Today: Hewlett-Packard stock rose Friday despite missing expectations in Thursday’s earnings report, as investors are relieved by lack of unexpected bad news and find hope in company’s coming split. Also: The Dow dropped more than 500 points for the first time since 2011, and Apple recruits a Tesla engineer and others with experience in self-driving cars, adding fuel to the rumors that Apple is getting into the car industry.
The lead: HP up after poor earnings, but split has analysts optimistic
While most of the stock market sank Friday, Hewlett-Packard was one of the few to gain, rising 0.48 percent, or 13 cents, to $27.49, despite reporting meager earnings Thursday. The Palo Alto company missed expectations with revenue of $25.3 billion, an 8 percent drop from a year ago, and earnings per share of 88 cents. While earnings didn’t look good on paper, investors weren’t too irked, as they had expected this.
“For the first time in several quarters HP did not mention unexpected bad news,” said Jim Suva, an analyst at Citigroup, according to Bloomberg News. “Previous quarters HP reduced cash flows, stated higher separation costs, more unplanned restructuring & costs, etc. We now believe the bad news is over.”
HP shares were up as much as 7.6 percent during trading, one of the very few tech companies to be in the green on Friday. This was the last earnings report before the Palo Alto company splits, and Fortune wrote on how the latest earnings show how a split is the right move. Sales of PCs were down 13 percent year-over-year to $7.5 billion, and printer sales were down 9 percent to $5.1 billion. However, revenue from data-center equipment, such as servers and storage, was the diamond in the rough, up 2 percent. With the split into HP Inc. and Hewlett-Packard Enterprise, the decline in the PC market will no longer bring the rest of the company down.
Barron’s wrote on how analysts still think the stock has a lot of potential, with numerous firms reiterating an outperform rating for the company. Stephanie Link spoke on how the upcoming split has attracted investors.
“It’s an event-driven story,” Link said. “As they split up, the guidance on cash flow is going to go higher. She’s (Whitman) got to do a good job to talk about cash. The PC business ws down, but down less than expected. The quarter was not as bad. It’s washed out, it’s very cheap, and there’s this event coming up that should be value creating.”
In other news, HP will be laying off an additional 5 percent from its global workforce than the 55,500 employees it originally planned to let go. HP announced it would lay off 25,000 workers in 2012, but that number has grown over the years. Business Insider reported that HP has already trimmed 51,900 jobs. More details are expected on Sept. 15 at a Wall Street analysis meeting.
SV150 market report: Dow drops more than 500 points, Apple recruits Tesla engineer
U.S. shares were sharply down Friday, with major indexes dropping more than 3 percent on average. The Dow Jones industrial average fell more than 500 points for the first time in since 2011, and tech stocks took a beating as well. Analysts noted that indexes are down nearly 10 percent from their recent peaks, right into “correction” territory.
“This is likely going to go down as the first meaningful correction in four years,” said David Rosenberg, an economist and strategist at Gluskin Sheff, to the New York Times.
With so much negative news surrounding the market, with the Greek debt crisis, China’s economic downturn and falling oil prices, investors just aren’t feeling too good right now.
“I think uncertainty about China (and) general negativity is weighing on the market. There’s a lack of positive economic news to motivate buyers,” said David Kelly, chief global strategist at JPMorgan Funds, according to Yahoo News.
Apple was down 6.12 percent, or $6.89, to $105.76, as the Cupertino tech giant has recruited Jamie Carlson, a senior engineer from Tesla, along with six others who have experience in self-driving technology, adding further evidence that Apple is getting into the car market, according to Reuters. In other news, a Samsung promotion is letting iPhone users try out a Galaxy phone for a month with cellular service for just $1.
A new report shows that the Apple TV is the fourth-most-popular streaming device, behind Roku, Google’s Chromecast, and the Amazon Fire TV and Fire TV stick. And finally, Dr. Dre’s “Compton” album is no longer an Apple exclusive and is now available on the Google Play store.
Facebook was down 4.97 percent, or $4.50, to $86.06, as the Menlo Park social network is now allowing businesses to post animated GIFs as ads and on Pages — so now businesses can show users just how out of touch they are by posting a GIF of Nyan Cat. Also, co-founder Dustin Moskovitz wrote on Medium that Amazon isn’t the only tech company “burning out its employees” and called for a healthier work/life balance, better hours and more sleep.
Google shares dropped 5.22 percent, or $35.45, to $644.03, as the Mountain View tech giant is no longer requiring Google+ and other Google apps to be preinstalled in Android phones. Given how Google has recently removed its Google+ requirement from Google Hangouts and YouTube, things aren’t quite looking good for Google’s social network.
Netflix fell 7.58 percent, or $8.53, to $103.96, as the Los Gatos video-on-demand company is getting flak from activists about how employees in its DVD branch do not receive the recently expanded parental leave benefits.
Salesforce was up 2.11 percent, or $1.43, to $69.25 after reporting earnings on Thursday, touting revenue of $1.63 billion and earnings per share of 19 cents, beating expectations.
Tesla was down 4.71 percent, or $11.41, to $230.77, as CEO Elon Musk purchased $20 million worth of stocks in the Palo Alto electric car company after fundraising $738 million from investors this week. Also, Tesla and Airbnb are partnering to have supercharger stations in select hosts’ homes.
Silicon Valley tech stocks
Up: HP, Salesforce, AMD
Down: Apple, Oracle, Intel, eBay, Gilead, Yahoo, Netflix, Facebook, Tesla, Twitter, SolarCity, Adobe, EA, GoPro, Fitbit, Google
The SV150 index of Silicon Valley’s biggest companies: Down 44.03, or 2.67 percent, to 1,606.91.
The tech-heavy Nasdaq composite index: Down 171.45, or 3.52 percent, to 4,706.04.
The blue chip Dow Jones industrial average: Down 530.94, or 3.12 percent, to 16,459.75.
And the widely watched Standard & Poor’s 500 index: Down 64.84, or 3.19 percent, to 1,970.89.
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