Today: A roundup of the past week's debut of the 2013 SV150. Also: Wall Street trading uneven in wake of GDP report, with Amazon tanking and Apple gaining.
Apple on top of SV150, Google moves up, chip industry suffers
In case you missed it, The Mercury News has been rolling out its annual SV150 rankings and news for the past week, providing a snapshot of Silicon Valley's current hierarchy. For those who have not taken the time to play around with the searchable database of the 150 largest technology companies in the area to come up with their own conclusions, here is a roundup of all we have learned.
The numbers: Overall, Silicon Valley's technology industry gained in sales and declined in profits in 2012, bringing down a profit margin that remains much higher than in previous decades. Total revenues increased 9.1 percent to $677 billion, profits fell 12.4 percent to $88.7 billion, and the total value of the 150 companies in terms of market capitalization rose 1.9 percent to $1.83 billion. Apple easily topped the list after overtaking Hewlett-Packard on the 2012 list, while Google created the only movement among the top five, leapfrogging Cisco and closing in on Intel. For more breakdowns of the numbers, see charts of top-10 lists for such breakdowns as gains and losses in employees and more, as well as a chat with the man responsible for all the number-crunching, data guru Jack Davis.
We are not alone: When we tweet about our rankings this year, we haven't been the only ones using the #SV150 hashtag -- Devotees of Hindu visionary Swami Vivekananda have been joining in. 2013 marks the 150th anniversary of the birth of the man who introduced the United States to the Hindu religion, and possibly yoga as well.
The only thing that hasn't changed is constant change: Apple is on top of the SV150 -- which ranks companies according to 2012 total revenues, for the second consecutive year -- but a decade ago the Cupertino consumer-tech giant was barely hanging in the top 10. Columnist Mike Cassidy wonders what will appear in the next 10 years that isn't reperesented now, and received some interesting possilbities, which he also discussed in a Google+ Hangout with Apple beat reporter Patrick May.
The chips are down: The semiconductor industry that gave Silicon Valley its name saw one of its worst years in history, as the rise of mobile devices took its toll on Intel, Advanced Micro Devices, and other valley companies. Revenue for the sector declined 6 percent and profits plummeted 38 percent, as smartphones and tablets that use cheaper and less-powerful chips manufactured by non-valley companies dominated. Fabricating-equipment companies such as Applied Materials had it even worse, with revenues falling 15 percent and profits declining 73 percent.
The rookies are a powerful force: While Facebook was the most prominent addition to the list, placing 16th in its IPO year, more than a dozen companies debuted on the list after exercising initial public offerings in 2012, the most since the dot-com bust. With tech companies waiting longer and proving more ability to bring in sustanable revenues before going public, new additions like Workday, Palo Alto Networks, Splunk and more are forces to be reckoned with straight out of the gate.
LinkedIn is Wall Street's favorite social network for a reason: Mountain View professional-networking company LinkedIn had one of the largest leaps on the SV150, rising 16 spots to No. 54 in its second year on the list after a 2011 IPO. The rise in revenues shows why LinkedIn has continued to reward IPO investors with large gains while Facebook has struggled: Its ability to sell human-resources professionals and recruiters access to more than 200 million members.
Area's non-tech companies had better year for profits: The Bay Area 25, the largest non-tech companies in the region, did not suffer the same overall profit decline, with San Ramon-based Chevron helping push the index to a 7.3 percent gain. Revenue gains weren't as robust as their tech brethren, however, gaining only 0.3 percent.
No two sectors are the same: While the semiconductor industry struggled, other SV150 sectors showed robust growth or were pulled down by one mammoth company's weakness (cough Hewlett-Packard cough). The business information technology sector had the largest revenues in 2012 despite having three fewer companies included than the semiconductor sector, but the enterprise-tech revenues were still in decline thanks to HP's struggles. The consumer-tech sector was dominated by Apple, which helped produce a revenue gain of almost 26 percent and profit gain of more than 22 percent for the sector. The Web industry easily surpassed that growth, however, gaining 43.7 percent in sales and 36.1 percent in profits as Google's phenomenal growth and the addition of Facebook helped the sector, which Peter Delevett and Brandon Bailey detailed in a live chat. The largest gain in market cap in the SV150 belonged to the biotech sector, where Foster City's Gilead helped shares rise 60 percent in 2012. The networking and telecommunications sector experienced a huge drop in profits, earning only $300 million for a 52.2 percent decline, topped only by the fabrication-equipment industry's decline at 73 percent. The entertainment industry in Silicon Valley was volatile thanks to two of the most hotly debated companies in the valley, Netflix and Zynga, which TechFiles columnist Troy Wolverton discussed in-depth. The smallest sector, clean technology, contains only three companies -- SunPower, Tesla and new addition SolarCity -- but staff writer Dana Hull detailed the possible future for the valley's green economy.
Wall Street uneven as GDP grows, but less than estimates
Wall Street moved both ways Friday after the federal government reported that the United States economy grew by an annual rate of 2.5 percent in the first quarter, a big bump from the previous quarter that was still lower than economists expected.
Consumer spending rescued the U.S. economy, growing 3.2 percent in the quarter to help offset a drastic drop of 4.1 percent in government spending even before the sequestration cuts took effect. However, economists are concerned that the current quarter will not match up as those federal cuts take effect and the payroll-tax increase has more effect, as it may have in weak March job growth.
"It wasn't the bang-up start to the year we had hoped for, and the signals from March suggested that we will only decelerate from here," CIBC World Markets chief economist Avery Shenfeld told Reuters.
The report led to a weak day on Wall Street, but not severe downturns, as the Dow Jones actually gained 0.1 percent but the other two major U.S. stock indexes fell.
Amazon weighs on tech stocks, Apple bounces higher
The Nasdaq composite index declined the most of the three major indexes Friday at 0.4 percent, but the weakness was not spread among tech companies, as the SV150's 0.4 percent increase shows. The reason for the disparity belongs to one non-Silicon Valley tech company: Amazon.
After the Seattle tech giant's Thursday earnings report showed that higher revenues did not help the company's net income, the stock plummeted 7.2 percent as analysts grew more wary of the company's high price-to-earnings ratio.
Meanwhile, Apple received another strong gain in the wake of its earnings report earlier this week, as investors continued to show their support for the Cupertino company's plan to push $100 billion in cash back to shareholders. Apple closed Friday with 2.2 percent gain at $417.20, ending a week that saw the stock gain 6.8 percent after it fell to 52-week lows in each of the final three days of last week.
Elsewhere in Silicon Valley, Yahoo dropped 2.1 percent to $24.68 after announcing Thursday afternoon that its chairman is stepping down, but Zynga rebounded healthily after its post-earnings weakness with a 7 percent gain to $3.35. Tesla hit an all-time intraday high of $53.74 in anticipation of another hyped announcement from CEO Elon Musk, but shares dropped 1.5 percent to $51.20 by the close after Musk announced new service and warranty plans for the Palo Alto company's cars.
Electronic Arts dropped 0.3 percent after confirming layoffs Thursday, Sunpower jumped a surprising 9 percent ahead of its earnings report scheduled for next week, and HP moved 1.9 percent higher.
Silicon Valley tech stocks
Up: SunPower, Zynga, Intuit, Facebook, Apple, HP, Workday, Ruckus, Netflix, eBay, Oracle
Down: SolarCity, Splunk, Yahoo, Tesla, AMD, Google, VMware, Juniper
The tech-heavy Nasdaq composite index: Down 10.73, or 0.33 percent, to 3,279.26
The blue chip Dow Jones industrial average: Up 11.75, or 0.08 percent, to 14,712.55
And the widely watched Standard & Poor's 500 index: Down 2.92, or 0.18 percent, to 1,582.24
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.