Earnings Show Verizon Strength, Google Weakness

By Doug Barney July 19, 2013

Earnings time is always interesting. There is no PR fluff or marketing flack. Just pure numbers -- the rubber meets the road with some companies peeling out and others skidding off the road.

This week showed that communications is hot, particularly mobile. The proof is Verizon’s second quarter, with net income up a rather staggering 23.1 percent compared to a year ago. Verizon revenue, meanwhile, rose a healthy 4.3 percent to a tad over $28 billion.

With this kind of wind in its sales, it’s no wonder Verizon promises to increase its capital spending this year to $16.4 billion.

Image via Shutterstock

Nokia Still Struggles

While Verizon soared, handset maker Nokia continues to struggle. Nokia earnings remain in negative territory as sales collapsed nearly 25 percent. Sales hit $7.5 billion for the quarter, but losses weighed in at $150 million.

Nokia is trying to reinvent itself around Windows phones, which are just now seeing some momentum. Former Microsoft exec and current Nokia CEO Stephen Elop believe he made the right call, arguing “Our mobile phones business unit started to demonstrate signs of recovery in the latter part of the second quarter following a difficult start to the year.”

Google and Microsoft Let Wall Street Down

Google and Microsoft compete more and more, and their product lines with search, development, cloud and applications seem ever similar. And in Wall Street’s eyes, the latest results are too similar, Google and Microsoft earnings were both disappointments.

This quarter, the search giant earned $3.2 billion, which while up 16 percent compared to last year, left Wall Street wanting more. Revenue, likewise, rose nearly 20 percent to just over $14 billion, but again was less than expected.

Microsoft last week announced a major reorganization centered on the concept of ‘One Microsoft’. This new approach is not off to the best start as yesterday Microsoft missed its expected numbers. So did Google on its earnings but they implications for Google are not nearly as bad as for Microsoft.

The company reported increased revenue for the fourth quarter, nearly $20 billion, but analysts expected the company to bring in closer to $21 billion. Despite letting down analysts, the numbers were good, up some 10 percent compared to a year ago. While business was generally good, Surface was a disappointment. In fact, Microsoft recently cut prices for the device by $150.

Yahoo! Says Yahoo

Yahoo hasn’t has a good last few years. Google is cleaning its clock and Yahoo has been searching for meaning and relevance. But a search/ad deal with Microsoft, and some fresh management, paid dividends according to its latest Q2 2013 earnings report. At the very least the company looks to be stabilizing. Revenue went up, rather than down, rising 7 percent to $1.35 billion. EBITDA, unfortunately, fell the same 7 percent to $369 million, still a tidy profit.

Relatively recently ensconced CEO Marissa Mayer was pleased, but not ecstatic. "I'm encouraged by Yahoo's performance in the second quarter. Our business saw continued stability, and we launched more products than ever before, introducing a significant new product almost every week," Mayer said. "From the new Yahoo News, the new Yahoo Sports app, the redesigned Yahoo search, the new Flickr, the new Yahoo Mail for tablet, the Yahoo Weather app, our new Yahoo app with Summly - this quarter drove tremendous improvements in our product line.”

Yahoo isn’t just counting on organic growth, but it on a bit of a buying spree. “During the second quarter, Yahoo made nine acquisitions to strengthen its products, content offerings, core technology and talent — including Summly, Astrid, Milewise, Loki Studios, Go Poll Go, PlayerScale, Rondee, Ghostbird Software and Tumblr. Tumblr is one of the fastest-growing media networks in the world. Its tremendous popularity and engagement among creators, curators and audiences of all ages brings a significant community of users to the Yahoo Network,” the company said. “The combination of Tumblr and Yahoo is expected to grow Yahoo!'s audience to more than one billion monthly visitors.”

Edited by Rachel Ramsey

TechZone360 Editor at Large

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