It’s been a bad earnings season for technology and internet companies. Google, Microsoft, Intel, eBay, SAP AG and Oracle have all missed analyst expectations, sending their stock prices down. Overall, those six companies lost more than $61 billion in market value in the day after they reported earnings.
Microsoft alone lost almost $30 billion in market capitalization in one day, while Google lost about $10 billion. Some firms, like Germany’s SAP and Intel have fallen even further since then, shedding several billion dollars more in market value.
The poor performance is partly due to tectonic shifts in the industry, for example, the decline of PCs. Microsoft and Intel both blamed weak PC sales for disappointing earnings.
Another problem for Microsoft was its $900 million inventory charge because of weak Surface tablet sales. Google, meanwhile, had trouble in its mobile business, an area where others are also struggling.
Yahoo broke from the pack of companies whose market value declined after reporting bad earnings. The company reported a drop in its crucial display advertising and search revenue, which initially drove shares down by as much as 2.7%.
But investors soon picked up on the brighter side of Yahoo’s earnings report: its 24% stake in China’s largest e-commerce company, the Alibaba Group, which is slated to go public, possibly by the end of this year. The windfall that Yahoo will receive from that IPO had already helped drive Yahoo’s shares up this year. But in the earnings report, Yahoo revealed that Alibaba’s net income grew 189%, while its revenue jumped by 71%. As a result, Yahoo’s market value has gained more than $2 billion since reporting its disappointing performance.