The Stupid Mistake That Torched My Tech Portfolio This Week

Each week, I report the results of the Big Idea Portfolio, a collection of five tech stocks that I believe will crush the market over a three-year period. I've done it before; my last tussle with Mr. Market ended with my beating the index's average return by 13.35%.

Real money was on the line then as it is now, which means any one of the five stocks you see here could cause me a lot of public embarrassment. This week, Google (GOOG +0.17%) cost me the most.

The search king fumbled when it prematurely released earnings during a press event meant to announce a new $249 Chromebook. But the gaffe itself paled next to the numbers it revealed to the world. Google badly missed earnings estimates thanks to ongoing losses at its Motorola Mobility unit and a rising cost per click (CPC) in its core ad business. A greater mix of mobile ads appears to be contributing to the downdraft.

Adjusted earnings fell  to $9.03 from $9.72 in last year's Q3 even as revenue climbed 45% year over year, to $14.10 billion. Analysts were expecting $14.69 billion and $10.69 per share, respectively, according to a survey of 20 analysts conducted by S&P Capital IQ. The stock fell more than 8% in the immediate aftermath of the report.

Facebook (FB +0.33%) also gave up hard-fought gains on the theory that weakness in advertising is, well, weakness in advertising. The social network remains off 50% from its May IPO debut and reports third-quarter earnings Tuesday after the bell. Analysts expect $0.11 in non-GAAP profits on $1.23 billion in revenue, according to data supplied by Yahoo! Finance.

What's the Big Idea this week?
Facebook and Google may have lost this time, but Mr. Market won, picking up 5.5 percentage points over last week's results thanks to a marketwide rally. The S&P 500 led all indexes with a 2.01% gain, followed by the small-cap Russell 2000, which rose 1.70% , and the Dow Jones Industrial Average, which added 1.65% . Google and Apple (AAPL +0.33%) held back the Nasdaq, which still managed to grow 0.94% , according to data supplied by The Wall Street Journal. Here's a closer look at where I stood through Thursday's close:

Source: Yahoo! Finance.
* Tracking began at market close on Jan. 6, 2012.
** Adjusted for dividends and other returns of capital.

Notable newsmakers
Interestingly, these numbers look weaker than they really are. I didn't get the benefit of Friday's 11% rally in Riverbed's shares. Investors piled in after the company reported better-than-expected Q3 earnings and strong fourth-quarter guidance.

Revenue improved 15% to $218.6 million, while adjusted earnings climbed 17% to $0.28 per share. Analysts had been calling for $216.7 million and $0.25, respectively, according data supplied by S&P Capital IQ. The beat marks Riverbed's third consecutive win versus Wall Street's consensus.

Microsoft (MSFT 0.50%) wasn't nearly so fortunate. A lack of Windows 8 machines put a damper on fiscal Q1 results, which missed targets. Revenue fell 8% as profits plummeted 22%. The good news? Pre-sales of Windows 8, which arrives next week, have already brought in more than $1.36 billion in revenue. Mr. Softy will recognize all that and perhaps quite a bit more when it reports second-quarter results three months from now.

Finally, Apple took yet another beating on Friday -- falling more than 3% on general weakness in the tech sector. At $609.84, the stock now trades at lows not seen since early August . And that's in spite of new estimates that say the iPad will once again outsell the entire domestic PC industry. Tablet sales should make for a healthy source of profits when Apple reports fiscal Q4 earnings next Thursday afternoon.