Wall Street Lower on Euro Zone Worries; Microsoft Swings to Loss

Arthi Gupta
20 Jul, 2012
New York City

U.S. indexes edged lower as euro zone worries mounted. eBay trimmed earnings outlook on $3 billion debt offering impact and Microsoft swung to quarterly loss on hefty goodwill impairment charges.

[R]9:40 AM New York – U.S. indexes edged lower as euro zone worries mounted. eBay trimmed earnings outlook on $3 billion debt offering impact and Microsoft swung to quarterly loss on hefty goodwill impairment charges.[/R]

Stocks on Wall Street traded lower at the opening after the euro declined and worries mounted about the euro zone finances. Spain’s Valencia region said it will seek help from central government to repay its debt.

In earnings news, Microsoft swung to a fourth quarter loss, hurt mainly by a hefty impairment charge related to its online services business and the 2007 acquisition of aQuantive Inc. However, the company reaffirmed its fiscal 2013 operating expense guidance of $30.3 billion to $30.9 billion.

Google said quarterly profit increased from a year ago and eBay updated its third quarter and full year earnings per diluted share guidance to account for the expected impact of its $3 billion debt offering.

European indexes turned lower after Spain’s Valencia region said it will seek help from the central government to repay debt. Euro-zone finance ministers’ conference call is expected to approve the €100 billion aid plan to Spanish banks.

Spain will receive the first disbursement of €30 billion by the end of this month after the memorandum of understanding is adopted. However, Spanish banks need up to €62 billion to shore up their banking sector.

Asian markets closed lower on downbeat global economic data despite strong corporate earnings in Europe and the U.S.

China asked its local governments to prevent property prices from rebounding, the official Xinhua News Agency reported.

Earnings Review

eBay, Inc. ((EBAY)), the online auctioneer trimmed its earnings guidance for the third quarter and for the full-year 2012. The company estimated quarterly earnings per diluted share in the range of 41 cents to 43 cents and for the full year 2012 estimates earnings per diluted share in the range of $1.89 to $1.94.

General Electric Company ((GE)), the diversified conglomerate said second quarter revenues increased 2% to $36.5 billion from the quarter a year ago. Operating earnings in the quarter climbed 6.7% to $4 billion or 38 cents per diluted share compared with $3.75 billion or 34 cents per share in the previous year.

Google Inc. ((GOOG)), the Internet services provider said second quarter consolidated revenues surged 35% to $12.21 billion compared to the year ago quarter. Net income in the quarter rose 11.2% to $2.79 billion or $8.42 per diluted share compared to $2.51 billion or $7.68 per share last year.

Microsoft Corporation ((MSFT)), the software company said fourth quarter revenue rose 4% to $18.06 billion from the same quarter last year. Net loss in the quarter swung to $492 million or 6 cents per diluted share compared to net income of $5.87 billion or 69 cents per share for the year-ago quarter.

For fiscal year 2012, the company’s revenue, operating income, and earnings per share were $73.72 billion, $21.76 billion, and $2 a share.

Microsoft shipped 1.1 million Xbox 360 consoles during the fourth quarter, down from 1.7 million during the same period last year.

Schlumberger Limited ((SLB)), the oilfield-services provider stated second quarter revenues climbed 16.2% to $10.45 billion from the quarter a year ago. Net income in the quarter climbed 4.8% to $1.4 billion or $1.05 per diluted share from $1.34 billion or $0.98 per share a year-ago quarter.