Google results disappoint investors

Shares drop more than 5% after hours as operating expenses jump. The Dow ends with a small gain, led by Coca-Cola, Kraft and Merck. Crude oil tops $108 a barrel. Fears of lower PC sales hit tech stocks. Supervalu shares soar.

By Charley Blaine Apr 14, 2011 12:58PM
Charley BlaineUpdated: 11:41 p.m. ET

Shares of Google (GOOG) were off more than 5% after hours as first-quarter earnings disappointed investors.

Earnings were $8.08 a share after one-time adjustments; Wall Street was looking for $8.10. In addition, expenses were higher than expected. Shares were at $546.60 after hours, down 5.5% from a regular close of $578.51. Revenue after payments to partners was up 27% to $6.44 billion.

The Google results came after the stock market finished basically flat on the day following a sell-off in the morning that saw the Dow Jones industrials ($INDU) fall as many as 107 points. The blue chips closed up 14 points at 12,285. The Standard & Poor's 500 Index ($INX) was up slightly to 1,315.

The Nasdaq Composite Index ($COMPX) was off 1 point to 2,760. The index was held back by weakness in Apple (AAPL), Qualcomm (QCOM), Microsoft (MSFT) and Research In Motion (RIMM). (Microsoft publishes MSN Money.)

The market struggled after a government report showed a surprising gain in jobless claims and new worries erupted about European debt woes. The dollar hit levels not seen since December 2009, and oil prices were higher.

Financial stocks dropped after a Senate report lambasted the role of financial giants in the 2008 real-estate crash. Goldman Sachs (GS)came under heavy criticism. Tech stocks were generally lower. Futures trading suggests a modestly lower open on Friday.

Article continues below.

How much to invest in the company
Google's results reignited a debate between the company over how much to reinvest in the company. The company believes its future depends on new investments, and it spent $1.2 billion on research and development in the quarter. It also added 1,916 employees during the quarter, bringing its full-time ranks to 26,316.

Investors are skeptical that all that investment will pay off in accelerated growth.

U.S. paid clicks, which measures how frequently consumers click on its ads, were up 18% from a year ago. The 4% gain for clicks from the fourth quarter was slower than the 11% sequential gain in the fourth quarter. The average cost that advertisers paid Google per click was up 8% from a year earlier but down 1% from the fourth quarter.

About 97% of revenue comes from advertising. The company, however, doesn't break out revenue for its various businesses, including revenue from search, YouTube or Android mobile devices. The company said the March 11 Japanese earthquake affected its revenue, although it did quantify the impact. About 63% of revenue comes from the United States and the United Kingdom.

A day for defensive stocks
The Dow was led by three defensive stocks: Kraft Foods (KFT), Merck (MRK) and Coca-Cola (KO). Eighteen of the 30 Dow stocks were higher.

The S&P 500 was led by staples and utility stocks, including supermarket operator Supervalu (SVU), up 16.9% to $10.61. Excluding one-time items, Supervalu earned 44 cents a share in its fiscal fourth quarter, easily beating the consensus estimate of 33 cents. Same-store sales declined less than expected, and the grocer's holding the line on its gross margin, at 23.3%.

Fifty-one Nasdaq-100 ($NDX.X) stocks were higher, but Apple, down 1.1% to $332.42, subtracted nearly 5 points from the index.

Many analysts believe stocks are headed higher, with the S&P 500 reaching perhaps to 1,400 -- which would translate into an 11.3% gain on the year. The market, however, has become stuck. The Dow is off 0.8% from its Feb. 18 peak, with the S&P 500 off 2.1% and the Nasdaq down 2.6%. The S&P 500 chart suggests a double-top formation, which frankly looks bearish.

Crude jumps over $108; gold tops $1,470
Crude oil settled up $1 to $108.11 a barrel, and energy stocks moved with it. Brent crude was off 48 cents to $122.40.

Gold settled up $16.80 to $1,472.40 an ounce, with silver jumping $1.427 to $41.66 an ounce. Copper fell 1 penny to $4.284 a pound.

Interest rates were up slightly, with the 10-year Treasury yield rising to 3.483% from Wednesday's 3.466%. The yield had hit as high as 3.488% but fell after a decent auction of 30-year Treasury bonds.

The dollar was lower against major currencies. The U.S. Dollar Index, which measures the greenback against a basket of currencies, fell 0.4% to 74.888. The close was the lowest for the index since Dec. 3, 2009.

The index's lowest level since 1999 occurred on March 17, 2008, when it finished at 71.304, just as investment house Bear Stearns collapsed and was taken over by JPMorgan Chase (JPM).

European stocks were down after German Finance Minister Wolfgang Schaeuble said Greece might have to restructure its debt. The finance minister’s comments renewed concerns about the eurozone’s debt crisis and pushed yields on Greek and Portuguese 10-year bonds to the highest levels in recent years.  


Energy prices -- New York close
 
 Thur.  Wed.  Month chg.  YTD chg.
Crude oil 

$108.11  $107.11  1.30%  18.31%
(per barrel)

 

 

 

 
Heating oil

$3.1890  $3.2028  3.21%  25.37%
(per gallon)

 

 

 

 
Natural gas 

$4.2120  $4.1410  -4.03%  -4.38%
(per mil. BTU)

 

 

 

 
Unleaded gasoline

$3.2347

$3.2424

-4.03%

-4.38%
(per gallon)

 

 

 

 
Brent crude

$122.36  $122.88  4.43%  29.14%
(per barrel)











Retail gasoline

$3.8120

$3.8080

5.71%

24.09%


Two IPOs have a big day

Car-sharing operator Zipcar (ZIP)soared well past its initial offering price of $18 in its first trading session.

Investors pushed its stock price to $30 when the market opened. It closed at $28 -- up 56% and still a nice haul for Goldman Sachs and JPMorgan, which managed the offering.

The IPO was widely anticipated by investors. Zipcar users reserve cars by phone or computer and then pick up the cars using keyless-entry cards. The service has taken off at college campuses and in 14 major cities, and the company hopes to expand several times over.


Arcos Dorados Holdings (ARCO), the largest franchise operator for McDonald’s (MCD), ended up 24.7% to $21.20. The offering received 10 times as much interest as the amount of stock being offered, Bloomberg News said.


Supervalu was the top performer among S&P 500 stocks. Excluding one-time items, Supervalu earned 44 cents a share, easily beating the consensus estimate of 33 cents. Same-store sales declined less than expected, and the grocer's holding the line on its gross margin, at 23.3%.


Hasbro (HAS) shares were off 3% to $44.40. The toymaker's first-quarter earnings fell 71% as the company spent more on product development and saw double-digit sales declines in its games and puzzles, girls and preschool categories.


Ford Motor (F) shares were off 1.1% to $14.81 after the company expanded a recall of F-150 pickups to 1.2 million vehicles that have airbags that may deploy when not needed. The recalls apply to F-150s from the 2004 through 2006 model years. Rival General Motors (GM) was off 0.9% to $30.58.


Financial stocks weigh on the market
Financial stocks were the market's laggards after The Wall Street Journal reported that U.S. investigators are looking into whether major U.S. and European banks conspired to manipulate the rate at which banks could borrow funds before and during the financial crisis.

The Financial Select Sector SPDR (XLF) exchange-traded fund was off 0.8% to $16.15. The ETF tracks the financial sector of the S&P 500. JPMorgan Chase (JPM) was off 2.8% to $44.97, the worst performer among the 30 Dow stocks. Wells Fargo (WFC) dropped 1.7% to $30.15, and Bank of America (BAC), which reports first-quarter results on Friday, slipped 1.1% to $13.13.

Goldman Sachs shares dropped 2.7% to $155.79, seventh-worst among S&P 500 stocks.

The head of the Senate’s financial crisis panel is questioning testimony Goldman executives gave to Congress last year on whether the company steered investors toward mortgage securities it knew would likely fail. Although Goldman agreed to pay $550 million to settle civil fraud charges in July, Sen. Carl Levin, D-Mich., said the subcommittee has found new evidence that Goldman misled investors.

Weak PC sales forecast hits techs -- even Apple
Shares of personal computer makers were lower -- along with Microsoft -- after technology research firms IDC and Gartner confirmed that there was a drop in PC sales in the first quarter compared with a year ago. The cause is the growing popularity of Apple's iPad, which continues to take significant market share from the PC and notebook markets.

Gartner and IDC expected PC sales to grow 3.0% and 1.5%, respectively.

 

Hewlett-Packard (HPQ) was off 1.9% to $40.36. Dell (DELL) dropped 3.1% to $14.95, and Microsoft was off 0.8% to $25.42.

Jobless claims move higher
In a surprise, more Americans filed first-time claims for unemployment insurance last week, reflecting greater-than-normal volatility at the end of the quarter. Applications for jobless benefits rose 27,000 in the week ended April 9 to 412,000, the most in two months, the Labor Department said. Economists had expected that claims would be little changed at 380,000.

Another report showed that wholesale costs in the U.S. rose 0.7% in March, led by higher prices for energy, light trucks and passenger cars. But the increase in the producer-price index was smaller than forecast as food prices unexpectedly dropped for the first time since August, the Labor Department said. The so-called core measure, which excludes volatile food and energy costs, increased 0.3%, more than estimated.


Short hits from the markets -- New York close
 
 Thur.  Wed.

Month chg.

YTD chg.
Treasury yields




 





13-week Treasury bill

0.070%

0.050%

-22.22%

-41.67%
5-year Treasury note 

2.205%

2.171%

-0.90%

9.37%
10-year Treasury note

3.490%

3.466%

0.84%

5.39%
30-year Treasury bond

4.542%

4.550%

0.75%

4.13%
Currencies











U.S. Dollar Index

74.888

75.19

-1.56%

-5.55%
British pound

$1.6364

$1.6273

2.05%

4.86%
(in U.S. $)











U.S. $ in pounds

£0.611

£0.615

-2.00%

-4.63%
Euro in dollars

$1.449

$1.445

2.29%

8.33%
(in U.S. $)











U.S. $ in euros

€ 0.690

€ 0.692

-2.24%

-7.69%
U.S. $ in yen 

83.612

83.900

0.33%

2.76%
U.S. $ in Chinese

6.554

6.530

-0.27%

-0.93%
yuan











Canada dollar

$1.041

$1.039

0.98%

3.77%
(in U.S. $)











U.S. dollar 

$0.961

$0.962

-0.96%

-3.62%
(in Canadian $)











Commodities

 

 

 

 
Gold

$1,472.40

$1,455.60

2.26%

3.59%
(per troy ounce)

 

 





Copper

$4.284

$4.295

-0.55%

-3.67%
(per pound)











Silver

$41.664

$40.237

9.97%

34.67%
(per troy ounce)











Wheat 

$7.4050

$7.5275

-2.98%

-6.77%
(per bushel)











Corn

$7.5425

$7.5550

8.80%

21.16%
(per bushel)











Cotton 

$1.9604  $1.9735  -2.09%  35.38%
(per pound)











Crude oil 

$108.11

$107.11

1.30%

18.31%
(per barrel)











26Comments
avatar
News Flash $4 a gallon gasoline not important to how Americans spend their money. Everything is ok and the economy is on the road to recovery. (Even if we have to print another $9 trillion and give it to the Wall Street bankers but not a penny for normal Americans).

HELENA, Montana (Reuters) – The recent surge in oil prices is no prelude to broader price increases that would force the U.S. Federal Reserve to raise interest rates, two top Fed officials said on Thursday.

The comments, from Minneapolis Fed President Narayana Kocherlakota and Fed Board Governor Elizabeth Duke, echoed recent remarks by Fed Chairman Ben Bernanke, adding to expectations the central bank will stay on course with its $600 billion debt-buying program and will not look to reverse its super-easy monetary policy any time soon.



Apr 14, 2011 4:39PM
avatar

Oil speculation is ruining our economy. Please join me and call your representatives and demand that they do something about unfair oil trading. Nothing will ever change if we do not try. These morons need to be stopped.

avatar
Manipulation of the unemployment numbers to make it look like unemployment is going down.

They are just reducing the 99er's (those who have exhausted their unemployment benefits up to 99 weeks) from the labor force. Unemployment is really approaching 30 percent. 

Rush said on his lunch hour radio talk show that only 45 percent of us had a job in 2010. So perhaps I am under estimating the unemployment numbers at 30 it's more like 55 percent according to Rush Limbaugh.

No wonder the federal, state and local governments are out of money 55 percent us who were working are not working now. 

Legislation to extend unemployment benefits for 99ers, introduced by two Congressional Black Caucus members, is being discussed, but the heavily opposed idea has made little headway. Meanwhile, as they drop off of Washington's radar, and as the Obama administration lauds an unemployment rate that edged down to 8.8 percent last month, millions of Americans in financial free fall can't help feeling effectively abandoned.

"One reason that [unemployment] number is going down is because once you become a 99er, you're no longer counted on the record as unemployed," said Rosen. "With respect to how the government collates the numbers, these people sort of just disappear."

Apr 14, 2011 4:42PM
avatar
What is it going to take before the moron oil traders and speculators get the message? They need to enjoy their artificial oil prices while they can because sooner or later, legislation will be passed to regulate their oil trading.

 

These "morons" are shorting oil this very minute.  They can make just as much money on the way down as they did on the way up, and they really don't give a sh*t how their actions affect the rest of us.

Apr 14, 2011 2:24PM
avatar
Newsflash...Newsflash...The Fed, aka Bernake's "Bandits" all belong in prison. If you or I were to not continually as they do, but even "once" do something 1/100th as bad as them, we would face imprisonment and shame for life. Of course the double standard used in politics, which also cover big Ben, would NEVER allow these criminals to be incarcerated, it simply rewards their behavior.
Apr 14, 2011 7:25PM
avatar
I really think it is time to set a day of no work to show the government Americans are serious about getting our country straightened out. If everybody would not go to work for one day think of how much oil we could save. Also, we should start having seminars to suggest ways to cut spending. I know the illegals cost taxpayers over 150,000,000,000 dollars per year in all the services we give them. I feel if a person who gets taxpayer help has a baby taxpayers will help them as we do, if they have another baby while on welfare....we would then deduct 10 percent from their welfare payment, and deduct 10 percent for each child they have. It is not right that American taxpayers have to support them, it is only an incentive to have more children. Also, we have got to stop rewarding people who come here illegally with free schooling, food stamps, medical care, and all the other free service they get. We simply can't afford it any more, and it is not right to think that real Americans can take care of the whole world. Look what our beautiful country has evolved into. It is sickening, but no one will face it, especially our  brain dead polaticians. Let's wake up America and face our problems head on!
Apr 14, 2011 5:52PM
avatar

Look folks, all jokes aside. We have to work together and stop this. If the government is not going to flood the market with some of it's 700 million barrels of reserve oil, then we have to start cutting back on fuel consumption. How? Stay at home, put a sign on your front lawn that says, "Big Oil Can Dipstick It"

 

And that's not by purchasing an electric car either. Auto

 

Tell your elected officials to start doing their collective jobs. Don't tell anyone

 

Take a stand! Surprised

Apr 14, 2011 1:30PM
avatar
Another afternoon where we have to struggle to keep things on the green....We are trying; plenty of manipulators as expected trying to go the other way....Too many of them unfortunately, we will see how things go these last 2 and a half hours...Sad though to see these scumbags get their way day in and day out.
avatar

1 minute ago
What is it going to take before the moron oil traders and speculators get the message? They need to enjoy their artifical oil prices while they can because sooner or later, legislation will be passed to regulate their oil trading. It should be taken off the commodity market. 
Listen who do you think is bidding up the price of oil??? Exxon and Shell and BP they know that there is less than twenty years left in the ground and for Exxon the production cost is $20 in the Gulf of Mexico and $5 in West Texas so if they can bid up the price to $110 barrel and then sell off at $105 a barrel they have just made about $90 pure profit for themselves. 

The oil companies run this part of the country so do not look for the markets to be regulated the Republicans will get another $20 million from them to look the other way as usual.

Apr 14, 2011 2:15PM
avatar
What is it going to take before the moron oil traders and speculators get the message? They need to enjoy their artifical oil prices while they can because sooner or later, legislation will be passed to regulate their oil trading. It should be taken off the commodity market. If not ,  we are headed for another recession or a depression this time courtesy of Wall Street Pigs. I do not know how these people can sleep at night. They need to have their heads examined to see if they have a brain, cause they sure as hell do not have any heart for the people in this country.
Apr 14, 2011 4:56PM
avatar

This is a serious question.  How come people put so much emphasis on Wall Street's prediction on how much stock will earn in a certain quarer?  So Google missed the Street by $.02.  So?  Did the predictors know that maybe precious metals went up and that cause Google to have increased production on their server units?  Did they know about this and that that caused the stock to miss the street's estimate?  Did they take into account the earthquake and problems in Japan that might have caused revenue to drop?

 

I mean, who really cares about what the street says.  Isn't it a good guess, at most?  When is the quarterly estimate by the street determined?  At the beginning of a quarter, middle, end of the quarter? 

 

Someone explain this to me, please...

Apr 14, 2011 3:34PM
avatar
The DOW is going into a severe contraction !! Take your money and Run !!
Apr 14, 2011 7:47PM
avatar
Carl, i understand some of your math and no argument here as concerning 'illegals'.  We have a more grevious situation in 'entitlement' types regardless of enthnicity and born right here in the States by parents born here so as not to confuse.  They have 'chosen' other 'professions' to make easy money ... drugs and prostitution are obvious.  Why not take a look at this without getting into a who did what scenario?   They are an entire drain on all of us as they are our/were our kids.  Now, they have kids and this will continue unless welfare departments step up and do something about it State by State.
Apr 14, 2011 6:27PM
avatar

I am being 'blocked'.  I will just say that 'populist' is not me.  I simply responded to what a poster said as to my 'stupidity'.  You are entirely wrong and I have a bit more intelligence than you might think in the financial services sector.  So...I cut this way down from my original post. 

 

You must be having a very bad day or are just holding up some 'flag' hoping things get better...which they will not.

Apr 14, 2011 8:57PM
avatar

What is going to happen to the job market when all the millions of college students graduate this year and many of them find themselves unable to find work--and added to the mix will be all the teachers getting laid off.

 

I wonder how many students will opt to stay in school so they can get student loans to live off of for another year, hoping that by the end of school in 2012 the economy has picked back up.

 

Should be interesting.

Apr 14, 2011 1:57PM
avatar
Things just got a bit more complicated...They called for a selloff to start at 1350 hrs so down we go. Tough when these scumbags own the floor...Oh well, still 2 hours to go...Yup, that means they can manipulate us a lot lower.
Apr 14, 2011 5:22PM
avatar
It is all very simple to me.  We are getting 'raped' pure and easy to understand.  Forget the 'markets'.  You actually care about who missed the 'street?.  Give me a break.  This is basic 6th grade math.  We are getting conned.   
Apr 14, 2011 4:28PM
avatar
Another day, another gold bar and oil barrel in my portfolio vault. Thumbs up
Apr 15, 2011 9:45AM
avatar
Yes, we opened up but be very cautious; may not last long, seems like another little suckers rally...Plenty of manipulators on and off the floor....Be very cautious and they will use the Google excuse all the way to the closing....Scumbags in charge again today. More later.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

RECENT QUOTES

WATCHLIST

Symbol
Last
Change
Shares
Quotes delayed at least 15 min
Sponsored by:

MARKET UPDATE

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 shed less than a point, ending the week higher by 1.3%, while the Dow Jones Industrial Average (+0.1%) cemented a 1.7% advance for the week. High-beta names underperformed, which weighed on the Nasdaq Composite (-0.3%) and the Russell 2000 (-1.3%).

Equity indices displayed strength in the early going with the S&P 500 tagging the 2,019 level during the opening 30 minutes of the action. However, ... More


Currencies

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Sponsored by:

VIDEO ON MSN MONEY