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Technology Stock Roundup: Facebook Wows, Apple Not So Much

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Facebook (FB) shares jumped a whopping 30% last week. But there were also other hot stories from technology companies that are prepping for the back-to-school season and more…

Facebook Takes Mobile Ad Market by Storm

Facebook got a lot of love from investors last week, as the company showed some solid execution. Reported earnings jumped both sequentially and year-over-year on the back of solid mobile ad revenue growth.

Mobile ad revenues jumped 75% sequentially, as Facebook gained from growing SMB spending. This is the same strategy Google (GOOG - Free Report) used when it was going after the display market. Facebook’s growth rate in the U.S. and Canada was less spectacular than its growth in international markets (Europe 18%, Asia 40% and ROW 40%), which shows an extremely effective international strategy.

Working in Facebook’s favor were a number of new advertising products that draw on Facebook social data for customer profiling, ad formatting and page re-designing with the mobile customer in mind. The effectiveness of these products and Facebook’s ever-increasing teen patrons drew more advertising dollars to the platform at a time when the display advertising market is going through a rough patch.

iPhone Sales Breathe Life into Apple Shares

Investors breathed a sigh of relief that Apple (AAPL - Free Report) managed to grow iPhone sales despite Samsung’s encroachment of its territory. However, with shipments and revenues growing 20% and 15%, respectively, it appears that the company is seeing weaker pricing.

Indeed, Apple said that older models were doing better (with discounts), indicating that it is failing to charm its fans as it did earlier and explaining the 14% global share in the last quarter. This is the lowest it has been since the second quarter of 2010 according to Strategy Analytics.

What’s worse, Apple’s total sales in China, which is a key growth market, fell 4% from last year and even CEO Tim Cook was baffled by the 20% decline in Hong Kong. iPad’s sequential and year-over-year declines are likely on account of increased competition and even its Macs are not being left alone.  As a result, earnings were down double-digits from both the previous and year-ago quarters.

Cook provided encouraging commentary about new products in the pipeline and margin targets indicate that the iPhone will get its usual refresh this quarter.

Google Is Creating Some Winning Hardware

The most exciting product announcement from Google was its Chromecast, a tiny dongle going for just $35 that Google says can be instructed to stream videos from the cloud. The dongle operates in the presence of Wi-Fi connectivity, allowing any device using a Chrome browser to serve as the remote control.

Google is of course very aware of the competition, so streaming stuff from Amazon (AMZN - Free Report) may not be that satisfactory and streaming from Apple’s iTunes is not possible at all. However, it has already roped in Netflix (NFLX - Free Report) and has said that Pandora (P) music will follow soon. Then of course there’s its very own Google Play.

Google estimates that roughly half the Internet traffic in the U.S. during peak evening viewing hours goes to YouTube and Netflix. Its Chromebook is making inroads into the very low end of the notebook segment and its tablets are also growing strongly. All these factors in combination, along with the pricing of its streaming device are expected to drive its adoption.

As expected, Google refreshed its Nexus tablet, introducing a sleeker, lighter and faster device at a slightly higher cost. Nexus 7 as it is called comes in three versions: $229 for the basic 16GB version, $269 for another 16GB of storage and $349 for LTE connectivity. Apple charges $329 for its 16GB iPad Mini and $429 for the additional storage. So Google appears to have the more attractive product in the category.

Google has made a few changes with this model, replacing NVIDIA’s (NVDA - Free Report) Tegra with Qualcomm’s (QCOM) APQ8064 processor, and including both front and rear-facing cameras, a higher-resolution display, virtual surround sound and multiple user-logins. Users also get to use the million apps on Google Play, which now exceeds iTunes’ 900K. While the exact number is not really important, it’s clear that Google has built a strong eco-system supporting its devices, which is what attracts and keeps users.

Google also picked up a 6% stake in Taiwanese chipmaker Himax Technologies with the option to increase the stake to 14.8% within a year. Himax makes tiny displays such as the ones used in Google Glass, so the company could be readying itself for a launch next year. App developers are already working on the platform and funding is not working out to be too difficult. Notably, Intel (INTC - Free Report) is also an investor in Himax.

Facebook stole the show last week, but Apple and Intel shares also beat the market.



Last Week’s Performance

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This week-

Google will host its first Moto X phone event to announce the first smartphone from Motorola since its acquisition by Google in 2012. Motorola’s existing devices have not been well-received, making it easy for Apple and Samsung to eat into its market. Google’s invitation to the media indicates that it has yet another winner up its sleeve.

Earnings season is maturing and the deluge of technology companies reporting has now gone to a dribble. Some of the bigger names reporting this week are Symantec (SYMC - Free Report) , BMC , Automatic Data Processing (ADP - Free Report) , Teradata (TDC - Free Report) , Roper (ROP - Free Report) and Garmin (GRMN - Free Report) . Read our previews in the “Earnings Preview” section to know more.

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