Welcome to Week 29 of the Big Idea Portfolio. This week, Google (Nasdaq: GOOG ) helped me win back points I'd lost in prior weeks when the search king reported strong second-quarter earnings. More on what's going on in my portfolio, and more tech stock news, in a minute. First, let's dig into the numbers:
|Apple (Nasdaq: AAPL )
|S&P 500 SPDR
Source: Yahoo! Finance.
* Tracking began at market close on Jan. 6, 2012.
** Adjusted for dividends and other returns of capital.
The week that was
Mr. Market is a tease. After days of rallying, stocks sold off enough on Friday for most indexes to end up just marginally. Tech led with the Nasdaq Composite gaining 0.58% as the S&P 500 improved 0.43%. The Dow also rose, ending up 0.36%, but the small-cap Russell 2000 fell for the second consecutive week, dropping 1.18%, CNBC reports.
Ongoing concern about the prospects for a recovery weighed down stocks last week, and it's doing so again today. Tepid demand for Spanish bonds in last week's auction appears to have been the initial culprit. More recently, economists said Spain's economy contracted 0.4% over the three-month period ending in June, up from 0.3% the quarter prior.
Thankfully, the U.S. economy is still growing. But there are also plenty of problems to report. As my Foolish colleague Morgan Housel reports, nearly half of Americans don't have enough savings to cover even three months of expenses. Not good, especially when you consider the average worker who ends up laid off spends 10 months unemployed. Frightening stats like these are why so many investors remain on the sidelines despite evidence they'd be better off investing regularly in well-run businesses that provide invaluable products and services to large groups of customers.
Tech poppers and floppers
Earnings season is upon us again, with big names reporting big numbers. Google led last week's list. The search king reported an 11% boost in earnings on a 35% improvement in revenue, aided by its acquisition of Motorola Mobility.
But it wasn't the big numbers that impressed analysts. Paid clicks, a measure of how frequently users click on ads shown on Google properties, rose 42% year over year. The added volume more than made up for a 16% decline in the price advertisers paid for their listings.
Microsoft (Nasdaq: MSFT ) wasn't so lucky. Mr. Softy reported a $492 million quarterly net loss -- the first in its history as a public company -- mostly because of a $6.2 billion goodwill impairment stemming from its 2007 acquisition of former Motley Fool Rule Breakers recommendation aQuantive.
To be fair, Microsoft attributed the losses to the entire online services division. Executives said the group, known internally as OSD, wasn't living up to prior estimates for growth and profitability.
Investors have known this for a while. Despite expensive marketing campaigns and a partnership with Facebook (NYSE: FB ) to enrich results, Mr. Softy's Bing search engine has made little progress in the war for search-market share. We'll learn more about Bing's impact on the social network when Facebook reports earnings on Thursday.
Apple and Netflix (Nasdaq: NFLX ) could move the market when they report earnings tomorrow after the bell. Analysts see the Mac maker generating better-than-30% revenue growth, while investors have more modest expectations for Netflix. Wall Street is calling for just 13% top-line growth, even though Netflix customers watched 1 billion hours of streamed programming in June.
Which reports will impress? Which will disappoint? You tell me. Use the comments box below to weigh in on what you're expecting in the week ahead.
And see you back here over the weekend for more tech-stock talk. In the meantime, remember to check out the Fool's latest premium report on Apple, written by senior technology analyst Eric Bleeker. Inside you'll receive his take on the key opportunities and threats facing Apple, as well as a full year of updates. Also, be sure to add Apple and these other tech stocks to your free Watchlist.