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80,258 News Articles

Google, Microsoft shares plunge, IBM soars

Google stock down nearly 8%

In a week where most of the biggest names in technology reported quarterly earnings, two top names, Google and Microsoft, disappointed Wall Street.

Google, which runs the world's most often used Internet search engine, reported what appeared to be solid financial results for the second quarter, with revenue up 39 per cent over the same time a year ago at US$5.37 billion and net profit up 35 per cent to $1.25 billion.

The trouble with the numbers came in the profit per share of Google stock, which was $4.63 in earnings per share, not counting expenses for stock compensation. Wall Street bankers had predicted a figure closer to $4.74 per share, according to figures from Thomson Financial. Some sold Google shares on the miss and because Google executives raised the issue of facing "a more challenging economic environment."

The company's stock plunged $40.69 to $492.75, a fall of 7.6 per cent, in after-market trading. The last time Google's stock sank below $500 was on April 17.

The strong reaction to Google's earnings miss and comments about the business environment show that investors remain concerned about a host of economic troubles, including high energy prices, the credit crunch and rising inflation.

Microsoft shares
Microsoft shares also dropped in after-market trading when its results failed to meet analyst expectations.

The world's largest software maker reported revenue of $15.84 billion, up 18 per cent compared to the same time last year. Net profit at the company soared 42 per cent to $4.3 billion.

But again, its earnings per share missed expectations by a penny, and its earnings forecast for the current quarter was below projections as well.

Microsoft shares fell $1.65, or 6 per cent, to $25.87 in after-market trading.

IBM, by contrast, exceeded analyst expectations.

The world's biggest technology company said second quarter revenue rose nearly 13 per cent year-over-year to $26.8 billion, while net profit increased 22 per cent to $2.8 billion. The company also boosted its earnings forecast slightly for the year, a relief to some investors because it's a sign IBM believes it can weather the current economic storm.

The company cited strong international demand for software and services as one reason for its strong earnings.


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