The Winners and Losers of Earnings Season
It’s that time again!
As the leaves turn, so do the fortunes of Silicon Valley. Some companies ripen to a golden hue as their quarterly revenue far exceeds financial analysts’ projections. Others turn a rotten brown and tumble down the Nasdaq when they fail to meet subscriber targets. The winds of change are blowing, threatening to send a high-flying stock fluttering back toward the market average. Whatever the time of year, you can bet that CEOs will still be lining their pockets with stock options.
Welcome to earnings season.
Despite some serious holes in its catalog, Netflix was able to parlay Barb hype into 3.6 million additional subscribers during the quarter, beating the company’s own projection of 2.3 million. The streaming service’s earnings of 12 cents per share also easily beat Wall Street projections of 6 cents per share, and revenue of $2.29 billion squeaked past projections of $2.28 billion. International subscribers are now the key to Netflix’s growth engines, comprising 3.2 million of the company’s adds in Q3 this year. It’s not clear how much steam Netflix has left in the U.S., as it added just 370,000 customers domestically. But for now, Wall Street is unconcerned — the company’s stock went up 20 percent in after-hours trading following the earnings report.
Microsoft back? That’s the growing consensus after the creator of Minesweeper delivered yet another strong quarterly report, with earnings per share of 76 cents beating projections of 68 cents. Microsoft’s $22.3 billion in revenue also beat analysts’ estimates of $21.7 billion. Again, the company boasted of the success of its cloud computing platform, Azure, which more than doubled its take in revenue year-over-year. After years in the digital wilderness, Microsoft finally seems to have hit on a highly profitable product line that’s not Windows. No wonder the company’s stock reached a new all-time high last month.
Google’s parent company remains almost infallible despite turbulence at many of the company’s moonshots, now generally known as “Other Bets.” Google Fiber, for instance, is dialing back its high-speed internet ambitions around the country. Still, thanks to healthy ad sales on Google Search and YouTube, Alphabet posted earnings of $9.06 per share and revenue of $22.45 billion, beating analysts’ estimates of $8.63 per share in earnings and $22.05 billion in revenue.
Another quarter, another earnings and revenue projection beat. Facebook made $1.09 per share on revenue of $7.01 billion, while analysts had projected 97 cents per share on $6.92 billion. And the company added 80 million more users. Here are some pointless ways to rephrase that statistic: This quarter, the population of more than two Californias joined Facebook. This quarter, more than one-fourth of Twitter’s population joined Facebook. This quarter, if you wanted to match Facebook’s user growth using just the artists who appeared on J. Cole’s 2014 Forest Hills Drive, you’d have to clone J. Cole 80 million times, because J. Cole went double-platinum with no features. Tortured metaphors are the only way to keep Facebook’s unyielding growth interesting.
We’re currently in an “Apple is doomed” period of the lunar cycle, so why not pile on the naysaying? Apple’s revenue was down year-over-year in the most recent quarter, as were iPhone shipments (and the newest iPhones launched at the end of the quarter). The company barely beat earnings projections ($1.67 per share earned versus $1.66 per share estimated) and barely missed revenue projections ($46.9 billion generated versus $46.94 billion estimated). Some Apple evangelists hate the new Macbook Pros and are gassing up the Microsoft Surface Studio instead. In other words, Apple is doomed until the next time the company’s stock hits an all-time high.
Apple’s loss should be Samsung’s gain. Except Samsung released a phone that doubles as a grenade. The electronics giant’s operating profit declined 30 percent year-over-year in part thanks to its Galaxy Note debacle, which is expected to cost $9.5 billion in lost sales overall. You were supposed to bring balance to the smartphone market, Samsung, not leave it in darkness.
Like Apple, Twitter had a decent financial quarter marred by big questions about the company’s future. The social network posted earnings of 13 cents per share and revenue of $616 million, beating estimates of 9 cents per share and $606 million. But Twitter also announced that it plans to lay off 9 percent of its workforce and it has seemingly failed to attract a suitor after Salesforce, Alphabet, and Disney were all rumored to be interested in acquiring it before deciding against it. Hard to label you a winner when no one wants to take you to prom (in this case, prom costs more than $16 billion).
It was supposed to be dead, but Zombie Yahoo revealed that it let hackers steal all our early-2000s email logins and reportedly scanned all incoming emails for a “computer signature” as part of a terrorist investigation by the FBI. These untimely disclosures have forced Verizon to reevaluate its planned acquisition of Yahoo and led the troubled company to bail out of its quarterly conference call with investors. Forget the dollars and cents: This is a strategic L through and through.