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Thursday December 18, 2014

Finances

Finances
 

Apple Reports Record Quarterly Revenue

Apple Inc. (AAPL), designer and retailer of iPods, iPads and iPhones among other devices, reported its quarterly earnings on Monday, January 27. The company reported record quarterly revenue and net income.

Apple reported record revenue of $57.59 billion for the quarter. This represents an increase from the same quarter last year when the company reported revenue of $54.5 billion.

The company announced quarterly net income of $13.07 billion or $14.50 per share. This is a slight decrease from the comparable quarter last year when the company reported net income of $13.08 billion or $13.81 per share.

"We are really happy with our record iPhone and iPad sales, the strong performance of our Mac products and the continued growth of iTunes, Software and Services," said Tim Cook, Apple's CEO. "We love having the most satisfied, loyal and engaged customers, and are continuing to invest heavily in our future to make their experiences with our products and services even better."

Although Apple sold a record number of iPhones and iPads this quarter, investors are looking for something more. "What we've gotten over the last year or so is impressive products, but they are really enhancements of current products and not necessarily the next new thing," said Jack Ablin, Chief Investment Officer with BMO Private Bank. "Apple investors want the next new thing – that's the catalyst that people are waiting for."

Apple Inc. (AAPL) shares ended the week at $500.60, down 9% for the week.

Facebook Reports Impressive Earnings


Facebook Inc. (FB), a social networking site with more than 1 billion monthly active users, reported its quarterly earnings on Wednesday, January 29. The company's stock price increased following the announcement of increased advertising revenue.

Facebook reported revenue of $2.59 billion for the quarter. This represents an increase of 65% over the same period last year when the company reported revenue of $1.59 billion.

The company reported net income of $523 million or $0.20 per share. This represents a significant increase over the comparable period last year when the company reported net income of $64 million or $0.03 per share.

"It was a great year for Facebook," said Mark Zuckerberg, Facebook founder and CEO. "We're looking forward to our next decade and to helping connect with the rest of the world."

Investors were all too happy to see Facebook report impressive revenue and income numbers. The market has been questioning whether Facebook will remain a viable social networking company since it reported that lower numbers of teenagers were using the site regularly. It is essential that Facebook keep the teenage demographic engaged in order to stay relevant in the social media space. Whether the flight of teenagers from Facebook to other social media sites like Twitter and Snapchat is a trend that will continue is something that Facebook and investors will be watching closely in the coming months.

Facebook Inc. (FB) shares ended at $62.57, up 14.3% for the week.

Google Continues its Meteoric Rise


Google Inc. (GOOG), operator of the web browser of the same name, reported its quarterly earnings on Thursday, January 30. Google beat analysts' revenue estimates and combined their earnings report with other announcements that encouraged investors.

Google reported revenue of $16.86 billion for the quarter. This represents an increase of 17% over last year when the company reported revenue of $14.42 billion. Analysts had expected revenue of $16.75 billion.

Google reported quarterly net income of $3.38 billion or $9.90 per share. This represents an increase from the comparable period last year when the company reported net income of $2.89 billion or $8.62 per share.

"We ended 2013 with another great quarter of momentum and growth. Google's standalone revenue was up 22% year on year, at $15.7 billion," said Larry Page, CEO of Google. "We made great progress across a wide range of product improvements and business goals. I'm also very excited about improving people's lives even more with continued hard work on our user experiences."

In addition to reporting impressive earnings, Google also reported that it will sell Motorola Mobile to Lenovo for $2.9 billion and that it is going to engage in a stock split in April 2014. As a result, Google stock rose to a record high in early Friday morning trading. The company's stock price rose to a high of $1,186.65 on Friday, January 31.

Google, Inc. (GOOG) shares ended at $1,180.97, up 4.9% for the week.

The Dow started the week of 1/27 at 15,879 and closed at 15,699 on 1/31. The S&P 500 started the week at 1,791 and closed at 1,783. The NASDAQ started the week at 4,132 and closed at 4,104.
 

Treasury Yields Fall to Three Month Low

The U.S. 10-year Treasury yield fell to its lowest level in nearly three months on Friday, January 31. Emerging markets have suffered losses, partly due to the Federal Reserve's decision to reduce bond purchases, and this has caused investors to leave these markets in favor of the security of U.S. government bonds.

"You're seeing a flight to quality out of other asset classes and into U.S. Treasuries," said Thomas di Galoma, head of U.S. Rates Sales at ED&F Man Capital Markets. "The market will continue to probably push closer to the 2.6% level on 10-year notes with month-end buying taking place." The 10-year yield fell four basis points to 2.66% in early Friday morning trading. This is the lowest level since early November 2013.

The Federal Reserve announced this week that it will cut bond purchases from $75 billion in January to $65 billion in February. At the same time a Bloomberg metric that tracks 20 developing nation's currencies fell 3.2% in January to its lowest level in nearly five years. Seeing this decline, many investors have sought the safety of U.S. Treasuries.

Despite the trouble in emerging markets, indications are that the U.S. economy is slowly growing. A report released on January 30 announced that the U.S. economy expanded at a 3.2% annual rate in the final quarter of 2013. This was in line with economists' predictions. In addition, although the Institute for Supply Management-Chicago Inc.'s metric fell to 59.6 in January, any reading above 50 signals growth. It seems the U.S. economy continues its slow march forward.

The 10-year Treasury note yield finished the week of 1/27 at 2.67% while the 30-year Treasury note yield finished the week at 3.62%.
 

Interest Rates Fall Slightly

Freddie Mac released the results of its latest Primary Mortgage Market Survey (PMMS) on Thursday, January 30. The results show average fixed mortgage rates falling slightly lower this week.

The 30-year fixed rate mortgage averaged 4.32% for the week. This represents a decrease from last week when it averaged 4.39%. One year ago at this time, the 30-year fixed rate mortgage averaged 3.53%.

This week, the 15-year fixed rate mortgage averaged 3.4%. This is slightly lower than last week when it averaged 3.44%. Last year at this time, the 15-year fixed rate mortgage averaged 2.81%.

Frank Nothaft, Vice President and Chief Economist at Freddie Mac, commented on the weekly survey results. "Mortgage rates eased somewhat as new home sales fell 7% in December to a seasonally adjusted pace of 414,000 units, below the consensus. The S&P/Case-Shiller 20-city composite house price index declined 0.1% for the month of November, the first decrease since November 2012."

The money market fund finished the week of 1/27 at 0.4%. The 1-year CD finished at 0.7%.

Published January 31, 2014


Previous Articles

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Scholastic Reports Strong Results

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