Shares of Intel Corp, the world's biggest computer-chip maker, and Yahoo Inc, the most-visited US Web site, declined after the companies said competition is reducing earnings.
Intel shares fell as much as 5.4 percent in extended trading on Tuesday to US$24.90 after the company's second-quarter profit margin fell short of its forecast. Yahoo's stock dropped as much as 4.5 percent to US$26.28. The Internet search company forecast annual sales that trailed what analysts had expected.
Smaller rivals are charging less than Intel and Yahoo to win business. Yahoo's customers are placing ads on other companies' Web sites, aiming to get more value for their advertising dollar. At Intel, discounts by competitor Advanced Micro Devices Inc (AMD) have put pressure on prices, CEO Paul Otellini said on Tuesday. That's eaten into Intel's gross margin.
"People are disappointed with the gross margin coming in below expectations," said Greg Barlage, an analyst at Boston-based Baring Asset Management, which oversees US$35 billion including Intel shares. "It's definitely something to be concerned about."
The Silicon Valley companies kicked off the second-quarter earnings season on Tuesday for the US technology industry. IBM Corp reports yesterday, followed by Motorola Inc, Microsoft Corp and Google Inc today.
Yahoo's net income declined for a sixth straight quarter, falling 2.3 percent to US$164.3 million, or US$0.11 a share. The Sunnyvale, California-based company forecast sales for the year of US$4.89 billion to US$5.19 billion.
Sales of display advertisements, including banner and video ads, increased in the low to mid-teens in the quarter, Yahoo president Susan Decker said in a conference call. That's a slowdown from 38 percent growth in the first quarter of last year and 20 percent in the first three months of this year, Jefferies & Co analyst Youssef Squali said.
"We have not continually driven innovation in the display business," Decker said.
She was promoted to president last month in a management shakeup that brought cofounder Jerry Yang (
"The June quarter was more Terry than Jerry," said David Garrity, director of research at Dinosaur Securities Inc in New York. "Yang is what shareholders need."
Yang and Decker face stiffening competition from social-networking companies, which charge advertisers less. Facebook Inc, a privately owned company based in Palo Alto, California, and News Corp's MySpace dominate sales of advertising on such sites. The market will more than double to US$900 million this year and reach US$2.5 billion in 2011, according to research firm EMarketer Inc in New York.
Intel, based in Santa Clara, California, said net income increased 44 percent to US$1.28 billion, or US$0.22 a share. Gross margin, or the percentage of sales left after production costs, was 46.9 percent, missing the midpoint of the company's forecast range.
Intel's shares had gained 30 percent this year, a sign investors were confident that the company had beaten back a challenge from Sunnyvale-based AMD. Intel's profit fell 42 percent last year after it cut prices to win back market share from its competitor.
"There was a strong run recently," said Pat Becker, who helps manage US$2.5 billion at Becker Capital Management in Portland, Oregon.
The earnings report "gives you some pause," Becker said.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS