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 4:12PM
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Umm, No V_L, you got that all wrong- I was the one doing the 'casting' and you went for that 'bait' right away.

I didn't know you were so sensitive.

Oct 18, 2012 4:04PM
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Lady, would you give V_L some tips on PMS control? Seems a bit cranky today!!
Oct 18, 2012 4:02PM
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We are ending the day flat to a bit down...Scumbags got their way but it could have been worse....If you are blaming Google for all of this, think again....It was a claustrofukc what happened today down here....The jobless claims did not help at all either....Oh well, after 3 decent days we expected manipulators to attempt to do their thing, we are sure they will try to follow things up tomorrow...We will see.
Oct 18, 2012 4:01PM
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"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.
Oct 18, 2012 4:00PM
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Greetings from the N. C. smokey mountains.

 

With all the talk about middle class and "what's it like to be rich?" on here today, Here are a few suggestions;

     (1) While money can't buy happiness- wait - it can if you spend it on a fly rod to go fishing for rainbow trout.

     (2) I know now how V_L feels to be replaced by the younger generation. My 6 year old will be able to out fly cast me by next year.  C-YA!!!!!

 

Oct 18, 2012 3:56PM
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Just remember this....  4 days before the election in 1984 realclearpolitics had W a 7 point underdog and predicted a 350 - 57 electoral college defeat....

That is a very liberal organization.   I'd be very worried if were Obama...   
Oct 18, 2012 3:55PM
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National polling firm Rasmussen's daily poll, shows Republican nominee Mitt Romney ahead with support from 49 percent of voters, while Obama has 47 percent. Of the other respondents, 2 percent are undecided and 2 percent support a different candidate

.

But Rasmussen explains in its daily analysis that its polling methodology requires some time before the candidates' debate performance can be factored in, and those results won't be available until the weekend.


Oct 18, 2012 3:48PM
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Check out these whack jobs that are already planning Romney's assasination



The following Tweets are just some of the ones compiled by Twitchy during and after the debate;


- “If Romney win this election, he might as well wear a shirt that says “Assassinate Me Bitch”.


- “Yall ready to assasinate romney?”


- “Somebody needs to asassinate This mofo Romney.”


- “Romney make me wanna hop through the tv & just assasinate his ****.”


- “I aint gone lie… Food stamps the ****! I mite assasinate romney my damn self if he get elected!”

- “If romney get elected i hope a nigga assasinate his bitchass.


- “No birth control???? Lol rlly Romney the american population is going to overflow and then we’ll have to resort to murder and you’ll be #1.”


- “At this point in time I am completely prepared to MURDER ROMNEY MYSELF!”

- “If Romney win, IM GOING TO JAIL FOR MURDER cuz imma whack his bitch **** ASAP.”


- “If Mitt Romney wins, which I doubt, someone should assassinate him before he ruins the lives of our generation & our children.”


- “IF ROMNEY GETS ELECTED AND TAKES AWAY MY FOOD STAMPS IMA SEND SOMEONE TO MURDER HIS ****.”

Oct 18, 2012 3:42PM
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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 3:42PM
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TWIT, the story to the left of the electoral counts on Silvers site says Obama will not likely geta bump. Also, look a little closer at the electoral counts.  Obama down 6% since Oct 10, Romney up 6% since October 10

JEFF R, Is Classic Lady your Mother?  You both have the same trait....Cannot read and interpret data....and distort or give false information....
He is not down 6 Percent,  he is down 6  Electoral College Points....since Oct 10th...

Here is where Percentages come into play......Nate has the Percentages of a Obama win at 65.7% and Myth Robme at 34.3%
a Drop of 2.2 %  for President Obama, since Oct 10th.

and these STATS do not reflect the Latest Debate..
Oct 18, 2012 3:41PM
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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 3:39PM
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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 3:36PM
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Romney up 51-45 in yesterday's Gallup poll.  Up 52-45 today with one day's polling in the 7 day rolling average since Tuesday's debate.  If this keeps up, he'll be up to 58% when all 7 days include debate reaction.
Oct 18, 2012 3:33PM
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TIWIT                   YEAH THATS HIM      LOL        

Classic,

How do you own businesses when you get Nothing right?    He was never a baseball writer, he was a statistician...he developed.a system for forecasting the performance and career development of Major League Baseball players,.....Baseball Writer, NOT......
Oct 18, 2012 3:31PM
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I like how Hillary dropped on her sword taking the blame for the debacle in the middle east,she knows all too well if Obama wins she has no chance running for president as a democrat in 2016.
Oct 18, 2012 3:30PM
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TWIT, the story to the left of the electoral counts on Silvers site says Obama will not likely geta bump. Also, look a little closer at the electoral counts.

Obama down 6 since Oct 10

Romney up 6 since October 10


Falling faster than Barney franks pants at a San Francisco bath house.
Oct 18, 2012 3:25PM
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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 3:25PM
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Mitt, those weren't binders, they're called magazines. The resume was in the folder.
Oct 18, 2012 3:24PM
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"Planned Parenthood, we're going to get rid of that" -


GREAT, it's long over due
Oct 18, 2012 3:19PM
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3:00 and the pimps are pumping again......It's amazing how they can change hands without missing a stroke. Climax on Google - WAFJ
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