Google’s stock price came close to its 52-week high on the first day of Google I/O today, hitting $915 per share at close. In comparison, Apple today dropped 15 points to close at $428 per share, 277 points off its 52-week high.
This morning, Google stock jumped to $909 per share from its opening price of $895 when Co-Founder Larry Page hit the stage at around 11:45. It is now trading at $916.50 in after-hours trading. One analyst I talked to attributed the increase to Google’s announcement of its “all access” streaming service and the rotation out of hardware makers such as Apple and HP.
The difference between Google and Apple’s share price is a barometer of the tech landscape. Google is a data company. Apple is more about design, creating beautiful devices.
The difference is evident here at Google I/O. Google has built its infrastructure to manage more data than arguably any company in the world. It uses ths data to provide services that it highlighted today in its keynote. This includes its Google Translate APIs and the next generation of its Google Maps. The iPhone will always be elegant. As my colleague Josh Constine points out, the beauty of a device is just not as important, as the entire world becomes a fabric of data objects.
Rackspace will open trading this morning on the New York Stock Exchange with a share price that dropped nearly 25% on Thursday. The stock fell after the company missed its earnings, raising concerns the cloud price wars with giants like Amazon Web Services are taking its toll.
The stock dropped about 12 points, ending trading at $39.36 per share. That puts the share price near its 52-week low of $38.30 per share.
On Wednesday, Rackspace reported 19 cents earnings per share (EPS). Analysts had expected Rackspace to report 20 cents EPS. The company had revenues of $362 million for the quarter, compared to $367 million that analysts had expected.
Rackspace executives cited its across the board drop in cloud pricing that it put into effect in February for the missed earnings. At the time, Rackspace provided a detailed picture of the price decrease, going into detail about its justification for the price drop.
But it was not enough for Rackspace to make a difference in a market that has seen successive price drops by AWS, Windows Azure. Additionally its OpenStack public cloud is growing but not enough to make a difference in the earnings.
Rackspace cannot compete on price with AWS. The company does not have the scale to absorb the drop in revenues. More so, it’s evident that Rackspace needs a different way to get ahead. I am hearing experts say that should be a big data play of some sort that can leverage its distributed infrastructure.
Facebook has just posted its earnings for the quarter that ended March 31, 2013. Facebook hit $1.46 billion in revenue up 38% from Q1 2012, beating Wall Street estimates of sales of $1.44 billion. Facebook reported earnings of $1.06 billion for the same quarter a year ago. Earnings per shared missed estimates, staying flat at $0.12 (analysts had expected earnings per share of $0.13.
Net income was up 7% to $219 million, versus $205 million a year ago (GAAP figures).
While revenue only grew slightly, the amount of its 1.11 billion monthly users that returned daily, 665 million, was slightly better than last quarter. For more details on user growth, read our post by Drew Olanoff.
Facebook also noted in an SEC filing issued today that Chief Accounting Officer David Spillane is leaving the company. Spillane had been the company’s revenue controller since 2008, overseeing growth and IPO. He is getting replaced by Jas Athwal effective May 10.
Initial reactions from the stock market were mildly positive, with the Facebook’s share price increasing slightly in after-hours trading just after the earnings were released, though the price had fallen 1.22% and closed at $27.43.
The percentage of Facebook’s total ad revenue that came from mobile surged to 30%, up from 23% last quarter. Read more on Facebook’s mobile progress from Kim-Mai Cutler.
Last quarter, Facebook posted earnings of $1.59 billion, a rise of 40% year-over-year. Last quarter the company had 1.1 billion monthly users, 618 million daily users, and 680 mobile monthly million, up 57% year-over-year.
In the lead-up to today’s earnings, there were a lot of expectations about how Facebook would perform performing around some key metrics.
User numbers. As noted in the WSJ, one area where Facebook will be scrutinized will be in its proportion of daily to monthly active users. In Q4 the figure was 58.5% globally. Mark Mahaney of RBC Capital Markets told the newspaper that he expects that to go up to 59% but “anything less than 58% would be a negative for Facebook.” Elsewhere, there have been some reports of user attrition. However, Facebook hit a 60% daily to monthly users, showing slightly better engagement.
The fact that Facebook saw a higher DAU/MAU ratio means that Facebook was more engaging this quarter than last, a strong sign rebuking critics who claim people are using the site less. However, Facebook’s user growth is currently coming predominantly from developing markets that don’t earn it nearly as much money as users in first-world markets like the United States.
Advertising and payments. Last quarter Facebook’s ad revenue was $1.33 billion, up 41% on the year before, and payments revenue came in at $256 million. Facebook’s payments revenue in Q1 was $213 million, it’s biggest payment three-month quarter yet. [Correction: We original said payments revenue fell, but that's because Q4 2013 was a four-month quarter, irregularly boosting its revenue on the books.]
213M for 1Q13 payments. This was biggest payment quarter – there were four months included in 4Q revenue.
We talked about it on call but should have reminded people.
Mobile. Last quarter mobile revenues revenues grew to make up 23 percent of the company’s total sales. Mobile revenues effectively equals mobile advertising, since gifts, also sold on mobile, are negligible. Next quarter, however, Facebook will start making another revenue stream in mobile by way of Parse, the mobile development platform. Parse has around 60,000 developers, and offers a freemium model based on usage, with the cheapest paid version priced at around $199 per month. This was still a relatively small business when it was acquired last month for a price believed to be around $85 million so it’s not likely to grow and become a significant revenue source for another couple of years. Another specific area proving to be a significant driver within Facebook’s mobile ads business are app install ads, where app publishers pay a fee for an add to appear in a person’s mobile news feed.
Facebook Home; Graph Search. This past quarter saw the launch of two major initiatives for the company, Facebook Home on mobile and Graph Search, the “third pillar” after News Feed and Timeline, according to CEO Mark Zuckerberg. Facebook Home saw a little surge of interest with 500,000 downloads in its first five days across a limited amount of devices that currently support it.
The earnings call is at 2pm PT; we’ll be listening in and reporting on that.
Apple has been the subject of plenty of financial scrutiny (perhaps even more so than usual) recently, and now all that speculation has come to a head.
The Cupertino company has just released its fiscal Q2 2013 earnings — it reported $43.6 billion in revenue (up from $39.2 billion in the year-ago quarter) along with $9.5 billion in quarterly net profit, which works out to earnings of $10.09 per share.
That means that the rumblings were true — Apple posted EPS of $12.30 back in Q2 2012, which makes this the company’s first year-over-year quarterly earnings decline in nearly a decade. Naturally, the bigger question is whether or not this ignominious milestone will mean anything for Apple going forward and there’s no clear answer to that just yet. Financially speaking, it was bound to happen sooner or later, but Apple’s recently cultivated image as a computing juggernaut could take a very prominent hit. Apple has $145 billion in cash in its coffers, so we can all lay off the doomsday scenarios, but CEO Tim Cook admits that the company’s growth has slowed. Cook also noted during Apple’s customary earnings call that the company would kick off an effort to buy back Apple shares to raise the value of its stock.
These past few days have been surprisingly turbulent ones for Apple (the company’s share price tumbled below the $400 mark just last week to a new 16-month low), so it’s no surprise to see that analysts weren’t quite as bullish on Apple as they usually tend to be. According to Bloomberg Businessweek, the analyst consensus was for Apple to announce earnings of $10.02 per share on $42.4 billion in revenue, which the company managed to beat. On the other hand, Apple’s own (once notoriously conservative) guidance from its last earnings release forecasted revenues between $41 and $43 billion. And Apple’s guidance for next quarter? The company expects to pull in between $33.5 billion and $35.5 billion in revenue and gross margin between 36 percent and 37 percent.
“We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad,” Apple CEO Tim Cook noted in the release. “Our teams are hard at work on some amazing new hardware, software and services, and we are very excited about the products in our pipeline.”
Despite the fact that Apple didn’t release or unveil any new hardware in Q2 (as some eagerly suggested it would), device sales were still nothing to sneeze at. As always, we’ve got more detailed breakdowns of how Apple did in terms of hardware this quarter courtesy of Jordan and Darrell, but here’s how the company did in a nutshell: Apple sold 37.4 million iPhones during Q2, along with 19.5 million iPads, but there’s no longer any word on iPods. Mac sales came up short as well, as Apple sold 4 million of them back in Q2 2012 compared to “under 4 million” this time around.
(You can find all of our other Apple charts here)
Not too shabby considering that iDevice sales are up across the board compared to the year-ago quarter (and in the iPad’s case, dramatically so likely thanks to the iPad mini), but the lack of any new standout products has weighed heavily on some people’s minds over the days and weeks that have led up to today’s release. Apple hasn’t pulled back the curtain on a new product since the iPad mini was unveiled back in October 2012. There’s nothing intrinsically wrong with that — the company likes to stick to its timetables after all — but the release of impressive new smartphones from Samsung and HTC could mean that Apple could be facing even stiffer competition as it works to dominate the mobile market. That could all change very shortly too, as rumblings of a new iPhone to be unveiled sometime this summer (along with a possibly cheaper model to follow) continue to circulate.
While Wall Street may have had concerns about Apple prior to the release, Apple’s stock price is up roughly 4 percent in after-hours trading.
Steve Wozniak, co-founder of Apple with Steve Jobs, said today that Apple’s share price, which hit a 16-month low two days ago, is “disappointing” but that he was confident the tech giant would come out with products which would “surprise and shock us all.”
In a wide-ranging speech at the Login technology conference in Vilnius, Lithuania, Woz – as he is known – said: “[Apple's]stock price is a little low right now. Over time I’ve seen Apple go up or down 2x over a few months. It’s very disappointing because if you look at the amount of cash that Apples holds that cash translates to one to two hundred dollars per share of stock just in cash form. So the expectations are a little lower even than they expect.
“But where are the profits of the whole industry though? They are still with Apple and profits are all that really matter in the long run. Apple’s business model tends to be new products, even products that didn’t exist before and doing well out of them and not re-making the same thing, as eventually that just gets a little bit stale. So I would guess that Apple is very well prepared, and working on new things that are going to surprise and shock us all. And I honestly don’t know [what].”
In a wide-ranging speech to the conference, he envisioned a future where computers eventually become so powerful that they will deliver us “to a place of perfect happiness”. He said computers have already saved us from having to do a lot of manual work, but he also said it was a “good thing” that they would eventually take over a lot of our need to think. “Computers should save us from a lot of thinking, like calculating numbers. When electronic calculators came about they freed our minds to think of other things and enabled us to get to where we are today.”
He spoke about his hopes for voice recognition on smartphones becoming more powerful: “It’s almost there already. I use it all the time. I would expect voice [recognition interfaces] to become more common.”
He said the main obstacle faced by computing today was the sheer complexity of hardware devices due to miniaturization and in order to break out and create a new kind of computer “someone would have to start from the ground up.”
He also reminisced about his time with Steve Jobs and hacking together hardware projects for friends.
“The iPhone 5 is one of the hottest products today. Back then, the HP35 hand-held calculator was the iPhone 5 of its day.”
Woz is also hoping for a robot which could “clean my car at night in the garage” – although he didn’t imply Apple might be building such a thing.
“I gave up trying to guess [what Apple would do next] a long time ago. There can be rumors which are false, or something gets cancelled. I never ask key insiders at Apple what they are about to come out with.”
