Despite the rough start to the day, the market managed to fight its way back to a pretty impressive gain. The S&P 500 ended Thursday’s trading session up 0.95%, somewhat inspired by the fact that first-time unemployment claims fell to multi-year lows last week.
It wasn’t all fun and games though. Plenty of stocks got squashed, with QUALCOMM, Inc. (NASDAQ:QCOM), Yahoo! Inc. (NASDAQ:YHOO), and Fortinet Inc. (NASDAQ:FTNT) among the worst of the worst. Here’s what investors need to know about their implosions.
QUALCOMM, Inc. (QCOM)
Qualcomm got the new fiscal year started on the right foot, but it’s not expecting to finish it on a high note.
The mobile phone chip maker warned investors today that it now only expects to earn between $4.75 and $5.05 per share of QCOM stock in 2015, versus average analyst estimates of $5.23. Qualcomm also said to expect revenue of something between $26 billion and $28 billion, which doesn’t compare favorably to the average estimate of $27.86 billion.
The prompt for the contracted outlook was two-fold. First and probably foremost, one of its customers is switching to an application processor of its own, and would no longer need to purchase them from Qualcomm. Simultaneously, the company is dealing with greater 4G competition in China.
QCOM stock finished the day at $63.69, down more than 10%.
Yahoo! Inc. (YHOO)
You live by the sword, you die by the sword.
It’s a cliche that Yahoo! shareholders fully understand today, in that YHOO stock was off by nearly 6% after Alibaba Group Holding Ltd (NASDAQ:BABA) posted disappointing Q4 results.
Yahoo! is a major shareholder of the much-ballyhooed Alibaba. The Alibaba IPO — and all the hype surrounding it — in the middle of last year spurred more than a 50% gain from YHOO stock between July and October. The luster of that windfall is starting to wear off though, following a revenue miss from the Chinese e-commerce giant. All told, Alibaba generated $4.22 billion in sales in its fiscal third quarter versus analyst expectations of $4.44 billion. BABA stock tanked more than 8% on the announcement.
The 384 million shares of BABA stock that Yahoo! owns collectively lost $3.5 billion worth of their value on Thursday.
Fortinet (FTNT)
The good news: Fortinet managed to top revenue estimates in its fourth fiscal quarter of 2014, and was also able to meet per-share earnings estimates. The bad news: The market didn’t care, more concerned about shrinking margins.
Last quarter, the cybersecurity name earned 14 cents per share of FTNT stock, as predicted. The top line of $224 million was even better than the estimated $211.6 million. The psychological impasse is the fact that higher revenue didn’t lead to higher earnings. Per-share income fell from 15 cents in the fourth quarter of 2013 to that 14 cents figure this time around. Some are concerned the shrinking profit margin for last quarter is just a preview of what’s to come.
FTNT stock fell 7% on Thursday.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
