Microsoft shot down more than four dollars, or eleven percent, today. This loss is the first in a long time, breaking a period of gains that catapulted the stock from $28 to $36. It dropped so much due to disappointing Q4 results, reflecting the weakening PC market. As mobile devices become more and more dominant, it is becoming harder for Microsoft and other computer companies to stay on top. Due to the Q4 results, MSFT has slipped down to $31 - a price that it climbed above this May.
Google (GOOG) also fell today, by $16 or almost 2%. This was due to the publication of their Q2 results, which revealed a 6% decline in the CPC (cost-per-click) value. Basically, this value determines how much money Google receives every time someone clicks an advertisement on their websites. Since selling ad space is Google's main way of generating revenue, this decline spells trouble for the company. While the CPC has been declining over the past year, the rate of decline had been decelerating until recently. Investors were optimistic over this deceleration, which led to the stock's impressive gains. However, Google's CPC decline may decrease investors' optimism over the upcoming weeks/months. Google plans to continue to expand into the mobile ad market, giving investors reason to expect continued growth. The company achieved many new milestones this year, including its Google Cars, its Google Glasses, and its YouTube revenue topping $1 billion per quarter.
Taiwan Semiconductor(TSM) fell another 2%, adding to the 10%
it shed yesterday. The company released an earnings report that was above the
consensus estimate, but forecasted a Q3 revenue that was a couple billion below
what Wall Street expected. This caused concern for the company’s ability to
stay afloat in an extremely competitive mobile devices market. In addition,
larger rivals like Samsung and Intel are able to roll out chips at cheaper
prices, making it difficult for the company to attract new customers. TSM
currently operates three Fab manufacturing plants that are each worth an
estimated $12 billion!
GE reported earnings that were just slightly above Wall
Street estimates today. The conglomerate’s stock rose by about 5% during
trading hours due to an increase in their order book. Its industrial branch
stated that its backlog rose to $223 billion, with orders in the US rising 20%!
In addition, the company has received $26 billion worth of orders for its jet
engines this year! However, the financial division of the company, GE Capital,
posted another revenue decline. This branch of the company was responsible for
the decline of the company during the 2008 recession. Currently, it represents about 1/3 of the
company but is rapidly decreasing in size. CEO Jeff Immelt plans to continue
shrinking it to return GE back to its industrial roots.
Intel rival AMD also fell today, by a massive 62 cents or 13.5%. This was due to a forecasted drop in gross margin (profit from sales minus production costs), as well as a downgrade to "Sell" by Goldman Sachs analyst James Covello, who believes that it is overvalued. AMD has been hurt by the declining PC market, which is at record lows.Disclaimer: Trading stocks has extremely high risks, and should not be taken to lightly without a thorough understanding. This is written from a purely commentary point of view and is not meant to suggest buying, selling, or holding a stock. All traders must do their own research prior to investing. We (StockQuests) are unaffiliated with all of the companies that are mentioned on this blog, and can't be held responsible for any losses that may occur. Invest at your own risk.
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