MONEY Tech

Here’s a Look at How Apple and Microsoft Really Stack Up

On Tuesday, both Apple and Microsoft released their quarterly earnings reports, with Apple showing a 12.3% profit jump—and Microsoft showing a 7.1% decline. How do they compete on other measures? Here's a look at how the two tech giants stack up.

TIME Microsoft

Nokia Drags Down Microsoft Profits

Microsoft logo outside the Microsoft Visitor Center in Redmond, Wash.
Ted S. Warren—AP

The software firm took over of the fledgling cell-phone maker in April

Quarterly profits at Microsoft fell 7.1% even as revenues rose, due to the company’s April acquisition of cellphone maker Nokia, the software giant said in a quarterly financial report Tuesday.

Microsoft’s core software products—like Windows and Office—continue to sell well to other businesses; revenue on commercial sales rose 11% in the last quarter. That strong performance wasn’t enough to make up for operating losses at Nokia, which totaled $692 million.

The report comes on the heels of Microsoft announcing it will slash up to 18,000 jobs over the coming year. Most of those cuts, the company said, will come from Nokia. The workforce drawdown is the largest in the company’s 39-year history.

The report covers the fiscal fourth quarter, which ended June 30. Revenue for the period is up 18% year over year.

“Our solid execution and expense discipline allowed us to deliver a strong finish to the fiscal year,” said Amy Hood, executive vice president and chief financial officer at Microsoft.

 

 

 

TIME Earnings

Comcast Pulls in $2 Billion in Profit in Q2

National Cable and Telecommunications Association Cable Show
The Comcast Corp. logo is seen as Brian Roberts, chairman and chief executive officer of Comcast Corp., right, speaks during a news conference at the National Cable and Telecommunications Association (NCTA) Cable Show in Washington, D.C., U.S., on Tuesday, June 11, 2013. Bloomberg—Bloomberg via Getty Images

Comcast is in the process of trying to merge with Time Warner Cable

Comcast’s cable and Internet business is generating more money as it prepares to try to merge with Time Warner Cable. The communications giant posted overall revenue of $16.8 billion, a 3.5 percent increase from second quarter of 2013 that slightly missed analysts’ projection of $16.95 billion.

The company had net income of $2 billion, up almost 15 percent from a year ago. Earnings per share were 76 cents, beating analysts’ expectations of 72 cents.

The company shed 144,000 video customers during the quarter, and now has 22.5 million. However, Comcast added 203,000 new Internet subscribers for a total of 21.3 million. Overall revenue from Comcast’s cable, Internet and voice business jumped 5.4 percent to $11 billion from the same quarter a year ago.

Revenue from the company’s NBCUniversal Division, which includes television networks, theme parks and movie studios, was essentially flat year-over-year at $6 billion, a 0.3 percent increase from last year.

Comcast is looking to massively increase its footprint in the cable market by merging with Time Warner Cable. If the merger is approved by federal regulators, the combined company will have about 30 million cable subscribers.

TIME Earnings

Netflix Crosses 50 Million Customer Streams

Updated July 21 at 5:38 p.m.

Netflix’s customer base has passed 50 million members, the company announced in its quarterly earnings report Monday. The streaming service added 1.69 million new members during its second quarter, bringing the total to 50.5 million customers and generating $1.1 billion in revenue, slightly missing analysts’ projections of about $1.2 billion.

The company had earnings of $1.15 per share, missing projections by a single penny. Overall, Netflix generated $71 million in profit, triple the figure from a year ago.

In a letter to shareholders, the company touted the success of its original programming, noting that Orange Is the New Black is now the most-watched series on the service in every territory. The next shows on the company’s production docket will be the final season of the cancelled AMC show The Killing and a new adult animated comedy called BoJack Horseman, both of which premiere in August.

Netflix is also planning an aggressive international expansion later this year. The streaming service, which already has almost 14 million customers abroad, will launch in Germany, France, Austria, Switzerland, Belgium and Luxembourg in September. Netflix is prepping some original shows aimed specifically at foreign audiences, such as a soccer comedy that it will air in Spanish.

The company reiterated that it does not want to pay interconnection fees to Internet Service Providers to get its video content delivered to customers, an issue it has tried several times to fold into the zeitgeist of the ongoing net neutrality debate. “In the cable industry, there’s been constant conflict between the networks and cable distributors,” CEO Reed Hastings said in a video call with analysts. “We would hate to see ISPs brownout or blackout certain Internet sites while they try to extract payments.”

Netflix has also formally opposed the proposed merger between ISP giants Time Warner Cable and Comcast, unless the two companies are specifically banned from charging interconnection fees.

 

MONEY stocks

What the Financial Press Isn’t Telling Us About Google and Other Tech Companies

Google on iPhone 5
Iain Masterton—Alamy

The search engine's ongoing struggles in mobile highlight problems cropping up throughout the tech sector — yet you wouldn't know it by the reactions of investors and the media.

This was an awful week for tech, as many of the sector’s biggest names announced disappointing results that point to slowing growth and troubled strategies.

Yet you wouldn’t know it by how the markets — or the media — reacted this week.

Late Thursday, the search engine giant Google reported the amount of money that advertisers are willing to pay whenever someone clicks on an online ad continues to fall. So-called “average costs per click” for Google fell 6% in the quarter, compared with the same period a year earlier. This continues a trend that’s been going on for some time. In the first quarter, for example, costs per click sank 9%.

There are two explanations for why this is happening and neither is good news for Google. One is that online sites are increasingly being viewed through mobile devices such as smart phones and tablets, and mobile ad platforms are not paying the premium that traditional web ads have. The other reason is that Google is no longer the only game in town when it comes to online advertising, and Facebook’s recent efforts to boost its mobile presence are clearly succeeding.

Yet instead, most news accounts focused on the rosier parts of Google’s quarterly results, such as the fact that overall revenues grew 22%.

The same thing happened all week throughout the sector:

* eBay

On Wednesday, the online auction site reported sales that fell short of the Street’s expectations. In fact, on a quarterly basis, revenues have been flat for several quarters. Instead, headlines focused on profits meeting consensus forecasts.

* Yahoo

The portal, which is making a huge push to try to be a big player in online advertising, reported on Tuesday that display ad revenues declined. Yet instead, many publications focused on how Yahoo’s mobile efforts were improving or that the company was going to sell a smaller-than-expected stake in Alibaba, the giant Chinese online retailer and auction site that is expected to go public later this summer.

* Intel

Intel shares hit a decade-high after releasing earnings results on Tuesday that showed better-than-expected PC sales expectations and overall revenue growth. As Reuters reported, chief financial officer Stacy Smith said “PC sales had stabilized, easing fears about the four-year decline in computer sales as consumers turn increasingly to tablets and smartphones.”

Great. That means the dying part of the industry is dying a little less rapidly than was previously thought. Meanwhile, investors glossed over the fact that revenues for the mobile and communications chip group sales were down 67% compared with the prior quarter and off 83% versus last year.

* Microsoft

The company announced the biggest layoffs in its history on Thursday, cutting its workforce by 18,000 — many of those coming from its recently acquired Nokia division. As MONEY’s Ian Salisbury reported, the historic cuts show how far this once-dominant tech company has fallen as it struggles to find its place in the sector. Yet many sites looked at the situation as glass-half-full, noting how the stock was rising on news that Microsoft was retrenching.

Of course, that’s what happens when investors fall in love with a particular group of stocks that have collectively posted a better-than-expected run. They start viewing those shares through rose-colored glasses.

TIME General Electric

GE Profits Up 13% As Company Continues to Refocus

Workers assemble a General Electric Co. CF6-80C2 jet engine at the GE Aviation factory in Cincinnati, Ohio, June 25, 2014.
Workers assemble a General Electric Co. CF6-80C2 jet engine at the GE Aviation factory in Cincinnati, Ohio, June 25, 2014. Bloomberg/Getty Images

General Electric profits climbed 13% in the second quarter as the conglomerate refocuses on its core businesses of energy and heavy industry.

GE’s posted earnings of 35 cents a share ($3.55 billion) are up from 31 cents a share a year ago. Operating earnings climbed from 36 cents a share to 39 cents a share.

“GE had a good performance in the quarter and in the first half of 2014, with double-digit industrial segment profit growth, 30 basis points of margin expansion, and nearly $6 billion returned to shareholders,” said GE Chairman and CEO Jeff Immelt in a statement. “The environment continues to be generally positive.”

The news signals the success of GE’s strategy of shedding non-core businesses, like the media giant NBCUniversal, and doubling down on its energy and industrial portfolio. Last quarter, the French engineering titan Alstom agreed to sell its Power and Grid business that builds and services power plants and transmission grids.

MONEY Kids and Money

The Surprising Place Your Kid Should Save His Summer Earnings

Pitcher of lemonade and a money jar
Your teen's summer earnings may not seem like much now, but they can serve as a cornerstone for his retirement 50-odd years in the future. Somos/Veer—Getty Images

Get your teen started off now in a Roth IRA for a big payoff down the road, says financial planner Kevin McKinley.

A few weeks ago, I wrote about how to figure out how much money you need to become financially independent, and how the process could help you teach your kids to reach the same goal.

But talking the talk only goes so far. You can walk the walk by helping them start saving for retirement in…drumroll, please…a Roth IRA.

Why a Roth IRA?

For most younger workers, the Roth IRA is preferable to a traditional IRA for two reasons.

The first is that contributions to a Roth IRA can be withdrawn at any time for any reason with no taxes or penalties whatsoever. Therefore, that portion of the account can be taken out for other expenses, such as college or a down payment on a house, without a severe cost.

The second reason the Roth IRA rules is that younger workers typically are in a low tax bracket, and therefore don’t need the deduction that a traditional IRA provides. But once they get to retirement, all the money in the Roth can generally be withdrawn with no taxes at all.

How much your kid can save

Children of any age can open a Roth IRA account—as long as they have legitimate earned income. Flipping burgers and bagging groceries certainly counts, but so does self-employment like babysitting and yard work, especially if it’s done for someone other than you.

Just make sure to keep track of what your kid makes so you know how much can be deposited in to the Roth IRA. For 2014 the contributions to a Roth IRA are limited to the lesser of the kid’s earnings, or $5,500.

Technically, for the 2104 tax year, the money doesn’t have to be deposited until April 15, 2015, the usual deadline for the federal income tax filing.

What you can do to encourage him

Congratulations to you—and your child—if you can convince her straightaway to put her hard-earned paychecks into an account that isn’t meant to be tapped for another 50 years.

But even if you can’t immediately get your teen into the savings habit, you may be able to motivate her by using some of your own money. The money for the Roth IRA doesn’t necessarily have to come from her. She can spend her earnings, and you can deposit into the Roth on her behalf.(Just remember that your deposits then become her money, and she’s free to do with it as she pleases once she reaches adulthood.)

Also, keep in mind that the source of the deposit to your child’s Roth IRA doesn’t have to be an all-or-nothing proposition. You may want to tell your kid that you will match every dollar she contributes with one of your own.

For further motivation, try showing your child how time can turn a relatively-small amount of money into a small (or large) fortune.

For instance, let’s say you and your child deposits $5,000 into a Roth IRA when he’s 15 years old, and it grows at a hypothetical annual rate of 6% per year.

By the time he’s 65 (and it will happen sooner than he thinks), the account would be worth over $92,000.

But if he has the earnings and discipline required to set aside $5,000 in to the same account every year until he turns 65, the Roth IRA will provide him with a tax-free total of $1.6 million.

And if that doesn’t get his attention, no amount of walking and talking will.

__________

Kevin McKinley is a financial planner and owner of McKinley Money LLC, a registered investment advisor in Eau Claire, Wisconsin. He’s also the author of Make Your Kid a Millionaire. His column appears weekly.

Read more from Kevin McKinley

Four Reasons You Shouldn’t Be Saving for College Just Yet

Yes, You Can Skip a Faraway Wedding

The Simple Formula That Can Help You Achieve Financial Independence

TIME Earnings

Google Growth Continues in Second Quarter

Google

Google continued to show large year-over-year revenue growth in its quarterly earnings report. The search giant generated nearly $16 billion in revenue for the quarter, a 22 percent increase over the same period last year that beat analyst expectations of $15.6 billion. The company posted a profit of $3.42 billion, up from $3.23 billion in the second quarter of 2013. Adjusted earnings per share were $6.08, off the mark from analyst estimates of $6.24.

The majority of Google’s revenue comes from people clicking ads on its search engine and on partner sites, and the trends there remained consistent with past quarters. The total number of paid clicks increased 25 percent year-over-year and 2 percent from the first quarter of 2014. The cost of these ads continues to fall though, decreasing 6 percent from the same period last year and staying stable from the first quarter of 2014.

Traffic acquisition costs, the money Google shares with companies who place its ads on their sites and the money Google pays to gets its search engine placed in web browsers, was $3.29 billion, up from $3.01 billion last year.

The company also announced that its chief business officer, Nikesh Arora, is leaving the company after nearly ten years to join the Japanese tech company SoftBank.

Google stock ticked up nearly two percent in after-hours trading.

TIME Earnings

Yahoo Will Get to Hold Onto More of Alibaba

Marissa Mayer
Yahoo president and CEO Marissa Mayer speaks during a keynote address at the International Consumer Electronics Show in Las Vegas on Jan. 7, 2014. Julie Jacobson—AP

Yahoo posted disappointing second quarter earnings Tuesday, but that could be offset by news that it will keep millions more shares of Chinese e-commerce giant Alibaba when that company goes public in the U.S., giving Yahoo a much-needed bright spot

Updated July 15, 6:22 p.m. ET

Yahoo will get to hold on to more of its most valuable asset, the high-flying Chinese e-commerce company Alibaba.

Alibaba, which is prepping for a huge public offering in the U.S., has agreed to let Yahoo keep 68 million more shares than originally planned when the company goes public, Yahoo disclosed in its quarterly earnings report Tuesday.

Yahoo was previously required to sell 208 million shares, or about 40 percent, of its current stake in Alibaba during its IPO. Now the Internet giant will only have to sell 140 million shares. Alibaba’s IPO could give the Chinese company a valuation of as much as $150 billion, according to some estimates, making it a valuable asset for Yahoo.

Yahoo currently has about a 24 percent stake in Alibaba. “We are very strong believers in Alibaba over time,” Yahoo Chief Financial Officer Ken Goldman said in a conference call with investors. The company also announced that it would return at least half of the after-tax proceeds it makes from Alibaba’s IPO directly to shareholders.

Not everyone is convinced that Yahoo’s dependence on Alibaba is a good thing. “They’re suggesting that the capital is much better suited in an investment in Alibaba Group than what they can actually do with the cash,” says Rick Summer, an equity analyst at Morningstar. “It’s an admission that Yahoo doesn’t have enough opportunities to invest in and they don’t have confidence to return the cash to shareholders.”

Beyond Alibaba, Yahoo’s earnings report was mostly disappointing. The company posted revenue excluding traffic acquisition costs of $1.04 billion in the second quarter, a 3% drop from the same period last year and well below analysts’ estimates. Earnings per share were 37 cents, below analyst estimates of 38 cents. Operating income plunged from $137 million in 2013 to $38 million in 2014. Revenue from display advertising excluding traffic acquisition cost was $394 million, off seven percent from the same period last year. Search revenue, though, was a bright spot, increasing from $403 million last year to $428 million this year.

CEO Marissa Mayer herself acknowledged that the results were subpar. “Our top priority is revenue growth and by that measure, we are not satisfied with our Q2 results,” Mayer said in a statement. “While several areas showed strength, their growth was offset by declines.”

During the conference call, Mayer touted user growth as proof that Yahoo still has considerable room to grow its revenue. The company’s sites now have 450 million monthly users on mobile, and its video site, Yahoo Screen, increased views 67% year-over-year. Upcoming content initiatives aimed at further goosing growth include a series of daily concert broadcasts for a year and the exclusive airing of a sixth season of the cancelled NBC sitcom Community.

Yahoo shares sunk a bit more than two percent following the company’s conference call with investors.

MONEY

How Married Couples Master Sex—and Money

Michael Sheen as Dr. William Masters and Lizzy Caplan as Virginia Johnson in Masters of Sex (season 2, episode 3)
Michael Sheen as Dr. William Masters and Lizzy Caplan as Virginia Johnson in Masters of Sex. Courtesy of SHOWTIME

Masters and Johnson may not have asked couples how their paychecks affected their sex life, but we did. And here's what we learned.

With the season two premiere of Showtime’s Masters of Sex debuting this Sunday, MONEY decided to dip into our own trove of data about people’s romantic lives. But while Masters sexologists William Masters and Virginia Johnson explored the nature of human sexual response through lab work, we dug into the matter from an angle closer to our hearts: couples’ paychecks.

As part of June’s exclusive Love & Money survey, we reported on how earning power impacts marriages, including the fights, secrets, and lies money inspires. But we also learned quite a bit about how who wears the pants in the relationship affects how often those pants come off. Here are some of the more titillating findings.

Egalitarian households where the husband and wife earn roughly the same have the most sex, with about 47% of couples reporting getting frisky at least once a week. Couples where the women earns less than her husband were more likely to do the deed at least once a month than other earning pairs. But couples where the woman outlearns her spouse were most likely to say they have sex less than once a month.

Of course, as Masters and Johnson could no doubt tell you, quantity doesn’t equal quality. So we also asked our survey respondents how satisfying their sex was.

Again, couples with similar paychecks outperformed their peers. Egalitarian marriages reported having the hottest sex of any earning pair, with more than half rating their sex life as “hot” or “very good.”

Households where the wives earn nothing were least content with their current sex lives. These pairs were most apt to say their sex life “could be better” (or “what sex life?”), with the women more dissatisfied than the men.

But women weren’t fond of the other extreme either: Women who earned more than their husbands were least likely to report a satisfying sex life, while men in those types of relationships were more likely to feel sexually satisfied than their counterparts in marriages where the wives earned less or nothing.

Across the board, men were easier to please when it came to sex, the size of their paycheck notwithstanding. More men than women said they felt satisfied with their sex lives in every single type of earning relationship.

But there was one area where men and women largely agreed: Over two thirds of husbands and wives said they check their bank balance more often than they have sex.

Your browser, Internet Explorer 8 or below, is out of date. It has known security flaws and may not display all features of this and other websites.

Learn how to update your browser