Facebook Soars on Strong Earnings: Tech Winners & Losers

NEW YORK (TheStreet) –– Facebook (FB) shares shot up 7.3% to $76.45 after the company reported strong second-quarter earnings.

Facebook reported yesterday it earned 42 cents a share on $2.91 billion in revenue, a 61% increase from the same quarter last year. $2.68 billion of the Menlo Park, Calif.-based company's revenue was from advertising, a 67% increase year-over-year; 62% of advertising revenue was from mobile, up 41% year-over-year. Analysts polled by Thomson Reuters forecasted 32 cents a share on $2.81 in revenue.

The social network averaged 829 million daily active users (DAUs) in June 2014, a 19% increase year-over-year, while mobile DAUs during the same period increased 39% year-over-year to 654 million. Monthly active users (MAUs) and mobile MAUs increased 14% and 31% year-over-year, respectively; both topped 1 billion. Facebook ended the quarter with $13.96 billion in cash and marketable securities.

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In response to the results, several analysts upgraded their ratings of Facebook stock. Jefferies analysts maintained their “buy” rating and raised the price target to $100 from $85, citing margin expansion. Wells Fargo analysts reiterated their “outperform” rating and raised the price target to $85-$87 from $78-$80, highlighting Facebook’s strong user growth and monetization. Analysts at Credit Suisse reiterated their “outperform” rating and raised the price target to $92 from $90, noting strong mobile advertising revenue growth. Sterne Agee analysts, who also cited digital advertising, reiterated their “buy” rating and raised the price target to $85 from $80.

Shares of AT&T (T) fell 0.9% to $35.56 after second quarter earnings missed estimates.

The telecom giant’s revenues rose 1.6% year-over-year to $32.6 billion, or 62 cents a share. Analysts were looking for 63 cents on $33.2 billion in revenue. Its profit of $3.5 billion was down from $3.8 billion a year earlier. Revenues in the Wireless segment grew 3.7% from the second quarter last year.

AT&T added 634,000 wireless customers this quarter for a total of 116.6 million. Its churn rate—the rate at which customers leave—was the company’s lowest ever: 0.86%. The company also added 700,000 post-paid smartphone users and sold 1.6 post-paid smartphones; nearly 80% of AT&T post-paid phone users own smartphones.

AT&T forecasts revenue growth of 5% and stable margins, with adjusted earnings growth of 3$-4%, for full-year 2014.

"The quarter was marked by several transformative moves to grow our wireless, broadband, and video services," said AT&T CEO Randall Stephenson in a statement. "Our move to simple pricing and no-device-subsidy plans is repositioning the wireless business model, resulting in our best postpaid net adds in nearly five years and our lowest-ever postpaid churn."

Nokia (NOK) shares shot up 6.8% to $8.20 after earnings exceeded expectations and sales decline slowed.

The Finnish telecom company, which completed the sale of its handset division to Microsoft  (MSFT) in April, reported net income of €2.5 billion, or $3.4 billion, up from a €226 million loss in the same quarter last year. Adjusted for the $7.5 billion handset sale and other divestments, however, Nokia lost €26 million, compared to a €113 million adjusted loss last year. Nokia’s second quarter profit rose 20% to €213 million ($285 million). Earnings per share of 6 euro cents beat consensus expectations of 4.5 euro cents.

Sales in China rose 18%--Nokia has contracts to upgrade the networks of carriers including China Mobile (CHL) and China Telecom (CHA). Overall, total network revenue fell 8% on declines in Europe and North America. Total sales fell 7% to €2.94 billion, but ahead of analyst expectations of €2.92 billion.

Due in part to the proceeds of the Microsoft sale, Nokia ended the quarter with €6.5 billion in cash, more than triple the €2.1 billion at the end of last quarter.

“Our expectations for the full year 2014 have improved and we now expect full year underlying profitability for Networks to be at or slightly above our long term target range of 5 to 10 percent,” CEO Rajeev Suri said in a statement, adding, “This performance, along with the many conversations I have had with customers, partners, employees and others in my first quarter as CEO, gives me a high degree of confidence about our future.”

Suri became CEO in April after running Nokia’s network infrastructure business.

Citrix (CTXS) shares jumped 4.5% to $66.98 following the release of a strong second quarter earnings report.

Citrix, an enterprise software vendor, earned 83 cents per share on revenues of $782 million this quarter, a 7% increase year-over-year. Analysts surveyed by Thomson Reuters expected 61 cents a share on $773 million in revenue. Net income for the quarter was $53 million, or 31 cents per share, down from $64 million, or 34 cents per share, a year earlier. Revenues rose 2% year-over-year in the Product and Licenses segment, 7.5% in License updates and maintenance, 11.8% in Software-as-a-Service, and 15.2% in Professional Services.

The company models revenue for the current quarter between $765 million and $775 million, with earnings per share of between 70 cents and 73 cents, slightly below Street estimates of $786 million and 76 cents. For the full year, Citrix predicts revenue growth of 8.5% to 10%, in line with the consensus estimate of 9.3%. Earnings per share is forecast between $3.20 and $3.25, above the consensus estimate of $3.09.

"I'm pleased with our performance and results for Q2," said CEO Mark Templeton. "I'm really proud of how our team delivered greater operating efficiencies while driving our very significant pivot to mobility. As we move into the second half, we'll continue to refine operations to further increase shareholder value and to stay aggressive with valuable solutions for our customers' mobility needs.

Shares of F5 Networks (FFIV) rose 3.8% to $115.02 after beating expectations in its earnings release yesterday.

For its fiscal third quarter, F5 earned $440.3 million in revenue, a 19% increase year-over-year and a 5% increase from the prior quarter. Net income was $104.6 million, or $1.39 per share, compared to $96.9 million ($1.27 per share) in the prior quarter and $88.4 million ($1.12 per share) a year ago.

"F5’s solid gains in Q3 were driven by strong growth in product revenue, up 5 percent sequentially and 20 percent year-over-year," said CEO John McAdam. "As we move toward the close of our fiscal year, ending September 30, we believe all of the company-specific drivers that propelled our business through the first three quarters will continue to generate solid sequential and year-over-year growth in the current quarter."

For its fourth quarter, the company expects revenues of between $453 million and $463 million, between $1.46 and $1.49 per share. Analysts polled by Thomson Reuters expect Q4 earnings of $1.46 per share and revenue of $458 million.

In response to the results, Jefferies increased its price target on the company to $108.50 from $101 and set a “hold” rating. Cantor Fitzgerald increased its price target to $134 and set a “buy” rating.

--Written by Laura Berman in New York

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