Google shares slump, pull market lower

The search giant's results -- released early -- disappoint and slam tech shares. Microsoft's earnings don't excite. Investors hate Chipotle's results. Travelers and Verizon earnings impress. Gold and oil slip.

By Charley Blaine Oct 18, 2012 1:17PM
Charley BlaineUpdated: 7:37 p.m. ET

Tech stocks took a dive today after earnings from Internet search giant Google (GOOG) were released early -- and disappointed investors.

Google shares slumped $68.10 to $687.39 before trading was halted and closed down $60.49 to $695. (Trading resumed at 3:20 p.m. ET.) Earnings of $9.03 a share (after one-time charges) missed the Street estimate by $1.62 and were down from $9.72 a year ago. Revenue of $11.33 billion, up 45% from a year ago, nonetheless missed the consensus estimate of $11.86 billion.

Google's miss was so bad that CEO Larry Page, his voice sounding strained, began the company's conference call by apologizing for the "scramble" in the afternoon. The scramble  pulled shares of Facebook (FB), Yelp (YELP), Groupon (GRPN) and Zynga (ZNGA) lower. Tech shares were already weak because of a decline in shares of Apple (AAPL).

Microsoft (MSFT) was lower in regular trading and fell further after hours after its fiscal-first-quarter earnings were released. Shares of Chipotle Mexican Grill (CMG) fell more than 10% after hours as results disappointed investors. (Microsoft publishes MSN Money.)

The damage from Google was largely confined to tech land. The Nasdaq Composite Index ($COMPX) closed down 31 points to 3,073. The Nasdaq-100 Index ($NDX) tumbled 31 points to 2,744. Both moved up from lows when Google trading resumed. But the Dow Jones industrials ($INDU) were off just 8 points to 13,549. Right after the Google news, the blue chips had been down as many as 31 points. The Standard & Poor's 500 Index ($INX) fell 4 points to 1,457. Google is an S&P 500 component, but isn't in the Dow.

Article continues below.
Gold (-GC) and oil prices were lower today as the dollar rose against the euro. Gold closed down $8.30 to $1,744.70 an ounce. Crude oil (-CL) in New York dropped 2 cents to $92.10 a barrel. Brent crude, the benchmark North Sea crude that has the most influence on gasoline prices, was off 81 cents to $112.41 a barrel.

The national average retail price of gasoline was $3.737 a gallon, according to AAA's Daily Fuel Gauge Report. That's down from Wednesday's $3.773 and down 1.9% this week.

The 10-year Treasury yield rose to 1.826% from Wednesday's 1.811% and 1.663% on Oct. 12.

Friday's earnings include results from General Electric (GE), McDonald's (MCD) and Baker
Hughes
(BHI). The National Association of Realtors reports on September existing-home sales.

Futures trading suggests a flat open for stocks. That probably reflects investors' waiting for the outcome of the election and any negotiations about the fiscal cliff -- the combination of required spending cuts and automatic tax increases if Congress and the White House can't agree on a spending plan.

Microsoft shares fall on earnings
Microsoft shares were down 45 cents, or 1.5%, to $29.05 after hours. The stock had closed at $29.50, down 9 cents.

Revenue of $16.01 billion and earnings of 53 cents a share using generally accepted accounting were off 8% and 22%, respectively, from a year ago. Wall Street was expecting 56 cents and revenue of $16.42 billion.

When deferred revenue for pre-sales of the new Windows 8 operating system are added -- about $1.36 billion -- the company earned 65 cents a share on revenue of $17.4 billion. Under that scenario, earning were down 4% from a year ago. Revenue was even with a year ago.

Revenue from the Windows division fell 33.4% to $3.24 billion from a year ago. Operating profit for the business was off nearly 50% to $1.65 billion. Much of the decline was believed to be customers waiting for Windows 8, but the slowdown in personal computer sales also was a factor.

Microsoft's other businesses mostly saw revenue gains. The entertainment and devices business saw operating profit fall 94%. The online business group, which includes Bing and the MSN portfolio of websites enjoyed an 8.7% revenue gain to $697 million. Its loss fell 29% to $364 million.

Chipotle growth slow; stock is punished
Chipotle was punished basically because its same-store sales growth fell to 4.8% in the third quarter, the slowest growth in 10 quarters. Most of the other quarters showed growth of 10% a year or more. Analysts estimated an increase of 4.9%, according to Bloomberg News. 

The company earned $72.3 million, or $2.27 a share, in the quarter, up 20% from a year ago. Analysts had expected $2.29 a share in earnings. Revenue was up 18% to $700.5 million.

The company expects same-store sales to be flat or grow a little.

Chipotle fell $29.83 to $256.10 after a fall of $4.07 to $285.93. If the after-hours price holds through Friday, the stock will have declined more than 40% since mid-April.

EBay, Lam Research, Green Mountain Coffee can't carry the Nasdaq
The Nasdaq-100's decline came despite sizable gains for Lam Research (LRCX), Green Mountain Coffee Roasters (GMCR) and eBay (EBAY). EBay was up $2.63 to $50.83 after its earnings, reported late Wednesday, cheered investors.

Lam Research was the top S&P 500 and Nasdaq-100 performer. EBay was second on the Nasdaq-100 and third among the S&P 500 stocks.

Apple fell $11.97 to $632.64, its first decline after two days of gains. The stock is down 5% this month, although it is still up nearly 58% this year.

IBM (IBM) was the Dow loser, down $5.67 to $194.96. The shares are down 7.6% in the two days since reporting earnings Tuesday that disappointed investors -- subtracting 123 points from the Dow in the process.

Advertising pressures weigh on Google's miss
Google results were released, apparently by mistake, in a Securities and Exchange Commission filing. Google blamed RR Donnelley (RRD). A Donnelley subsidiary made the early SEC filing.

RR Donnelley, one of the nation's largest printers of everything from telephone books and magazines to fliers and financial documents, was off 10 cents to $10.76.

The release includes the phrase "PENDING LARRY QUOTE" in a spot for a to-be-added quote from CEO Larry Page. The company had expected to release its report after today's close.

The problem with the earnings wasn't just the miss. Cost per click -- a key measurement of the company's revenue growth -- fell 3% in the third quarter from the second. And it was off 15% from the 2011 third quarter.

Advertising revenue overall was up 16% from a year ago. Google generally pulls in less revenue from the advertising placed on mobile devices than from ads that appear on traditional personal computers, The Wall Street Journal noted. That's helped create a downward trend for advertiser prices on Google, which has caused some concern. It's also been a worry for Facebook.

The rest of the revenue gain over a year ago came from Motorola. A stronger dollar through the quarter depressed reported international revenue by $136 million.  About 53% of revenue comes from outside the United States, down slightly from a year ago.

Revenue from its Motorola Mobility business was down 21% to $2.58 billion from a year ago. The business reported a loss of $527 million under generally accepted accounting. That includes $349 million in restructuring charges. The loss drops to $151 million under non-GAAP rules.

Energy prices -- New York close



Thur.     Wed.

Month chg.

YTD chg.
Crude oil (-CL)

$92.10

$92.12

-0.10%

-6.81%
(per barrel)











Heating oil (-HO)

$3.1866

$3.1894

0.87%

9.35%
(per gallon)











Natural gas (-NG)

$3.5870

$3.4700

8.04%

20.01%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.7269

$2.7642

-6.62%

2.62%
(per gallon)











Brent crude 

$112.39

$113.22

-1.95%

4.67%
(per barrel)











Retail gasoline

$3.7370

$3.7560

-1.32%

14.07%
(per gallon; AAA)












Jobless claims jump
The market opened lower after initial jobless claims jumped to a seasonally adjusted 388,000 in the latest week from 342,000 a week earlier. The big swing is due to incomplete processing of claims in California two weeks ago, resulting in a big drop in reported claims. And then the data were updated for the latest week.

A boost to the market -- before the Google earnings -- was the Philly Fed Index, the measure of manufacturing activity in the region served by the Federal Reserve Bank of Philadelphia.

The index rose to 5.7 for October, compared with expectations for a gain to 1.9. The index was at -1.9 in September. In addition, The Conference Board’s index of leading economic indicators climbed 0.6% in September.

Homebuilding shares and shares of companies tied to housing were mostly higher. One reason: Executives at USG (USG), one of the largest makers of wallboard, said they worried that labor shortages may be a big headache as the nascent housing recovery moves into 2013. USG shares fell 10% after the company released its third-quarter earnings.

But the shares were up $1.94 to $24.67.

Travelers, Verizon earnings impress
Travelers (TRV) earned $864 million, or $2.21 a share, up from $333 million, or 79 cents a share, a year ago -- and well ahead of the consensus forecast. Revenue was up 2% to $6.51 billion. A big drop in catastrophe losses helped the bottom line. Shares jumped $2.56 to $73.94. The stock was the top performer among the 30 Dow stocks.

Verizon Communications
(VZ) earned $1.59 billion, or 56 cents a share,  in the third quarter, up from $1.38 billion, or 49 cents, as year ago. The telecom carrier’s revenue rose nearly 4% to $29.01 billion. Excluding one-time charges, earnings rose 14% to 64 cents a share. Verizon reported that wireless revenue was a big profit driver, allaying worries that heavy smartphone usage would hit profits. Shares rose $1.06 to $45.78. The stock was the second-best Dow performer.

Morgan Stanley
(MS) reported a third-quarter loss of slightly more than $1 billion, or 55 cents a share, down from earnings of $2.15 billion, or $1.15 a share a year ago. Revenue fell to $5.29 billion from $9.81 billion. Excluding a debt valuation adjustment, quarterly revenue would have been $7.6 billion and income from continuing operations would have been 28 cents a share, Morgan Stanley said. Analysts had been looking for adjusted earnings of 24 cents a share on revenue of $6.36 billion. Shares were off 70 cents to $17.79.

Short hits from the markets -- New York close



Thur.

Wed.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.1000%

0.110%

11.11%

900.00%
5-year Treasury note 

0.780%

0.772%

23.81%

-6.02%
10-year Treasury note

1.826%

1.811%

11.55%

-2.41%
30-year Treasury bond

3.007%

2.988%

-0.82%

4.08%
Currencies











U.S. Dollar Index

79.425

79.059

-0.75%

-1.36%
British pound

1.6059

1.6147

-0.63%

3.36%
(in U.S. $)

 








U.S. $ in pounds

£0.623

£0.619

0.63%

-3.25%
Euro in dollars

$1.31

$1.31

1.65%

0.84%
(in U.S. $)

 








U.S. $ in euros

€ 0.765

€ 0.762

-1.62%

-0.83%
U.S. $ in yen 

79.43

79.05

1.87%

3.02%
U.S. $ in Chinese

6.27

6.25

-0.12%

-0.83%
yuan











Canada dollar

$0.000

$1.023

-100.00%

-100.00%
(in U.S. $)

 








U.S. dollar 

$0.986

$0.977

0.25%

-3.34%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,744.70

$1,753.000

-1.65%

11.35%
(per troy ounce)

 








Copper (-HG)

$3.743

$3.748

-0.40%

8.93%
(per pound)

 








Silver (-SI)

$32.8680

$33.232

-4.94%

17.74%
(per troy ounce)

 








Wheat (-ZW)

$8.6850

$8.563

-3.77%

33.05%
(per bushel)

 








Corn (-ZC)

$7.6075

$7.455

0.60%

17.67%
(per bushel)

 








Cotton 

$0.7772

$0.779

10.01%

-15.23%
(per pound)

 








Coffee

$1.5860

$1.615

-8.59%

-30.94%
(per pound)

 








Crude oil (-CL)

$92.10

$92.120

-0.10%

-6.81%
(per barrel)










 

291Comments
Oct 18, 2012 1:36PM
avatar
MSN doing the best they can to put lipstick on the Obama pig - "Presidents can't control gas prices" is the big headline for today.  Don't recall seeing that one a few years ago....

Northeastern University just released a study that 53% of new college grads are unemployed or underemployed - must be too many art history majors, couldn't possibly be the crappy economy...

Student loan debt at record levels - $26k per student, up 5% from a year ago.

Lots comments about Anne Romney's dress at the debate costing $1600.  No mention at all of Michelle's dress costing more than $3k.  Probably just an innocent oversight.

Gallup has Romney leading 51-45, but that story doesn't seem to be plastered all over the MSM.

Oh well, doesn't matter who wins next month anyway, the Fed will still be there to stuff another $40 billion into the economy and as long as stocks go up, no one cares, right?  By the way, only 55 million shares traded on the Dow in the first 4 hours of trading.  Remember the good old days, when Buffett would fart and 50 million shares would come shooting out?  Back then we'd see a billion shares trade hands just about everyday - not anymore.  Apparently the economy is so strong, no one wants to trade stocks anymore.

Oct 18, 2012 1:47PM
avatar
JOBS REPORT................the reality of what is to come if Obama is re-elected!! GO ROMNEY!
Oct 18, 2012 1:56PM
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If you voted for odumbo  we can forgive you    He is slick   puts willie to shame   but if you vote for him this time    you deserve what you get.

Oct 18, 2012 2:14PM
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Unemployment jumps but the lead story on MSN is "President Can't Control Gas Prices".

Can you be any more in the bag for Obama? Geez, at least don't be so obvious. 
Oct 18, 2012 1:43PM
avatar
The $38,000,000,000.00 spent on green energy could have paid for the full conversion of 4,750,000 vehicles to compressed natural gas, providing more jobs than the 3500 Green jobs, and moved the US closer to energy independence. Taking it one step further, if you add up all the tax breaks, subsidies, money given to GM to build the failed Volt, and the ethanol we wouldn't need anymore, we could have allocated close to 90,000,000,000.00 for CNG conversions. That would have converted about 11,500,000 vehicles and made much of our oil imports unnecessary. Of course 3 billion of that would have to be put into new fueling station construction and associated infrastructure. Who knows, maybe food prices would go down, we could feed our cattle something other than candy, and solve the trade deficit at the same time by exporting a lot more oil. There are better policy decisions that can be made if they are well planned out. We can't stand another 4 years of failed policies leaving nothing for our children but debt.
Oct 18, 2012 2:03PM
avatar
V_L

You and I actually have something in common. Getting rid of the Federal Reserve is needed. That is one reason, among many, why I voted for Ron Paul in 2008 (write in) and voted for him in the Primary this year.

Why won't Harry Reid let us look at their books? It's our country, we should be able to AT LEAST look at what they are doing. What harm would it do for them to open their books?
Oct 18, 2012 1:32PM
avatar
Good to see Apple lose the dumbest lawsuit I have seen in a while over in Europe.  Turns out a rectangular tablet with rounded corners was a shape not invented by Apple.  Go Samsung!  Wonder if the Microsoft tablet will be a total mess or will Apple finally have a competitor in the tablet market they won't be able to outsell 20 to 1?
Oct 18, 2012 2:09PM
avatar

OLDCHUM,

Obama does not want any cheap fuels competing with his bundlers "green" company investments. 

NG is obviously a great alternative to oil and coal and we have a butt load of it. Yet, we are being told it's off limits because some birds might get stressed. 
Oct 18, 2012 2:11PM
avatar

Oh well.  Said probably too much as concerns this guy in office.  Nah, he is not even remotely close to being a President...he is just a Chicago hood and more will come out.  One might check out his wife as a lawyer then in Chicago...could expound on this but will not.  All this come out.  Reiterative...sure. There are many looking for a place to hide right now. Denial is great ...but, that time is coming to 'foreclosure'. Nothing has improved economically, period.  All the numbers are fabricated. 

 

Do as you will and that is what you can do...will it make a difference in who is elected?  I doubt it. But, anything could not be worse than this. It is time for change up and down the line in restoring...what is left.    

Oct 18, 2012 2:46PM
avatar
Jeff R said:
"Now libtards in Kalifornia are trying to tell people they cannot smoke in their own fricken house.
Liberals, the party of personal freedoms......BULL**​*T"

Not entirely true!
It's fine, if it's POT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Jeezzzzzzz no wonder............................
Oct 18, 2012 2:19PM
avatar
The entire market is overpriced.  They've been pumping up stock prices across the board into the earnings reports in hopes of sucking people in.  Get out while you still can and don't come back until the Feds and worlwide central bankers pull their operation twist funds that they started pumping in last November.
Oct 18, 2012 2:33PM
avatar
Libtards love to spout off about tolerance and they are very tolerant, as long you subscribe 100% to their view points and don't waiver. No alternates accepted on the left side of the the aisle.

Ever heard of a pro-life democrat? How about a democrat that demands responsibility for one's own self? Pro-2nd Amendment? 

Didn't think so.




Oct 18, 2012 1:59PM
avatar
To dismay fears about CNG, this is from the wise gas website.

The CNG Cylinder, which stores the compressed natural gas, is one of the safest factors of using CNG as an alternative fuel.

The idea of natural gas being compressed to 3,600 psi and stored in a vehicle tends to frighten some people away. They're afraid of rupture or explosion, when in fact, the likelihood of either of those occurring is far slimmer with a CNG Cylinder than it would be with a gasoline or diesel tank.

Wise Gas, Inc. only works with approved CNG-cylinders. Our team is willing to inspect unapproved cylinders for consideration of pursuing approval certification, however, we will not install, repair or provide fuel to any vehicle using an unapproved cylinder for safety and legal reasons.

There is nothing scary about CNG or the cylinders that they are stored in. The fact is that CNG cylinders are put through exhaustive and extreme tests which include firing bullets at the canister, roasting it over a roaring bonfire and impact tests in which a crane drops the cylinder at multiple impact points. Compare this to the 1/16th of an inch thick, or plastic, gasoline tanks in today's vehicles containing a much more flammable and toxic substance.

Oct 18, 2012 3:25PM
avatar
Here we go again MSN trying to protect this President, All I have heard the last few days is President Cool out on the stump say Romney is lying,  he won't tell you his plan  Well Mr President I have still not heard yours , you say you are the President and the buck stops with you, Then you are the reason welfare is the highest expenditure the government now has even higher than the military, Students college students are more in debt than they have ever been, the unemployment numbers were the highest today than they have been in 4 months, over 50% of Americans are now on some type of government assistance. So can you again tell us why is is you should be elected
for another 4 years, would love to hear that, then we have Bosnia and the death of 4 Americans A ambassador and 3 of our finest service people, and  you are covering it up, so we won't think we are not as safe as before you took office.

Oct 18, 2012 3:41PM
avatar
The latest figures are out! The total number of employees employers collected payroll taxes for has dropped by 1,395,000 since Obama took office. But wait, how could 5,000,000 jobs have been created? Must be new math!!!
Oct 18, 2012 2:37PM
avatar
I wonder,

IF, by an outside chance, Obama gets re elected. When 4 years down the road things are markedly worse, who will they blame then? 
avatar
So, what if Romney wins ................... Since everything that has happened in the last 4 years is still Bush's fault,  .................................................................................................. does that mean that: THERE NEVER WAS AN OBAMA ADMINISTRATION?
Oct 18, 2012 3:39PM
avatar
You can't fix STUPID, but you can Vote Obama OUT...  We don't have to have an arrogant imbecile as our President.  We can Vote him out in 19 days...
Oct 18, 2012 3:42PM
avatar
www.realclearpolitics.com

Romney 206
Obama 201

131 toss ups.

Romney leads in Florida and closing in Michigan, Iowa, Ohio, Wisconsin and NJ.





Oct 18, 2012 4:01PM
avatar
"jobless claims jumped to a seasonally adjusted 388,000" 1) I did not hear this mentioned in any iof tdays speeches by by obama, biden oir clinton - curious after the victory laps taken last week; 2) MSN business has more excuses for the failures of this admin than bho himself.
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