Technology Stock Roundup: Facebook Inc (FB) Stumbles, Yahoo! Inc. (YHOO) Sails

Technology Stock Roundup: Facebook Inc (FB) Stumbles, Yahoo! Inc. (YHOO) Sails

Facebook (FBAnalyst Report) and Intel (INTCAnalyst Report) took a thrashing last week, while Yahoo (YHOOAnalyst Report) continued to rise.

Facebook Pays for Government Spying

Facebook shares plunged nearly 6% last Monday following a couple of news reports about the repercussions of government spying actions. Facebook, along with other technology companies like Google (GOOGAnalyst Report) and Yahoo have been subjected to public ire and foreign governments of various countries are now looking for redressal.

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According to a Bloomberg report, the EU Justice Commissioner, Viviane Reding is looking to enforce EU citizens’ rights to sue U.S. agencies that violate their privacy rights. The U.S. government grants such rights to U.S. citizens even when they are resident in the EU, but foreign citizens are not treated similarly.

The EU would also like to force significant constraints on U.S. technology companies that could result in fines up to $135 million for data-protection violations. The only thing holding them back is the intervention of the UK, which would like the process to be gradual so as to minimize the impact on revenues.

The other thing that hit Facebook was the news that teens and youngsters care about their privacy more than older people. According to the results of a Harris Poll as reported in the USA Today, 40% of survey takers aged 18 and above changed their privacy settings in the last three months, while 53% changed them in the last six months. People over 45 rarely made changes.

Although Facebook’s Sandburg continues to defend her position on teen usage, it’s apparent that the Facebook platform with its disregard for privacy (it even started displaying whether users were on the web or mobile last week) is not what youngsters prefer.

More Good News for Yahoo

Yahoo shares continued to rise last week after its Board authorized the repurchase of up to $5 billion of common stock. This is not really much of a surprise considering the fact that Yahoo had just $300 million remaining under the previous authorization.

Yahoo’s core business is yet to pick up and one of the main strategies adopted by management to boost earnings has been the reduction of its share count. In fact, the company has spent over $3 billion on share repurchases so far this year and the fourth quarter will no doubt see additional repurchases.

However, Yahoo’s cash balance is significantly lower than it was in the prior year, so management is also going for some cash infusion. Considering the low interest rates, it makes sense to raise some debt, so that’s exactly what Yahoo has decided to do. The company will be pricing a billion dollars’ worth of notes, of which $200 million will be used for share repurchases and the balance for general corporate purposes.

Investors Wanted More Out of Intel

Intel started its Investor Day presentation painting a very rosy picture. The company said its chips would be found in every area that demanded computational capabilities, including custom applications (for instance Facebook’s cold storage requirements).

Management had a more optimistic tone than analysts about both the PC and data center markets, saying that PC revenues would continue to stabilize while data center revenues would grow at a CAGR of 15% through 2015. Strength in the data center will come from private cloud, telecom and HPC segments. Competition is expected to remain far behind, since ARM chips will increase costs for the purchaser in the form of investments in middleware stacks.

One interesting thing was Intel’s decision to open up its foundry capacity to outsiders (most likely for making smartphone chips), if it made monetary sense. Intel has to consider the typically lower margins of the foundry business, as well as its own idle capacity that if filled up, could improve its margins. The other positive was with respect to its own tablet chip volume, which is expected to quadruple next year.

But numbers count at the end of the day and this is where Intel disappointed heavily.  The company now expects 2014 revenues to be consistent with 2013 levels, well below analyst expectations of a 1.4% increase. Shares slumped on Friday in response.

 Company Last Week Last  6 Months
AAPL -1.38% +16.77%
FB -5.02% +90.17%
YHOO +1.64% +38.59%
GOOG -0.52% +18.16%
MSFT +0.54% +9.63%
INTC -2.84% -0.21%

Other stories you may have missed

Apple Scores Win Over Samsung: Apple (AAPLAnalyst Report) won $290 million as damages when a jury ruled in its favor and called in an expert to calculate the amount. The week-long trial was held to decide the amount of damages resulting from Samsung’s infringement of key Apple technology in 13 of its devices. Samsung had already been held guilty of infringement in an earlier ruling.

Microsoft’s Xbox One Has a Good Day 1: Microsoft (MSFTAnalyst Report) said it sold over a million pieces of its new game console in less than 24 hours. The device, which is intended to “take over the living room” was sold out at Amazon, as well as other retailers like Gamestop, Best Buy and Target (TGTAnalyst Report).  Microsoft looks set to take on Sony, which launched its PlayStation 4 last week, also selling a million pieces on the first day. The Xbox One launched in 13 markets.

Google Has Holiday Plans: Google is opening six showrooms, which it is calling Winter Wonderlabs to showcase products like Nexus 7 tablets, Chromebook computers and Chromecast video-streaming devices. Google joins Intel in these showrooming efforts and like Intel, Google too will be using the stores for showcasing and selling the products online. It is also showcasing products in 750 large-format Best Buy stores.

Google Announces Prepaid Debit Card

Pandora Reported A Solid Quarter

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