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.
Authorities have detained three former Taiwan Semiconductor Manufacturing Co (TMSC, 台積電) employees on suspicion of compromising classified technology used in making 2-nanometer chips, the Taiwan High Prosecutors’ Office said yesterday. Prosecutors are holding a former TSMC engineer surnamed Chen (陳) and two recently sacked TSMC engineers, including one person surnamed Wu (吳) in detention with restricted communication, following an investigation launched on July 25, a statement said. The announcement came a day after Nikkei Asia reported on the technology theft in an exclusive story, saying TSMC had fired two workers for contravening data rules on advanced chipmaking technology. Two-nanometer wafers are the most
NEW GEAR: On top of the new Tien Kung IV air defense missiles, the military is expected to place orders for a new combat vehicle next year for delivery in 2028 Mass production of Tien Kung IV (Sky Bow IV) missiles is expected to start next year, with plans to order 122 pods, the Ministry of National Defense’s (MND) latest list of regulated military material showed. The document said that the armed forces would obtain 46 pods of the air defense missiles next year and 76 pods the year after that. The Tien Kung IV is designed to intercept cruise missiles and ballistic missiles to an altitude of 70km, compared with the 60km maximum altitude achieved by the Missile Segment Enhancement variant of PAC-3 systems. A defense source said yesterday that the number of
A bipartisan group of US representatives have introduced a draft US-Taiwan Defense Innovation Partnership bill, aimed at accelerating defense technology collaboration between Taiwan and the US in response to ongoing aggression by the Chinese Communist Party (CCP). The bill was introduced by US representatives Zach Nunn and Jill Tokuda, with US House Select Committee on the Chinese Communist Party Chairman John Moolenaar and US Representative Ashley Hinson joining as original cosponsors, a news release issued by Tokuda’s office on Thursday said. The draft bill “directs the US Department of Defense to work directly with Taiwan’s Ministry of National Defense through their respective
Tsunami waves were possible in three areas of Kamchatka in Russia’s Far East, the Russian Ministry for Emergency Services said yesterday after a magnitude 7.0 earthquake hit the nearby Kuril Islands. “The expected wave heights are low, but you must still move away from the shore,” the ministry said on the Telegram messaging app, after the latest seismic activity in the area. However, the Pacific Tsunami Warning System in Hawaii said there was no tsunami warning after the quake. The Russian tsunami alert was later canceled. Overnight, the Krasheninnikov volcano in Kamchatka erupted for the first time in 600 years, Russia’s RIA
RSS