The Lead: Intel and eBay drop after earnings, SanDisk and smaller companies succeed
In Silicon Valley's busiest day yet of the current earnings season, Intel and eBay suffered at the hands of investors following their Wednesday reports, but smaller SV150 companies managed to impress.
Santa Clara chipmaker Intel validated fears of investors and analysts that the decline of personal computer sales would be too great to be balanced by a belated mobile effort, pulling down its revenue forecast. Intel's revenues for the recently completed quarter came in about $100 million below expectations at $12.8 billion, and the world's largest chipmaker said it now expects revenues for 2013 to be flat from 2012, after projecting small gains previously.
"Everything that we were concerned about is starting to come in," Evercore Partners analyst Patrick Wang told Bloomberg News.
Intel's net income of $2 billion, or 39 cents a share, met analysts' expectations, but still represented a 29 percent decline from the same quarter a year ago for Silicon Valley's third-largest tech company. Intel stock, which closed with a 0.4 percent decline at $24.15, fell more than 3 percent in late trading.
San Jose e-commerce powerhouse eBay also experienced a late-trading decline following its earnings report, which was lighter than expected on profits. While eBay's revenues grew 14 percent year-over-year to $3.88 billion, profits declined 8 percent to to 49 cents a share for the valley's seventh largest tech firm. An increase in operating expenses seemed to account for the decline, but CEO John Donahoe warned that economic weakness in Europe and parts of Asia would "continue to be a challenge" for the rest of 2013.
After growing 1 percent to $57.38 in regular trading Wednesday, eBay shares shrank more than 6 percent in after-hours trading, to less than $54.
The most impressive Silicon Valley earnings report of the afternoon came from Milpitas, where flash-memory company SanDisk reported huge gains in revenues and profits. The company reported profits of $1.06 a share on revenues of $1.48 billion; in the same quarter last year, SanDisk reported profits of 5 cents a share on revenues of $1.03 billion.
Analysts were left agog, with Stifel Nicolaus's Kevin Cassidy calling the report "a surprise for sure."
"SanDisk must've had better prices or put more products out," The analyst guessed to Bloomberg.
SanDisk, which had better revenues than well-known valley tech firms like Yahoo and Adobe (ADBE) in 2012, saw its stock jump more than 7 percent in after-hour trading, after closing with a 0.1 percent decline at $59.44.
Smaller tech companies in the region were also successful: Fremont's iGATE had the best stock performance of the SV150 companies Wednesday after releasing its earnings report in the morning, showing off three new contracts worth more than $100 million and a rise in profits in revenues; shares increased 11.4 percent to $19.77. San Jose-based Xilinx reported a 19 percent gain in profits both year-over-year and sequentially, and shares gained more than 3 percent in after-hours trades. Oakland's Zhone Technologies reported its third straight profitable quarter and shares skyrocketed more than 16 percent higher in late trading.
SV150 market report: Alibaba propels Yahoo to new highs, Tesla bounces back
Wall Street enjoyed another mildly positive day while preparing for Wednesday afternoon's earnings reports, with a big post-earnings bounce from Yahoo and a rebound from Tesla helping tech stocks advance.
While Yahoo's Tuesday earnings report showed that revenue growth is still hard to come by for the Sunnyvale company, investors instead focused on tremendous growth from Alibaba and sent shares to their highest level since 2008. Yahoo stock hit an intraday high $29.73 before closing with a 10.4 percent increase at $29.67 Wednesday, with glowing analyst reports focusing on Yahoo's Asian investment tripling revenues in its first quarter.
Tesla, which fell hard Tuesday after Goldman Sachs issued a price target of $84 a share, bounced nearly all the way back with a 10.3 percent gain to $120.25. Again, a new price target seemed to sway investors, but this time it was much higher than the going rate: Dougherty analyst Andrea James raised her price target from $90 to $200 Wednesday, and said there is plenty of room for growth as Tesla expands capacity at its Fremont plant. "We ultimately believe Tesla is a $300 stock at the factory's maximum capacity," she wrote.
Google (GOOG) remained relatively flat despite inviting media to an event expected to introduce a refreshed Nexus tablet line; the Mountain View search giant dropped 0.1 percent to $918.55. Netflix (NFLX) again hit its highest prices since the Qwikster debacle almost two years ago, gaining 2.9 percent to $267.92 ahead of Thursday's Emmy nominations, when the Los Gatos company could shake up the TV industry again. Redwood City's Electronic Arts (ERTS) dripped 1.6 percent to $23.81 after the NCAA said it would not renew its contract with the video game developer.
The SV150 index of Silicon Valley's largest tech companies: Up 4.55, or 0.36 percent, to 1,273.85
The tech-heavy Nasdaq composite index: Up 11.50, or 0.32 percent, to 3,610
The blue chip Dow Jones industrial average: Up 18.67, or 0.12 percent, to 15,470.52
And the widely watched Standard & Poor's 500 index: Up 4.65, or 0.28 percent, to 1,680.91
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.