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Technology Round Up - August 5, 2013
There have been many noteworthy developments in the technology space recently. Some of these will likely have a material impact on the companies in the sector and the markets they serve.
Zynga’s Earnings Disappoint
Shares of Zynga (ZNGA) declined following the company’s second-quarter earnings release. The top line decreased roughly 31%, to $230.7 million. Bookings fell roughly 38%, to $187.6 million. The company did report a share loss of $0.02, which exceeded our expectation and was somewhat better than the prior-year tally. The company’s more established games, such as FarmVille and Words with Friends, remain popular. However, some of Zynga’s recent titles should build an audience more slowly. Moreover, the company has largely scrapped plans to launch a real-money gaming business in the United States. Investors had previously been hopeful that such an initiative would help Zynga turn its fortunes around.
Shares of Facebook (FB) have advanced nicely following the company’s second-quarter earnings release. The top line increased roughly 53% from the prior-year figure, to $1.8 billion. Monthly active users advanced 21%, to 1.15 billion. Mobile monthly active users were 819 million, an increase of 51% on a year-over-year basis. Mobile ad revenues comprised 41% of total advertising revenue, compared to 23% and 30% in the December and March quarters, respectively. Share earnings came in at $0.13, a healthy improvement and above our expectations. Wall Street responded well to the announcement, with a number of brokerage firms increasing their price targets for the stock. Facebook’s performance on the mobile front was particularly encouraging.
Google’s Mixed Performance
Internet-search behemoth Google (GOOG) posted mixed results for the second quarter. The top line increased over 19%, to $14.1 billion. Revenues continue to benefit from growth in paid clicks, which are driving healthy ad sales volume. However, revenue growth did fall short of consensus expectations. The cost-per-click measure (which tells how much advertisers pay Google for each ad clicked on) declined 6% in the period. Weakness on this front is the result of an increased focus on mobile ad sales, where fees tend to be lower. Meantime, the bottom-line picture was unimpressive. Excluding a $1.99 per share gain on the disposal of Motorola Home, share earnings came in at $7.55 for the recent quarter, somewhat below the prior-year tally.
Baidu Shares Advance Sharply
Shares of Baidu (BIDU) have been on the rise in recent weeks. The Chinese-language Internet search provider reported revenue growth of roughly 44% in the recent quarter, on a year-over-year basis. This resulted from a 33% increase in the number of online marketing customers. An increase in revenue per online marketing customer also helped. However, the bottom-line picture was somewhat less rosy. Costs for traffic acquisition, bandwidth, content, SG&A, and research and development all increased. As a result, share earnings of $1.22 declined slightly from the prior-year period.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.