread-and-butter -- search advertising on the Web -- continued to be a huge money maker for the company, as that section of the business pulled in $10 billion on its own, a 23 percent increase from last year. A growing portion of the revenues came from mobile advertising and YouTube ads, however, showing Google's advancing ability to adapt; 15 percent of Google's advertising revenues were derived from mobile and YouTube, up 5 percent from the first quarter of 2012.
"You're seeing good progress," Wedge Partners analyst Martin Pyykkonen told Bloomberg News. "They're taking advantage of, and really cultivating these relatively newer businesses."
In another sign of Google's advance, the company's "cost per click" intake -- the amount it charges every time a user clicks on an Internet ad -- decreased 4 percent in the the quarter, after showing much larger decreases in previous quarters: It fell 12 percent in the year-ago quarter and 6 percent in the final quarter of 2012. Even Motorola Mobility, the money-losing hardware company Google acquired for $12.5 billion, is beginning to show progress: The company's losses slimmed to $271 million in the quarter.
CEO and co-founder Larry Page -- his voice still hoarse after an ailment kept him silent for a large chunk of last year -- was excited by the company's performance in the quarter.
"I have been very pleased with the rate of progress so far," Page said during Thursday afternoon's conference call. "In today's multiscreen world, the opportunities are endless."
Page also touched on his co-founder Sergey Brin's Google Glass effort -- "Someday we'll all be amazed that computing involved fishing around in pockets and purses," he said of the wearable device -- and Facebook Home, the new app from the Menlo Park social-networking leader that layers on top of Google's Android mobile operating system.
"It's really great to see developers focused on and building for Android," he said, keeping his comments to a minimum.
Google dropped 2.1 percent to $765.91 in regular trading, but recover most of that loss in after-hours action.
Apple closes lower than $400 for first time since 2011, stocks decline
Apple did not recover its recent losses on Wall Street, as the Cupertino tech giant again reached lows unseen since 2011 on Thursday and closed lower than $400.
After briefly dipping below the psychological barrier of $400 a share Wednesday, Apple stock comfortably fell below that level Thursday and stayed there, closing with a 2.7 percent decline at $392.05 after falling as low as $389.74.
That decline helped push indexes down for the day, with other tech companies also contributing: The tech-heavy Nasdaq fell 1.2 percent and the SV150 index of Silicon Valley's largest technology companies dropping 1.9 percent, while the Standard & Poor's 500 decreased 0.7 percent and the blue-chip Dow Jones moved lower by 0.6 percent.
eBay (EBAY) suffered after issuing a cautious forecast in its earnings report Wednesday, declining 5.9 percent. Yahoo (YHOO), which announced less-than-stellar earnings earlier this week, dropped 1.9 percent as it announced a new round of mobile apps focusing on weather and email.
Intel (INTC), which announced earnings the same day as Yahoo that were also not that impressive, bounced back from post-report losses with a 1.4 percent gain. Other large-cap Silicon Valley companies were not as fortunate: Hewlett-Packard (HPQ) dropped 1.4 percent, Oracle (ORCL) declined 1.1 percent and Oracle fell 0.2 percent.
Facebook was outshined by its social-networking brethren, dropping 3.5 percent as LinkedIn announced a new advertising venture to match Twitter's new ad effort, while Twitter's busy week continued with the public release of its new #music app; LinkedIn didn't profit, however, dropping 3.4 percent.
Microsoft, IBM, AMD and Intuitive Surgical announce earnings
Google wasn't the only important earnings report for the tech sector and Silicon Valley, as earnings season roared along
-- Microsoft: The Washington tech giant beat expectations that had been diminished since a reports showed a massive decline in personal computer shipments in the first quarter, reporting profits of 72 cents per share on revenues of $20.5 billion. Despite the relative success, Microsoft announced that Chief Financial Officer Peter Klein would depart his position later this year after more than a decade with the company and more than three years in the top financial position. Klein did take the time Thursday to announce a new planned offering from Microsoft: a 7-inch tablet that will compete with Amazon's Kindle Fire and Apple's iPad Mini.
-- IBM: The New York giant posted profits that were a disappointment to Wall Street for the first time in nearly a decade. Net income dipped from $3.07 billion to $3.03 billion year-over-year, a rarity for the software-and-services giant, and the per-share increase from $2.61 to $2.70 wasn't enough to meet analyst expectations, pushing stock down in after-hours trading.
-- Advanced Micro Devices: The struggling Sunnyvale chipmaker, like Microsoft, exceeded analyst's diminished expectations for the PC industry, losing 13 cents a share vs. expectations of a loss of 18 cents a share. "In a world of low expectations this is a decent report -- a solid beat off of low expectations," Sanford Bernstein analyst Stacy Rasgon told Reuters.
-- Intuitive Surgical: The Sunnyvale surgical device company, which makes the da Vinci robot, continued to derive huge profits from its sole product, but a lighter-than-expected forecast pushed its stock down in after-hours action. Still, its profits and revenues blew away expectations: Intuitive raked in $4.56 per share on revenues of $611 million, while analysts on average expected profits of $3.98 on revenues of $582.8 million, according to Thomson Reuters.
Silicon Valley tech stocks
Up: AMD, SolarCity, Tesla, Intel
The tech-heavy Nasdaq composite index: Down 38.31, or 1.2 percent, to 3,166.36
The blue chip Dow Jones industrial average: Down 81.45, or 0.56 percent, to 14,537.14
And the widely watched Standard & Poor's 500 index: Down 10.4, or 0.67 percent, to 1,541.61
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.