Google, Microsoft Fall, Citi Rises

123jump.com Staff
18 Jul, 2008
New York City

U.S. stocks traded mixed with tech stocks trending lower and select financials rising. Google fell 8% after it reported 39% rise in sales and 35% increase in earnings. Microsoft fell 7% after it reported sales rise of 18% and earnings gain of 40% to $17.7 billion from a year ago. For the fiscal year earnings rose 26% to $17.7 billion or $1.87 per share. European markets closed up 1.5%.

[R]11:30AM New York – U.S. market averages were on the decline on weak tech stocks and fall in Google and Microsoft after earnings. IBM rose. Citigroup rose and Merrill Lynch fell on earnings.[/R]

Tech stocks led the market averages lower in the morning trading despite earnings rise at Microsoft, Google and IBM. Google and Microsoft fell after they missed earnings estimates of analysts. Citigroup rose after it reported a loss of $2.5 billion on a write down of $12 billion in asset.

Fannie Mae and Freddie Mac rose and under intense investors scrutiny. The latest U.S. administration plan suggests that Fannie Mae may be allowed to raise $10 billion in preferred stock sale. Freddie Mac insisted that it does not need capital for now. Both government sponsored lenders are operating with less than 2% capital base, substantially lower than required 8% or better for most commercial banks.

Google Inc. second quarter revenues increased 39% to $5.37 billion from $3.87 billion before deducting traffic acquisitions costs.

Net income increase 35% to $1.25 billion or $3.92 per share compared to net income of $925 million, or $2.93 per share for the same quarter of 2007.

Google-owned sites generated 66% revenues of $3.53 billion of total revenues in the second quarter of 2008 increase over 42% of $2.49 billion second quarter of 2007. Google’s partner sites revenues through AdSense programs increased 31% to $1.66 billion, increased of 22% over network revenues of $1.35 billion for the second quarter of 2007.

More than half the revenues or $2.80 billion, 52% compared to 48% from the second quarter of 2007 derived from international markets helping to offset relative weakness in the U.S markets.

Traffic Acquisition Costs revenues shared with Google’s partners declined to $1.47 billion in the second quarter of 2008. $1.32 billion, a. major part of TAC expense was paid to AdSense partners. Other cost of revenues increased to $674 million.

Google ((GOOG)) dropped $41.79 to $492.34 in the morning. Google in the last one year traded as high as $747.24 in November 2007 and as low as $412.11 in March 2008. Based on the yesterday''s closing price the company has a market cap of $ 167.55 billion.

Microsoft Corporation reported revenue for the fourth quarter increased 18% to $15.84 billion compared to $13.4 billion same period of the prior year. Revenue For the fiscal year ended June 30, 2008 increased 18% to $60.42 billion for the fiscal year end of 2007.

Net income for the fourth quarter increased to $4.3 billion or 46 cents per share compared to $3.0 billion or 31 cents per share for the year ago. Net income for the fiscal year rose 26% to $17.7 billion or $1.87 per diluted share compared to $14.1 billion or $1.42 per diluted share in fiscal of 2007.

Microsoft incurred $1.8 billion of legal charges during the year primarily related to the European Commission fine of $1.4 billion or €899 million. The decreased Xbox 360 costs reflect the $1.1 billion charge in the fourth quarter on higher warranty costs for Xbox 360 partially offset by higher unit sales.

Microsoft expects revenue for the first quarter to be in the range of $14.7 billion to $14.9 billion. Operating income expected to be in the range of $5.9 billion to $6.0 billion and diluted earnings per share are expected to be $0.47 or $0.48.

Full fiscal year 2009 revenue is estimated between $67.3 billion to $68.1 billion. Operating income is expected between $26.3 billion and $26.9 billion and diluted earnings per share are expected to between $2.12 and $2.18.

Microsoft fell $1.92 to $25.60 in the morning trading. Microsoft Corporation ((MSFT)) in the last one year traded as high as $37.50 in November 2007 and as low as $24.87 in July 2008. Based on the yesterday''s closing price the company has a market cap of $ 256.30 billion.


Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 84.25 or 0.65% to 12,803.70, Hang Seng index in Hong Kong increased 139.47 or 0.64% closed to 21,874.19. ASX 200 index in Australia decreased 60.60 or 1.24% to close 4,840.40. The KL Composite index in Malaysia decreased 16.13 or 1.44% closed to 1,105.04.

The Kospi Index in South Korea decreased 15.57 or 1.02% to close at 1,509.99, SET index in Thailand closed lower 5.45 or 0.81% to 664.52 and JSE Index in Indonesia decreased 26.58 or 1.23% to 2,141.14. The Sensex index in India increased 523.55 or 3.99% to 13,635.40.