Google shares slump after results disappoint

Updated: 7:52 p.m. ET

Google (GOOG) shares were down more than 8% after hours as the company missed Street estimates on its fourth-quarter results.

But Intel (INTC), IBM (IBM) and Microsoft (MSFT) shares were higher after fourth-quarter results were either better than expected or in line with analyst estimates.

The earnings came out after the close on a day when the market edged higher for the third day in a row. Tech shares were the major catalyst. So was news that jobless claims fell to levels last seen in April 2008. Bank of America's (BAC) return to profitability from a year ago helped the financial sector lead the overall market. American Express (AXP) shares, however, moved lower after fourth-quarter revenue disappointed investors.

The Nasdaq-100 ($NDX) and Nasdaq Composite ($COMPX) indexes were the market leaders today. The Dow Jones industrials ($INDU) and the S&P 500 were only modestly higher at best. Crude oil (-CL) in New York had traded above $101 a barrel but fell back. Gold (-GC) was off slightly.

The Dow closed up 45 points to 12,624. The S&P 500 was up 6 points to 1,315. The Nasdaq was up 19 points to 2,788, while the Nasdaq-100 added 16 points to 2,442.

Article continues below.
Futures trading suggests an open that's flat to down slightly on Friday. General Electric (GE) and oil-services giant Schlumberger (SLB) are the top earnings reports. The National Association of Realtors reports on December existing-home sales.

Cost per click falls at Google
Google said it earned $9.50 a share, up from $8.75 a share a year ago. Revenue after payments to advertising partners was $8.13 billion; the consensus estimate had been $8.4 billion. 

Shares were down $55.82, or 8.9%, to $582.75 after hours. They closed at $639.57, up $6.66, in regular trading. Revenue had exceeded Wall Street's revenue targets for the past eight quarters.

One reason for the miss was that the cost of paid clicks -- what Google charges advertisers and a key revenue metric -- fell 8%. Analysts had expected a 7% gain. Operating expenses rose to $3.38 billion, or 32% of revenue, from 30% of revenue a year ago.

The company had $44.6 billion in cash and short-term investments as of Dec. 31.

IBM says software and services are strong
IBM said it had earned $4.62 a share, up from $4.18 a year ago. Revenue was up 1.7% to $29.5 billion from $29 billion a year ago. The company said it expects to earn $14.85 a share in 2012. Wall Street was looking for $14.82.

Shares were up $4.77, or 2.6%, to $185.29 after hours. They had closed down 55 cents to $180.52 in regular trading.

IBM said higher software and services revenue offset a decline in its hardware business. Big Blue said revenue in the Americas improved 3%. Total sales in Europe, the Middle East and Africa rose 1%. That reflects the turmoil Europe has struggled with over the last year.

While total revenue in Asia increased 2%, a rising dollar turned that gain into a 1% decline.

Intel will boost capital spending 14% this year
Intel said it earned 64 cents a share, up from 59 cents a year ago and 3 cents ahead of estimates. Revenue grew 20.7% to $13.9 billion.

Shares were up 25 cents to $25.88 after rising 24 cents to $25.63 in regular trading.

Sales in the company's PC client group, which makes up about two-thirds of the company's revenue, rose 17% in the quarter. Data-center revenue increased 7.7%.

Intel's other architecture group posted 35% higher revenue, though sales of the division's Atom microprocessor and chipset still fell 57%.

The company expects first-quarter revenue of $12.3 billion to $13.3 billion and will grow "in the high single digits" for the year. More important, Intel plans to spend 12% more on research and development for the year, or a total of $18.3 billion.

Microsoft's Windows business is still pressured
Microsoft earned 78 cents a share, up from 77 cents a year ago in the fiscal second quarter. The Street had expected 76 cents. Revenue grew 5% to $20.89 billion. The Street had expected $20.94. (Microsoft publishes MSN Money.)

Most businesses did fairly well, especially its entertainment and servers and tools businesses. But the company's  Windows and Windows Live Division posted revenue of $4.74 billion, down 6% from a year ago. That reflects the weakness in the personal-computer business. It may also reflect some reluctance to buy new machines before the launch of its Windows 8 operating system.

Still, Microsoft has sold over 525 million Windows 7 licenses since launch.

Shares were up 72 cents, or 2.6%, to $28.84 after slipping 11 cents to $28.12 in regular trading.

Separately, American Express (AXP) shares were off $1.05, or 2.1% to $49.90. The company reported a 12% profit gain  to $1.12 billion shares, with earnings at $1.01 a share, up from 88 cents a year ago. But the company seemed to be penalized when revenue came to $7.74 billion. Analysts had expected $7.92 billion.

F5 is a big winner
Networking company F5 Networks (FFIV), up $11.54 to $120, was the top performer in the Standard & Poor's 500 Index ($INX) and the Nasdaq-100 Index ($NDX) after F5 reported stronger-than-expect​edfiscal-first-quarter​ earnings. Netapp (NTAP) was second in both indexes, up $2.86 to $37.51, amid speculation that it is a takeover target.

Meanwhile, the Dow Jones Transportation Average ($DJT) was up a healthy 84 points to 5,302 after railroad giant Union Pacific (UNP) reported a 24% increase in earnings from a year ago. The shares hit an all-time high of $114.82 before falling back to $112.18, up $2.36.

The company said business was strong in all of its markets.

Crude oil and gold drift lower
Crude oil fell 15 cents to $100.44 a barrel. Brent crude was up slightly at $110.72 a barrel.

Gold settled down $5.40 to $1654.50 an ounce. Silver (-SI) settled down 3.4 cents to  $30.509 an ounce. Copper (-HG) closed up 4.8 cents to $3.8005 a pound.

Interest rates were higher with the 10-year Treasury yield reaching 1.972% from Wednesday's 1.897%. The dollar was lower against major currencies.

Energy prices -- New York close
			Thur.			Wed.			Month chg.			YTD chg.
Crude oil (-CL)			$100.39			$100.59			1.58%			1.58%
(per barrel)
Heating oil (-HO)			$3.0360			$3.0134			4.18%			4.18%
(per gallon)
Natural gas (-NG)			$2.3220			$2.4720			-22.32%			-22.32%
(per mil. BTU)
Unleaded gasoline (-RB)			$2.8228			$2.8292			6.22%			6.22%
(per gallon)
Brent crude			$111.55			$110.66			3.88%			3.88%
(per barrel)
Retail gasoline			$3.3780			$3.3780			3.33%			3.33%
(per gallon; AAA)

Bank of America shares rise on earnings
Bank of America shares were up 16 cents to $6.96. The bank, which lost its status as the largest U.S. lender by assets to JPMorgan Chase (JPM) last quarter, reported a fourth-quarter profit of $2 billion, or 15 cents per share, with revenue of $25.1 billion. Analysts had expected earnings of 15 cents.

The bank had lost $1.2 billion, or 16 cents a share, a year ago.

Morgan Stanley (MS) shares jumped 93 cents to $18.28 after reporting a fourth-quarter loss of 14 cents per share on revenue of $5.7 billion. Analysts had expected a loss of 57 cents on revenue of $5.57 billion.

An improving jobs picture
The jobless claims report generated a lot of interest for good reason. For the week ended Jan. 14, claims fell to a seasonally adjusted 352,000, the lowest level since April 2008. If you look at a four-week moving average, which smooths out week-to-week volatility, this week's level of 379,000 is the lowest since June 2008.

The conclusion that many economists made today was that the jobs picture is better, though not great. Claims were as low as 260,000 in 2000 before the dot-com bust.

"We’ve had fundamental improvement in the labor market in the past few months," said Ellen Zentner, a senior economist at Nomura Securities International in New York.

Some cheer from single-family building permits
The other reports on the economy were more nuanced.

Housing starts in December were lower, but building permits were flat. But single-family starts and permits were higher. Single-family construction adds more to the economy than multifamily projects.

Single-family permits rose to a seasonally adjusted rate of  440,000, up 1.8% from November and the third straight gain. Many analysts prefer permits because they are forward-looking.

But don't get too cheery. IHS Global Insight noted that single-family starts and permits had their worst year on record in 2011. Didn't matter if you were looking nationally or in any of the four regions used by the Census Bureau to assemble data.

Separately, a report on consumer prices in December showed virtually no gain as gasoline  prices eased. (You can expect an increase for January because gas prices are rising.)

A bit of caution from Philadelphia
The one disappointment came from Philadelphia Federal Reserve Bank's Manufacturing Index. It rose to 7.3 from 6.8; analysts had expected a gain to around 10. But a gain is a gain, and it looks good when coupled with the Empire State Index published by the New York Federal Reserve Bank.

The worry going forward is that a rising dollar because of Europe's problems and weakening global demand may hurt manufacturing.

Short hits from the markets -- New York close
			Thur.			Wed.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.0400%			0.030%			300.00%			300.00%
5-year Treasury note			0.851%			0.804%			2.53%			2.53%
10-year Treasury note			1.972%			1.897%			5.40%			5.40%
30-year Treasury bond			3.039%			2.954%			5.19%			5.19%
Currencies
U.S. Dollar Index			80.405			80.822			-0.15%			-0.15%
British pound			1.5475			1.5434			-0.40%			-0.40%
(in U.S. $)
U.S. $ in pounds			£0.646			£0.648			0.40%			0.40%
Euro in dollars			$1.29			$1.29			-0.10%			-0.10%
(in U.S. $)
U.S. $ in euros			€ 0.773			€ 0.778			0.10%			0.10%
U.S. $ in yen			77.34			76.78			0.31%			0.31%
U.S. $ in Chinese			6.33			6.33			0.13%			0.13%
yuan
Canada dollar			$0.000			$0.000			-100.00%			-100.00%
(in U.S. $)
U.S. dollar			$1.012			$1.012			-0.80%			-0.80%
(in Canadian $)
Commodities
Gold (-GC)			$1,654.50			$1,659.90			5.60%			5.60%
(per troy ounce)
Copper (-HG)			$3.801			$3.753			10.61%			10.61%
(per pound)
Silver (-SI)			$30.5090			$30.5430			9.29%			9.29%
(per troy ounce)
Wheat (-ZW)			$6.0575			$5.9225			-7.20%			-7.20%
(per bushel)
Corn (-ZC)			$6.0600			$5.935			-6.26%			-6.26%
(per bushel)
Cotton			$0.9799			0.973			6.88%			6.88%
(per pound)
Coffee			$2.297			2.2785			-0.02%			-0.02%
(per pound)
Crude oil (-CL)			$100.39			$100.59			1.58%			1.58%
(per barrel)