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Apple's Downfall: Tech Weekly Recap

NEW YORK ( TheStreet) -- Apple (AAPL - Get Report) was the talk of tech this week, reporting first-quarter results on Wednesday. It's been a string of bad news for the world's largest tech company, and it seems as if no end is in sight.

The Cupertino, Calif.-based firm generated revenue of $54.5 billion in its fiscal first quarter, up from $46.33 billion a year earlier, earning $13.81 a share. Wall Street analysts were looking for $54.73 billion in revenue and $13.47 per share in earnings.

Apple also changed the way it gives guidance, providing a range for its fiscal second quarter, instead of single line items. Apple forecast revenue between $41 billion and $43 billion, a gross margin between 37.5% and 38.5%, and operating expenses between $3.8 billion and $3.9 billion.

Following the revenue miss and guidance change, several analysts cut their price targets, with a few even removing Apple from buy lists.

Morgan Stanley's Katy Huberty, one of the most respected Apple analysts on Wall Street, removed Apple from her company's Best Ideas list but noted that catalysts will start to appear in the summer of 2013. These include "a lower priced [iPhone], similar to iPad Mini, 2) new iPads, including iPad Mini with Retina Display around mid-year, 3) expanded carrier partnerships with T-Mobile in the US, NTT Docomo in Japan, and/or China Mobile in 2H13/2014."

Apple shares got crushed this week, falling 15% to close at $439.85. As a result, Apple lost the title of world's most valuable company, falling behind Exxon Mobil (XOM).

Google (GOOG - Get Report) reported fourth-quarter results that beat Wall Street estimates. A key metric of advertising, cost-per-click (CPC), also improved for Google, leading some to think mobile is now making money.

For the fourth quarter, Google earned $10.65 a share on $11.3 billion in revenue, excluding traffic acquisition costs (TAC). With TAC, Google generated $14.42 billion in sales, up 36% year on year, according to CEO Larry Page. Analysts polled by Thomson Reuters expected Google to earn $10.49 a share on $12.3 billion in revenue.

Google's Mobile Miracle

Cost-per-click (CPC) fell 6% year over year but actually rose 2% sequentially, alleviating some of Wall Street's biggest concerns.

The fear about Google is that, going forward, it could struggle to monetize mobile, Deutsche Bank analyst Ross Sandler noted. The analyst, however, highlighted Google's accelerating U.K. mobile revenue as evidence this may not be the case.

Google shares soared this week, gaining 1.8% to close at $753.67.

Another tech titan, Microsoft (MSFT - Get Report), also reported quarterly results this week.

The Redmond, Wash.-based firm earned 76 cents a share on a GAAP basis during its fiscal second quarter, generating $21.46 billion in revenue. Analysts polled by Thomson Reuters were expecting 75 cents a share on $21.5 billion in revenue.

There were also rumors this week that Microsoft could potentially take a stake in Dell (DELL), should the PC-maker go private.

CNBC's David Faber reported that Microsoft may invest anywhere between $1 billion and $3 billion as part of a private-equity bid for Dell. The investment would be mezzanine financing, which is defined as financing in the form of debt that converts to equity should the debt not be paid back on time and in full.

Shares of Microsoft closed the week sharply higher, gaining 3.9% to finish at $27.88.

IBM (IBM - Get Report), another tech giant reporting this week, beat estimates, as software boosted results.

Big Blue reported revenue of $29.3 billion, earning $5.39 a share. Analysts surveyed by Thomson Reuters were looking for $29.09 billion in sales and earnings of $5.25 a share. Software revenue increased 3% (or 4% adjusted for currency) to $7.9 billion.

For fiscal 2013, IBM expects to earn at least $16.70 a share. Analysts polled by Thomson Reuters expected earnings of $16.63 a share.

Shares of IBM closed the week higher, tacking on 5.4% to finish at $204.97.

Netflix (NFLX - Get Report) also reported earnings this week, beating Wall Street expectations and sending the stock soaring.

For the fourth quarter, Netflix earned 13 cents a share on $945 million in revenue. Wall Street was looking for a loss of 13 cents a share on $934.5 million in sales.

Netflix gave guidance for its fiscal 2013 first quarter, saying it expects to earn anywhere between 0 and 23 cents a share. Estimates called for a loss of 7 cents a share.

Shares of Netflix soared this week, gaining a whopping 67% to finish up at $169.56.
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