Hewlett-Packard Earnings Top Expectations, but Revenue Falls

But while H.P. outperformed the diminished expectations Wall Street had for the quarter, revenue was lower in five of its six business segments, and demand for key products like personal computers collapsed.

In an interview, Ms. Whitman said that she had built up H.P.’s cash position and lowered its debt, while retooling businesses and shuffling executives, as part of an overall plan to move one of the world’s largest information technology companies to “a new style of I.T.”

In that world, businesses and consumers will rent software over the Internet, and pay for technology-infused experiences like the ability to print from a mobile phone to a kiosk at a FedEx store, as much as they now buy H.P. mainstays like laptop computers and printers.

“This is a pretty big change,” she said. “We need to do it with speed, and we need to leverage it with scale.” In PCs, H.P.’s biggest business, she said, the company has to cater to “people’s desire to personally compute,” using a variety of devices and technologies.

“We haven’t broken through that,” Ms. Whitman said.

Some of the progress, in things like new kinds of tablet computers that use Google’s Android operating system instead of the Windows software from Microsoft, will be seen over the next few weeks, as H.P. offers a number of machines for the Christmas season. Other efforts, like the kiosk printing, three-dimensional printers, or H.P.’s own so-called cloud computing business, may not show significant revenue for several years.

Analysts appeared content with H.P.’s results, while warning about the difficulties ahead. H.P. reported net income of $1.41 billion, or 73 cents a share, in contrast to a loss of $6.85 billion, or $3.49 a share, in the period a year earlier. Revenue was $29.1 billion, a drop of 3 percent from a year ago.

The net income, excluding charges, was $1.01, above the expectations of Wall Street analysts. They had expected $1 a share and revenue of $27.91 billion, according to a survey of analysts by Thomson Reuters. The news sent H.P. stock up more than 5 percent in after-hours trading.

Nonetheless, revenue from consumer PCs fell 10 percent. Revenue from software, an essential growth area for the company, fell 9 percent from a year earlier (in part related to a large sale H.P. made in 2012, making comparisons with new earnings difficult). Sales of business hardware, the only business segment to rise, were up a modest 2 percent.

H.P. returned cash to shareholders in the form of a dividend payment, but cut research and development spending by $180 million, a big slice from the $909 million spent in that area a year ago.

“They’re very challenged longer term,” said Bill Kreher, an analyst with Edward Jones. “Most people view this as a restructuring, or a turnaround story. It’s going to be so hard for them to get away from their old hardware businesses.”

H.P., one of the oldest companies in Silicon Valley, was blindsided by advances like smartphones, tablets and cloud computing, all of which have hammered its core businesses, as well as turmoil in its executive ranks. Ms. Whitman, who came on board in September 2011, was the company’s third chief executive in just over two years.

“We still have a lot of work to do,” Ms. Whitman said, adding that she would not get H.P. into businesses like smartphones as an alternative to PCs unless she saw a means to success in that business. “It’s hard to figure out how to make money in that,” she said.

Cisco Expects a Decline in Revenue of Up to 10%

The network equipment maker’s chief executive, John T. Chambers, issued the warning as the company reported lower-than-expected revenue for its first fiscal quarter. Mr. Chambers attributed the warning to sluggish demand in emerging markets, as well as the chilling effect of the recent government shutdown on business confidence.

Mr. Chambers said companies in emerging markets like China had become hesitant to buy Cisco products because of political repercussions from reports about the United States spying on foreign governments.

He said Cisco was also seeing a slowdown in decision-making by companies because of economic uncertainty. Mr. Chambers additionally cited a big decline in revenue from television set-top box sales as the company pulled away from less-profitable contracts in that market.

He said Cisco’s orders fell sharply toward the end of the company’s first quarter because of big declines in many of its most important emerging market countries.

“The last two weeks of the last quarter was really tough,” Mr. Chambers told analysts on a conference call.

Shares of Cisco fell 10.3 percent, to $21.52, in after-hours trading after the company released its disappointing financial results targets.

Cisco said revenue grew only 2 percent, to $12.09 billion, in its fiscal first quarter, which ended Oct. 26, from $11.88 billion in the period a year earlier, below analysts’ average estimate of $12.34 billion, according to Thomson Reuters.

The company had forecast growth of 3 percent to 5 percent in the quarter.

Mr. Chambers told analysts that while the partial federal government shutdown directly cut a smaller-than-expected $50 million off Cisco’s revenue, it also reduced demand from nongovernment customers.

He said the shutdown “exasperated the lack of confidence among business leaders we had highlighted over the past few quarters.”

Cisco said its net income dropped to $2 billion, or 37 cents a share, from $2.09 billion, or 39 cents a share. Excluding one-time items, the company earned 53 cents a share, compared with Wall Street expectations of 51 cents a share.

Cisco also said its board had authorized up to $15 billion in additional repurchases of its common stock.

Cisco to Cut 4,000 Jobs Despite Growth in Revenue

Cisco's revenue guidance for the current quarter was weaker than Wall Street expected, and shares fell sharply in extended trading.

The company's stock fell $2.51, or 9.5 percent, to $23.87 in extended trading after the results were released. The stock closed up 6 cents at $26.38 in the day's regular trading session.

Cisco Systems Inc. earned $2.27 billion, or 42 cents per share, in the three months that ended on July 27. That's up from $1.92 billion, or 36 cents per share, a year earlier.

Adjusted earnings were 52 cents per share in the latest quarter, squeaking past Wall Street's expectations by a penny. This figure excludes charges stemming from a patent settlement with TiVo and other one-time items.

Revenue rose 6 percent to $12.42 billion from $11.69 billion.

Analysts, on average, had expected revenue of $12.41 billion, according to a poll by FactSet.

Cisco's performance is widely regarded as a bellwether for the technology industry. That's because the San Jose, California, company cuts a broad swath, selling routers, switches, software and services to corporate customers and government agencies. Cisco's fiscal quarters end a month later than most other major technology companies, giving it additional time to assess economic conditions.

Cisco's product orders grew 4 percent year-over-year, the same as in the third quarter of this year. Orders in the Americas region grew 5 percent, while Asia declined 3 percent due to economic challenges in the region, Chambers said. Europe, the Middle East, Africa and Russia increased 6 percent. On its own, Europe was up 9 percent.

Chambers said that economic conditions in Europe still "vary significantly" by region, with the north and the U.K. showing "very positive progress."

"We remain cautious, however, given the instability of the southern region," he added.

The caution is evident in Cisco's guidance. For the current quarter, the company said that said it expects revenue to grow 3 percent to 5 percent year-over-year. Analysts are expecting $12.72 billion, a 7 percent increase from last year's $11.9 billion.

Over the long term, Chambers said that the company still expects revenue to grow 5 percent to 7 percent, and added that Cisco is in a "better position in the market today than ever before."

As Revenue Exceeds Estimates, Groupon Plans $300 Million Share Buyback

The company, which also announced a $300 million share repurchase program on Wednesday, reported a better-than-expected 7 percent jump in second-quarter revenue to $608.7 million, as sales in the United States and Canada climbed 45 percent.

Lefkofsky, who was named interim CEO in February, has pushed on with his mobile-centric strategy since fellow founder Andrew Mason was replaced in February. The former CEO had presided over a precipitous share price decline to below $5 from its $20 debut in 2011.

The stock, which has gained 80 percent in 2013, rose to $10.35 in after-hours trade on Wednesday, its highest since July 2012.

"I think the news about installing Lefkofsky played a big part," said Tom White, an analyst at Macquarie Research. "Investors have been very impressed by the progress he's made since being made interim head and improving metrics particularly in the North America business."

With its core daily deals business model in steep decline, Groupon in recent months has re-invented itself as a more traditional e-commerce business that sells long-term deals, particularly through its smartphone app.

Lefkofsky and other executives told Wall Street analysts on Wednesday that emailed deals, once the linchpin of Groupon's sales strategy, now only accounted for 40 percent of its quarterly revenue. Instead, Groupon's customers were increasingly logging into the site to search for goods they were actively seeking, they said.

"It was only a few short years ago when email was all of the business," Chief Financial Officer Jason Child said. "The good news for us is we see our most active cohort of customers engaging with the marketplace most often. They're browsing, they're searching, they're going in and typing in keywords."

The difference, Lefkofsky added, was that Groupon was transforming from a "demand-generation business to a demand-fulfillment business."

But company management warned it would take several quarters for Groupon to complete its shift in direction and fully enter and compete in an intensely competitive and crowded e-commerce marketplace dominated by giants like Amazon Inc and eBay Inc.

For Groupon to succeed, Lefkofsky said it needed to focus on refining its algorithms to present goods relevant to a user's interests, while also improving its product suite for sellers, which includes rewards tracking programs and credit card processing tools.

BY THE NUMBERS

Groupon's gross billings, or the total value of purchased goods and services - of which the company takes a cut - rose 30 percent in North America, outpacing a 10 percent expansion rate overall.

About 50 percent of its North American transactions came through smartphones and tablets, versus 30 percent a year ago, the company said.

Groupon's success with mobile adoption has been viewed with particular favor on Wall Street. Groupon shares jumped 11 percent on June 14 when Deutsche Bank analysts upgraded the stock, attributing their optimism to the company's progress on the mobile front.

Groupon's revenue in the United States and Canada in the second quarter grew 45 percent, offsetting a 24 percent slide in Europe, the Middle East and Africa (EMEA) and a 26 percent fall everywhere else.

Child told Reuters on Wednesday that while Groupon's international performance has been weak, the company's investment in shoring up its European operations will pay off soon.

"North America continues to see strong growth and we made good progress in EMEA which flipped to positive gross billings growth," Child said. Gross billings in EMEA grew 4 percent in the second quarter. "We're now shifting our focus to the rest of the world."

The Chicago-based company reported quarterly revenue of$608.7 million compared with $568.3 million a year ago. Analysts on average expected $606.2 million in revenue, according to Thomson Reuters I/B/E/S.

It posted a second quarter net loss of $7.6 million, or 1 cent per share, compared with a year ago profit of $28.4 million, or 4 cents a share.

Excluding one-time items, it earned 2 cents a share, level with analysts' expectations.

(Reporting by Gerry Shih; Editing by Carol Bishopric)

AOL Posts Higher Revenue and Buys Company

In line with its ambitions to become a platform for live broadcasting and programming, the company also said that it had acquired Adap.tv, a video advertising company that allows purchases across the Internet and on television. The cost was $405 million.

Under the terms of the deal, AOL will pay $322 million in cash and about $83 million in stock. That is more than the $315 million it paid for The Huffington Post two and a half years ago and thus is its biggest acquisition since becoming an independent company.

Video, with its ability to command higher advertising rates, has been one of the biggest points of focus for Internet media companies for some time. AOL has been seeking to amass sources of video content as part of its bet that consumers will increasingly watch video online instead of on television.

“AOL is a leader in online video, and the combination of AOL and Adap.tv will create the leading video platform in the industry,” Tim Armstrong, AOL’s chairman and chief executive, said in a statement. “The Adap.tv founders and team are on a mission to make advertising as easy as e-commerce, and the two companies together will aggressively pursue that vision.”

AOL executives added in a phone interview that the acquisition was not as much about promoting their own content as it was about diversifying the company’s earnings into a revenue stream — the infrastructure for ad purchasing for online video — that it thinks has tremendous potential.

In addition to the Adap.tv sale, AOL trumpeted the fact that its ad sales were up 5 percent. However, that growth was tepid compared to overall digital ad spending in the United States. That spending grew by 14.8 percent, to $10.01 billion, in the second quarter of 2013 compared with the same period last year, according to Emarketer, an online advertising research firm.

Despite positive growth in advertising and traffic, up 3 percent year over year, the earnings revealed the company’s continued dependence on revenue from subscriptions to the AOL portal, a declining business. Looking at adjusted operating income before depreciation and amortization, or income earned from regular operations, the membership business was a net positive at $151.6 million, but still down 4 percent year over year.

Wall Street’s reaction was mixed, and AOL’s stock rose 1.4 percent, to $36.69 at the close of trading. Analysts were pleased that AOL seemed to be cutting losses. The brand groups, for example, cut losses from $15.2 million for the quarter a year earlier to $1.4 million this last quarter. Though losses increased in this area for AOL networks, Mr. Armstrong said that was because the company was in “investment mode.”

But many worried about whether AOL paid too much for the Adap.tv purchase, which will be completed in September.

Adap.tv, founded in 2007, counts Spark Capital, Redpoint Ventures and Gemini Israel Funds among its investors.

This article has been revised to reflect the following correction:

Correction: August 7, 2013

An earlier version of this article misstated the quarterly revenue for AOL. It was $541 million, not $361 million, for an increase of 2 percent, not 7 percent. The error was repeated in an earlier version of the headline.

Intel Cuts 2013 Revenue Forecast as P.C. Industry Sags

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Revenue Falls, but Profit Tops Forecast at I.B.M.

The company’s software delivered a strong performance, profit margins rose, and new contract signings in its major services like data analysis rose sharply — an encouraging sign of future business. But its hardware business continues to struggle.

“The results are positive compared to earnings expectations,” said A. M. Sacconaghi, an analyst at Sanford C. Bernstein. “But it’s mixed.”

I.B.M. and investors focused on the positive side. The company raised guidance for earnings per share for the year by 20 cents to “at least $16.90 a share.”

In after-hours trading, I.B.M. shares rose 2.6 percent, or more than $5. The stock closed the regular trading session up 70 cents at $194.55.

The company’s net income fell 17 percent, to $3.2 billion, or $2.91 a share, compared with nearly $3.9 billion in the year-ago period. That includes a charge of about $1 billion for trimming its work force. I.B.M. announced in April that it would take that charge this quarter and that most of the affected workers would be outside the United States.

In recent years, I.B.M. has taken annual charges that average several hundred million dollars for what it calls “work force rebalancing.” The company sheds workers in higher-cost nations and in businesses that are being trimmed, and it adds employees elsewhere, especially in India.

I.B.M. says the process reflects both financial discipline and globalization as it hires and invests in faster-growing markets. The net effect has been an expansion of its global work force to more than 430,000.

What is mainly different this time, analysts say, is that the work force charge is being taken in a single quarter rather than being spread across an entire year. The company’s operating earnings, which exclude the charge for work force cuts, rose 3 percent, to $4.3 billion, or $3.91 a share. The result was well above the average analyst estimate of $3.77 a share, according to Thomson Reuters.

Operating earnings per share rose 8 percent, reflecting fewer shares outstanding, because I.B.M. steadily buys back its own shares. Revenue fell 3 percent, to $24.9 billion, below the Wall Street forecast of $25.4 billion.

I.B.M. is the largest supplier of information technology — hardware, software and services — to corporations and government agencies worldwide, and its results are watched as a guide to broader trends in business technology spending.

Globally, the growth in technology spending has softened, as once-hot markets like China and Brazil cool and Europe remains in an economic slump. For I.B.M., the China business was soft, but Brazil did well, Mark Loughridge, I.B.M.’s chief financial officer, said in a conference call.

I.B.M. has met the challenge of economic turmoil and new waves of technology more nimbly than most of its established rivals. It moved quickly to expand in emerging markets, shift to higher-profit products and services, and cut costs.

But in the first quarter of this year, I.B.M. reported disappointing earnings, below analysts’ forecast for the first time since early 2005.

Businesses that I.B.M. has earmarked for growth are thriving. One of these is software and services for mining vast amounts of data from the Web, sensors and smartphones, to be used to find ways to increase sales or cut costs.

But the question for established companies like I.B.M. is whether newer, more profitable businesses can grow fast enough to offset the competition from emerging rivals and new technology.

A prime example is cloud computing, a fast-growing market for computing sold to businesses as a service over the Internet. The low-cost cloud model threatens traditional technology suppliers. Amazon is the early leader in the cloud business.

I.B.M. is investing in cloud computing. Last month, it announced plans to buy SoftLayer Technologies, a cloud computing company, in a deal valued at about $2 billion.

“I.B.M. is making strong plays in new technologies like cloud, but the question is whether it is moving fast enough,” said Frank Gens, chief analyst at the International Data Corporation, a research group.

In the past, I.B.M. has also aggressively pulled out of areas with declining margins, like its personal computer business, which it sold to Lenovo in 2005.

Recently, I.B.M. has talked to Lenovo about a deal for I.B.M.’s unit that sells so called industry-standard data center computers, typically powered by Intel chips, analysts say. Talks apparently broke off in May, when the two sides could not agree on a price. But Mr. Loughridge said I.B.M. was in “active discussions.” That business represents about $5 billion in sales for I.B.M., but competition is fierce.

Oracle’s Revenue Disappoints Wall Street Again

The quarterly results announced Thursday could escalate investors' fears about Oracle's ability to adapt to the changing demands of its customers. Businesses and government agencies are increasingly buying software through monthly or annual subscriptions that enable employees to access applications on any machine with an Internet connection. This "cloud computing" approach is a shift from Oracle's traditional approach of licensing software that is installed on individual computers kept on the premises of its customers.

Oracle has been rolling out more cloud computing options through acquisitions and in-house development, but its recent performance is raising questions about its ability to compete in this growing market. The cloud computing shift is being led by smaller companies that were set up to focus on leasing software over the Internet. This group includes Salesforce.com Inc., Workday Inc. and NetSuite Inc., a company backed by Oracle CEO Larry Ellison.

Like other software makers born decades ago, Oracle and longtime rival SAP are trying to mine new markets while still clinging to the old way of doing things because the familiar sales methods still bring in most of the company's revenue.

"It's a very difficult transition," Forrester Research analyst Andrew Bartels said. "It's something they are clearly nervous about."

Investors are jittery, too. Oracle's stock plunged $2.99, or 9 percent, to $30.22 after the numbers came out.

A similar sell-off occurred three months ago when Oracle's previous quarterly report proved to be a letdown.

The latest report covering Oracle's fiscal fourth quarter also contained troubling signs as several key gauges fell below the analyst projections that steer Wall Street's expectations.

Nonetheless, Oracle insists it remains healthy. It boasted that it added more than 500 cloud computing customers in the past quarter, putting the company on a pace to generate more than $1 billion annually in cloud computing.

Ellison, an executive known for brash statements, promised analysts during a Thursday conference call that Oracle is poised to unveil a series of "startling" partnerships with Salesforce, NetSuite and other cloud computing services that will rely on Oracle's latest database software. "These partnerships in the cloud I think will reshape the cloud and reshape the perception of Oracle technology in the cloud," Ellison said. He added that more details will be provided next week.

In an apparent attempt to win over skeptical investors, Oracle is doubling its quarterly dividend. A payment of 12 cents per share will be made on Aug. 2 to shareholders of record as of July 12. Oracle will also try to boost its stock by spending an additional $12 billion buying back its own shares. The stock will move from the Nasdaq exchange to the New York Stock Exchange next month if Oracle wins approval of an application announced Thursday.

The Redwood Shores, Calif., company earned $3.8 billion, or 80 cents per share, in the three months ending in May. That represents a 10 percent increase from income of $3.5 billion, or 69 cents per share, at the same time last year.

If not for certain expenses unrelated to its ongoing business, Oracle said it would have earned 87 cents per share. That matched the average estimate among analysts surveyed by FactSet.

But revenue remained unchanged at $10.9 billion — about $170 million below analyst forecasts.

In a particularly telling sign, Oracle's sales of new software licenses and cloud computing subscriptions increased just 1 percent from last year. If not for currency fluctuations that undercut Oracle, the company said the increase would have been 2 percent. A relatively strong U.S. dollar means sales made in other currencies get converted into fewer dollars.

The mid-range of an estimate provided by Oracle's management in March called for a 6 percent increase, excluding differences in currency rates. New software licenses and subscriptions are considered to be a key measure of a software maker's health because they set up a steady flow of future revenue.

Oracle Chief Financial Officer Safra Catz blamed weak markets in Australia, Asia and Brazil for dragging down sales in the past quarter.

In the current quarter ending in August, Oracle predicted new licenses and cloud computing subscriptions will rise by 1 percent to 9 percent from the same time last year.

Excluding certain expenses, Oracle anticipates its earnings will range from 56 cents to 59 cents per share in the current quarter. Analysts polled by FactSet had forecast earnings of 58 cents per share.

Medtronic’s 4th-Quarter Revenue Rises 4%

Medtronic reported net income of $969 million, or 95 cents a share, a decrease of 2 percent from $991 million in the period a year ago. Excluding one-time events and gains, the company would have earned $1.12 billion, or $1.10 a share. Revenue rose 4 percent to $4.46 billion for the period ended April 26.

That was better than estimates of analysts polled by FactSet, which predicted earnings of $1.03 a share on revenue of $4.38 billion.

“With our scale and breadth of innovative technology, Medtronic is clearly outperforming the market,” Medtronic’s chief executive, Omar Ishrak, said in a statement.

Shares of Medtronic, which is based in Minneapolis, rose $2.46 to $52.35.

Sales of the company’s pacemakers and implantable defibrillators increased 3 percent to $1.33 billion, driven by international sales. Sales of spinal treatments slipped 1 percent to $811 million, and neuromodulation devices increased 6 percent to $492 million.

The results suggested Medtronic might be regaining momentum after years of sluggish sales. The company’s defibrillators have been hurt by safety recalls and reduced medical spending.

The spinal business has been hurt by revelations about Medtronic’s handling of studies and marketing of its protein bone graft Infuse. Last year, a Senate investigation concluded that the company had helped write and edit medical journal articles that played down the graft’s risks. InFuse contains a genetically engineered protein that can stimulate bone growth.

For fiscal year 2014, Medtronic said, it expects earnings of $3.80 to $3.85 a share on revenue of $17 billion to $17.2 billion.

Vodafone Reports Rare Full-Year Decline in Revenue

Revenue at Vodafone was down 4.2 percent to £44.4 billion, or $67.6 billion, for 2012, while core earnings fell 3.1 percent to £13.3 billion.

The company, based in London, said it would keep a £2.1 billion dividend payment from its American unit, Verizon Wireless, rather than returning it to shareholders. Vodafone is at the center of intense speculation as to whether it will sell its 45 percent stake in Verizon Wireless, in a deal that has been estimated at $120 billion.

‘'We have faced headwinds from a combination of continued tough economic conditions, particularly in Southern Europe and an adverse European regulatory environment,'’ Vodafone’s chief executive, Vittorio Colao, said in a statement.

Mr. Colao declined to comment on whether he would consider a sale of the Verizon Wireless stake, merely saying that he had nothing new to report.

Verizon Communications, the American company that holds the other 55 percent of Verizon Wireless, has made little secret of its wish to buy out its British partner. It has ramped up the pressure in recent months, saying that it believed it could buy the asset in a tax-efficient way.

The full-year results highlighted a problem for Mr. Colao, with Verizon Wireless growing at a rapid rate compared with assets in the core European markets that have now struggled for several years.

The steepest revenue declines came from Southern Europe, where operators are cutting prices to win business from struggling consumers. In Italy, service revenue fell 12.8 percent, while in Spain it was down 11.5 percent.

The group also took a £1.8 billion charge on its business in Italy, bringing the total write-downs for Spain and Italy for the year to £7.7 billion.

Having completed a three-year dividend program that guaranteed 7 percent growth per year, Vodafone said it now aimed at least to maintain the ordinary dividend per share at current levels.

Full-year margins on core earnings were down 0.5 percentage points to 29.9 percent, from 33.1 percent just three years ago.

‘'The situation in Southern Europe remains one of disappointment,'’ said Richard Hunter, the head of equities at Hargreaves Lansdown Stockbrokers. ‘'The question of the Verizon stake remains at the top of the agenda for investors, although Vodafone’s decision hitherto to stay put continues to reap measurable rewards, quite apart from the value of its stake appreciating by the year.'’

Time Warner Revenue Is Flat, Despite Cable Gains

The parent company of HBO, CNN, TNT and TBS reported revenue of $6.9 billion in the quarter that ended March 31, down 1 percent from the same period last year. Net income grew 23.5 percent to $720 million, or 75 cents a share, compared with $583 million and 59 cents a share in 2012.

“We’re off to a strong start in 2013, making us even more confident in our full-year outlook,” Jeffrey L. Bewkes, chairman and chief executive of Time Warner, told analysts. He specifically pointed to the success of the company’s cable TV business, driven this quarter by an average nightly audience of 10.7 million for the N.C.A.A. basketball tournament broadcast on several Turner channels.

But Time Warner’s legacy businesses continued to lag. Later this year, the company is expected to complete the spinoff of its Time Inc. publishing unit into a separate, publicly traded company. Revenue at Time Inc., which publishes Time, People, Sports Illustrated and InStyle, fell 5 percent to $737 million, reflecting an 11 percent dip in subscription revenues.

Time Inc. eliminated roughly 6 percent of its total worldwide staff of 8,000 in the first quarter, resulting in $53 million in restructuring and severance charges. “We remain very focused on taking costs out of the business,” said John K. Martin, chief financial and administrative officer at Time Warner. Cost cutting, he added, is “an important step in preparing Time Inc. to function as a stand-alone public company.'’

Revenues at the Warner Brothers studio fell 4 percent to $2.7 billion, while operating income increased by 23 percent to $263 million. “Both ‘Gangster Squad’ and ‘Jack the Giant Slayer’ fell below our expectations,” Mr. Bewkes said.

He remained optimistic about the studio’s slate of upcoming films, including “The Great Gatsby” and “The Hangover Part III.” Warner Brothers had a strong television season with “Revolution,” an apocalyptic drama on NBC, and “Game of Thrones,” the HBO fantasy series that averages 13.4 million viewers per episode.

Mr. Bewkes defended CNN under the leadership of Jeff Zucker, the recently named president of CNN Worldwide. But, he said, the channel still needed to evolve from a trusted source of breaking news to a more regularly watched outlet. “CNN can’t just be politics and wars,” Mr. Bewkes said.

He rebuffed questions about whether the HBO Go on-demand app would be made available on an à la carte basis through a broadband connection, making the premium cable channel more like the streaming service Netflix. “We would do it if we thought it was in our economic best interest,” Mr. Bewkes said. “At this point, we don’t think it makes sense.”

A Million Users Desert BlackBerry, and Revenue Falls 48%

It reported other bad news as well, a month before introducing its new BlackBerry 10 phones to the public. Revenue fell 48 percent in the company’s fiscal third quarter, ended Dec. 1, to $2.7 billion from $5.2 billion a year earlier.

After a favorable tax gain, RIM reported net income of $9 million, or 2 cents a share. A year ago during the same period, RIM earned $265 million, or 51 cents a share. The company said that using nonstandard accounting methods to adjust for the tax gain and other pretax charges led to an adjusted net loss of $114 million for the third quarter, or 22 cents per share.

Analysts had expected a larger loss of 35 cents a share, according to a survey by Thomson Reuters. Nevertheless, RIM’s shares fell about 9 percent in after-hours trading. Before RIM’s announcement, shares closed at $14.12, up for the day by 3.6 percent.

The company has pinned all its hopes on the BlackBerry 10 to win back customers who may have defected to iPhones or phones using Google’s Android operating system. RIM said 79 million customers were using BlackBerry devices.

“We believe the company has stabilized and will turn the corner in the next year,” Thorsten Heins, the chief executive, said in a conference call with analysts. “We are realistic about our competitors, but we know that customers in this industry demand and respond to innovation.”

Until now, RIM had been able to offset the sharp drop in the BlackBerry’s popularity in its traditional markets, particularly the United States, through increased sales to users in developing countries. Because every BlackBerry user generates high-margin monthly fees from carriers for RIM, the last quarter’s loss of subscribers is more than just a symbolic setback.

In the conference call Mr. Heins indicated that RIM had been reducing those fees, which account for 36 percent of RIM’s revenue, in a bid to keep BlackBerry’s current product offerings alive. And in an announcement that seemed to concern some analysts on the call, Mr. Heins said that the new BlackBerry 10 phones would substantially revamp how RIM set service fees.

With BlackBerry 10, Mr. Heins said, corporate and government users will be able to pick and choose what services they purchase from RIM, a step that he said could mean that some of them would no longer generate any user fees. The company was unclear about what fees BlackBerry 10s sold to consumers would produce. Last month Mr. Heins said that consumer BlackBerry 10 models would no longer benefit from RIM’s special Web compression technology, the chief service provided to consumers by RIM.

RIM, which has no debt, pleasantly surprised analysts by increasing its cash on hand by $600 million, to $2.9 billion. The company was vague about how it achieved that beyond saying that the newfound cash came from “working capital conversion.” In the past, several analysts have speculated that the company has mainly become better at collecting its outstanding bills.

Mr. Heins said that the introduction of BlackBerry 10, however, would bring an end to the company’s cash hoarding. RIM, he said, will dig into its cash reserves during the quarter to stockpile BlackBerry 10 phones in advance of their release and to finance advertising and other marketing campaigns for the devices.

Nevertheless, Mr. Heins predicted that RIM would still hold more cash at the end of its fiscal year than the $2.1 billion it had on hand at its beginning.

RIM shipped 6.9 million current-model BlackBerry phones during the quarter and 255,000 of its BlackBerry PlayBook tablets. During the call, company officials indicated that those products were being heavily discounted.

Apple Revenue Meets Forecasts, iPad Disappoints

Shares in the world's most valuable technology company briefly dipped to levels not seen since the start of August, after it delivered a 27 percent rise in revenue for its fourth quarter while earnings rose 24 percent.

The numbers, while in line with expectations, lacked the positive surprises that investors had grown used to and came after Apple undershot revenue targets in the previous quarter. Its shares bounced back, however, after CEO Tim Cook told analysts on a conference call that the latest iPhone 5 was heavily backlogged but the company had mostly worked out kinks in its iPhone supply chain.

Apple shipped 26.9 million iPhones in the last quarter, somewhat higher than the 25 million to 26 million that Wall Street analysts had predicted. But sales of the iPad came in at 14 million, well below lowered forecasts for the tablet as the economy remained weak and consumers awaited the iPad mini, which will hit store shelves next month.

Analysts say the real test for the company will come during the crucial holiday shopping season, when competition will reach fever-pitch with Apple, Amazon.com Inc, Google Inc and Microsoft Corp all fielding new gadgets.

"Going into earnings we were wondering if the slowing economy will catch up with Wall Street and it has," said Channing Smith, co-manager of the Capital Advisors Growth Fund.

"Apple is very well-positioned with the iPad and now the iPad mini. It has a great smartphone and we expect the iPhone 5 to sell very well. The outlook is conservative but that's not surprising. Err on the side of caution is a proven formula."

Just hours after Apple's results, its main smartphone rival Samsung Electronics Co reported a near doubling in quarterly earnings, and while it did not detail smartphone shipments, they are estimated to have surged to 58 million.

Apple heads into the current quarter after refreshing almost all of its product lines, including introducing an upgraded, fourth-generation full-sized iPad. The December quarter will show how well consumers respond to Apple's latest gamble - the iPad mini that will go on sale on November 2.

CAR THAT FLIES AND FLOATS

For the December quarter, Apple forecast revenue of $52 billion (32 billion pounds), below the average estimate of $55 billion, according to Thomson Reuters I/B/E/S. It is expecting margins to come in at 36 percent, far lower than analysts' expected 43 percent.

Apple Chief Financial Officer Peter Oppenheimer mostly attributed the lower margin and conservative guidance to a combination of a stronger dollar, higher costs associated with new products, and the fact that Apple's next fiscal quarter has one less week than the same period a year ago.

Apple's stock was holding steady at $609.40 in extended trade after flirting with the $600 level. The shares had ended regular trade at $609.54.

Supply constraints holding up sales of the iPad and iPhone dominated discussions between analysts and Apple executives during the post-results conference call. Apple had struggled to deliver large quantities of the iPhone 5 since its launch in late September, with the waitlist for the device at one point stretching to three weeks in some regions.

"Our supply output is significantly higher than it was earlier in October," Cook said, referring to the iPhone 5. "And I'm confident that we'll be able to supply quite a few during the quarter."

Cook also opined on Microsoft's new Windows 8-based Surface tablet that will hit stores in the wee hours of Friday.

"I haven't personally played with the Surface yet, but what we're reading about it, is that it's a fairly compromised, confusing product," he said. "I suppose you could design a car that flies and floats, but I don't think it would do all of those things very well."

Despite the lacklustre fourth quarter, Apple put up big numbers for the year. It ended its fiscal 2012 with a 45 percent increase in revenue to $156.5 billion, while net income was up 61 percent at $41.7 billion.

For the final fiscal quarter, it posted net income of $8.2 billion or $8.67 a diluted share in the fiscal fourth quarter on revenue of $35.96 billion, versus $6.6 billion or $7.05 a share a year earlier. Analysts had expected on average that Apple would earn $8.75 per share.

Apple ended the quarter with $121.3 billion in cash and securities, of which $83 billion was offshore.

(Reporting by Poornima Gupta; Editing by Richard Chang and Edmund Klamann)

Facebook’s Revenue Rises 32 Percent to $1.26 Billion

Facebook said on Tuesday that it now gets 14 percent of its advertising revenue from mobile ads, helping to reassure investors that the social network is beginning to figure out how to earn money off smartphone and tablet users.

Mobile ad revenues totaled roughly $150 million, up from an estimated $40 million to $50 million in the second quarter and almost nothing in the first.

"This certainly dispels the most bearish view, that Facebook couldn't monetize people on phones or tablets," said Colin Sebastian, an analyst with Robert Baird & Co.

"In about a six-month period they've actually started to generate decent revenues form their mobile applications," Sebastian added, though he said Facebook still needs to show that its mobile ads can command the same rates as its traditional ads and that they can deliver results for marketers.

Mobile advertising has been among the key investor concerns hanging over Facebook, helping slash more than $40 billion off its market value since its May IPO. As its users increasingly access the social network with their smartphones, Facebook has struggled to transition its business to mobile devices.

The mobile ads helped reignite Facebook's overall advertising business during the third quarter, following several consecutive quarters of slowing revenue growth that raised questions about Facebook's long-term prospects.

Advertising revenue increased 36 percent to $1.09 billion, up from 28 percent growth in the second quarter. But revenue from its payments and other businesses increased just 13 percent to $176 million.

Mark Zuckerberg, the 28-year-old chief executive who created Facebook in his Harvard dorm room, said mobile was the "most misunderstood aspect" of the company and took issue with the "myth" that Facebook could not earn money on mobile.

"Over the long run we're going to see more monetization per time spent on mobile than on desktop," Zuckerberg said on a conference call with analysts on Tuesday.

The company's shares leapt nearly 13 percent to $21.97 in after-hours trading on Tuesday.

Facebook said it had crossed the 1 billion threshold for monthly active users by September 30, of which 604 million were mobile users, a gain of 61 percent from a year earlier.

The shift to mobile has challenged many of the Web industry's top companies. Google Inc is the No.1 provider of smartphone software with its Android operating system. But the company missed Wall Street's revenue targets in the third quarter, with some analysts blaming the shortfall on its increasing reliance on lower-priced mobile ads.

Social game maker Zynga Inc, which announced layoffs of 5 percent of its staff on Tuesday, has suffered as it struggles to translate its hit games to mobile devices and as the use of its games on Facebook's service declines.

NOT PLEASED WITH GAMING

Zynga's woes were visible in Facebook's results, with Facebook's payments revenue from the maker of Farmville down 20 percent year on year.

Zuckerberg said he was not pleased with revenue from gaming, but said that beyond Zynga - which accounts for 7 percent of Facebook's total revenue - the situation was brighter.

"The interesting thing is that the rest of the games ecosystem has actually been growing. Our monthly payments revenue from the rest of the ecosystem increased 40 percent over the past year, since payments has been adopted," he said.

Zuckerberg also said Instagram, the photo-sharing app that Facebook acquired for roughly $750 million this year, now has 100 million users, up from 27 million when Facebook bought the company.

Facebook posted a net loss of $59 million or 2 cents a share in the three months ended September 30 after booking a big provision for income taxes. Excluding share-based compensation and income tax adjustments, it earned 12 cents a share, a penny higher than the average analyst expectation.

Facebook Finance Chief David Ebersman said the company would continue to invest aggressively during the fourth quarter, though the company did not provide a specific financial outlook, in keeping with its previous practice.

Ebersman said that the total number of ads that Facebook delivered in the third quarter increased 27 percent year-on-year and that the average price per ad increased 7 percent.

Facebook's third-quarter mobile revenue marked a big jump from the second quarter, when Facebook said that it was generating more than $1 million a day from a new class of ads that appear in users' newsfeeds. Facebook said that roughly half of that revenue was from mobile ads, suggesting that mobile advertising revenue totaled $45 million in the second quarter.

Stifel Nicolaus analyst Jordan Rohan said that Facebook's mobile ad revenue was impressive, but said that Facebook needs to proceed carefully so as not to damage the user experience by overloading its service with too many ads.

And he said that Facebook's desktop PC advertising business appeared to have shrunk by about $40 million from the second quarter. Rohan said he would rather see the desktop ad business remain stable as the mobile ad business grows.

Facebook's third-quarter revenue of $1.26 billion was a hair above the average analyst expectation of $1.23 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Alexei Oreskovic; Editing by Phil Berlowitz and Mark Bendeich)

Facebook 3rd-Quarter Revenue Surpasses Forecasts

“I want to dispel this myth that Facebook can’t make money on mobile,” he told financial analysts on the company’s third-quarter earnings call. “We are just getting started.”

Even before he spoke, investors seemed to take comfort from the company’s earnings report, released on Tuesday after the market closed.

Facebook posted revenue that slightly beat forecasts, and it said 14 percent of its advertising revenue came from ads on mobile devices. With those results, its shares rallied more than 8 percent in after-hours trading. Even so, they were at about 45 percent of the initial public offering price.

“You see a bit of a relief rally,” said Colin Sebastian, an analyst with R.W. Baird. He added, however, that “Facebook still has a lot to prove in terms of their overall competitiveness and market share in online advertising.”

The rally came even though the company reported a net loss of $59 million in its third quarter, compared with net income of $227 million a year ago.

The earnings report was the first time the company had broken out from its overall advertising revenue how much money it collects from mobile ads. The information helped to address a critical question that investors have had about how Facebook will respond to the world’s shift to mobile computing; 60 percent of all Facebook users log in from their phones.

Although it is not a direct comparison, Google is poised to make far more money from mobile devices. Google said that in the coming year, it would earn $8 billion from mobile advertising, apps and content. Facebook this quarter earned $150 million from mobile ads.

Analysts say Facebook’s biggest promise lies in strategically using the data it keeps on its one billion users. For Facebook to increase its advertising revenue significantly, it has to use this data to sell ads beyond its mobile app and desktop platforms. It has to serve ads to Facebook users when they are surfing the Web or playing online games or, crucially, when they are using their smartphones and tablets.

Even though Facebook makes the bulk of its revenue through advertising, in the earnings call, Mr. Zuckerberg talked about the company’s plan to branch out and make money in other ways, including by enabling people to buy and sell things on the platform. For example, he pointed to a product that allows users to buy gifts for their Facebook friends on their birthdays.

The company, which has its headquarters in Menlo Park, Calif., reported that revenue in the quarter grew 32 percent, to $1.26 billion, slightly surpassing analysts’ forecasts.

Analysts had expected revenue to rise by 29 percent compared with a year earlier, to $1.23 billion, according to a survey by Bloomberg. That consensus had already accounted for slowing growth. Revenue grew by 32 percent year-over-year in the second quarter of 2012 and 45 percent in the first quarter; by contrast, the company’s revenue doubled in the third quarter of 2011.

Analysts had also expected 11 cents a share of net income, using the nonstandard accounting methods they prefer, but Facebook beat that estimate by a penny. The company said it had over one billion users and made an average of $1.29 on each. Those rates were considerably higher in North America, where ad rates are relatively high. The company itself is growing fast. It employs 4,300 today, a 40 percent increase from a year ago.

Facebook made its public debut on May 18 with a valuation of over $100 billion, or more than 100 times its annual earnings at the time. At that price, it was more expensive than 99 percent of the companies in the Standard & Poor’s 500-stock index, Bloomberg calculated. Since then, Facebook remains among the costliest, certainly in the technology sector. Its price-to-earnings ratio is over 67 before the earnings numbers were released, compared with just over 20 for Google and just over 14 for Apple.

Facebook shares have hovered around $20 for several weeks, barely budging even when the company announced in early October that it had drawn a record one billion regular users.

“Wall Street cares about money,” is how Laura Martin, an analyst with Needham & Company, put it. “We need to see users turn into revenue.”

Facebook’s challenges remain formidable. It has to make more money from mobile advertising, a problem that many tech companies face.

Also, the vast majority of Facebook’s users are overseas, where ad rates can be far lower. And its share of revenues from payments has declined slightly, in part because of the poor performance on Wall Street of its social games partner, Zynga.

Not least, employees and other insiders will become eligible to sell off a tranche of shares in the coming months, potentially flooding the market with stock.

“They’re going to have to be pretty nimble,” said Aaron Kessler, an analyst with Raymond James. “But it’s a good first step.”

AT&T Revenue, Subscriber Growth Miss Wall Street View

The No. 2 U.S. mobile service provider said it had 151,000 net new subscribers in the quarter, compared with the average expectation for 358,000, according to five analysts contacted by Reuters.

Its bigger rival, Verizon Wireless, added 1.5 million subscribers in the quarter.

AT&T said a shortage of the latest iPhone, which went on sale in the last week of the quarter, meant that the vast majority of third-quarter iPhone sales went to existing customers, stunting its growth of new customers.

Slow customer growth likely helped the company post better-than-expected earnings for the quarter as new customers come with a hefty cost for wireless service providers.

AT&T's profit rose to $3.64 billion, or 63 cents per share, from $3.62 billion, or 61 cents per share, and was 3 cents ahead of Wall Street expectations, according to Thomson Reuters I/B/E/S.

However, revenue fell to $31.46 billion from $31.48 billion and missed the analysts' average estimate of $31.59 billion, according to Thomson Reuters I/B/E/S.

The company also raised its target for 2012 free cash flow by $2 billion to $18 billion.

Verizon Wireless is a venture of Verizon Communications and Vodafone Group Plc.

(Reporting by Sinead Carew; Editing by Lisa Von Ahn and Jeffrey Benkoe)

Yahoo Posts $1.09 Billion Net Revenue in Quarter

Mayer, once a rising star at Google Inc who took charge at Yahoo in July, told analysts on a conference call that she wanted to focus Yahoo's efforts around the "daily habits" of users such as email, the home page, Internet search and mobile devices.

"We're committed to going back to our roots as a consumer internet company focused on user experience," the 37-year-old Mayer said on Monday, adding that "we intend to win".

Rather than get into completely different businesses, Mayer said Yahoo would look to improve its performance and finding opportunities in its existing businesses, such as search which she said has "clear upside" potential.

But her top priority was to fashion a coherent strategy to manage the industry's transition to mobile devices, a fundamental shift that some of the most innovative Silicon Valley companies - from Facebook Inc to Google Inc - are struggling with.

"The mobile wave is a huge wave for us to ride," Mayer said on the conference call, adding that that the company had failed to capitalize on the shift to smartphones, underinvesting and "splintering" Yahoo's brands in its previous mobile efforts.

Mayer's comments, which she delivered along with third-quarter earnings results that beat analyst expectations, sent Yahoo shares up 4.6 percent to $16.49 in afterhours trading on Monday.

"For people who weren't sure how she was going to come across on her first call, she definitely proved herself tonight," said RBC analyst Andre Sequin. "It seems like she really recognizes what the company is, where the strengths are and what the opportunities are."

Some analysts also pointed to comments about using share buybacks to distribute the gains from the sale of Yahoo shares in China's Alibaba Group, and a preference for smaller-sized acquisitions rather than blockbuster deals, as buoying investor sentiment.

Mayer, Yahoo's third CEO in about a year, arrived after a tumultuous period in the company in which former CEO Scott Thompson resigned after less than 6 months on the job over a controversy about his academic credentials. Yahoo co-founder Jerry Yang had also stepped down as CEO, and an internal reorganization eliminated thousands of jobs.

Internet pioneer Yahoo, which makes most of its money from online advertising, has fallen behind more innovative rivals n recent years and missed out on the online social networking boom launched by Facebook.

Roughly 700 million users still visit a Yahoo website every month - putting it in the top ranks globally. But the amount of activity people engage in on many sites is steadily declining and its smartphone offerings are deemed lacklustre.

"She handled the call very well," said Gabelli & Co analyst Brett Harriss.

"You have the tone of a professional CEO who just wants to block and tackle better and move the company forward," he said, noting that he detected echoes of Google's business approach in Mayer's comments.

SHIFTING COURSE

Mayer is expected to focus on revamping Yahoo's technology and products, shifting course from the media-centric approach embraced by her immediate predecessor, Ross Levinsohn.

Still, Mayer noted that she did not plan to exit media entirely, noting that content was part of the company's appeal and that Yahoo would continue to invest in some original programming such as videos and coverage of events such as the Olympic games and the U.S. presidential elections.

Since taking the helm, Mayer has moved quickly to build a team to assist her, shelling out rich pay packages for a new chief operating officer and chief financial officer, among others.

Intel Reports Third-Quarter Revenue of $13.5 Billion

Intel, the world’s biggest maker of chips, is feeling pain from a global downturn in demand for personal computers. While Intel makes many kinds of chips, the ones that go into PCs are among its most profitable. The PC market is eroding, however, because of economic weakness and a shift to devices like smartphones and tablets.

Intel has fought the trend by investing in new styles of PCs that work more like tablets, by selling chips for the servers in big cloud computing data centers that connect PCs and the new devices, and by finding new uses for more powerful chips. So far, little of this has worked.

“The problem is demand,” said Ken Dulaney, vice president at Gartner, a technology research firm. “People are buying other things with their disposable income for electronics, like tablets, televisions, smartphones, e-readers and gaming devices. Intel is trying to take its technology to these consumers, but this is a transition period.”

Almost no one is counting Intel out, but the rough market transition will not end soon. In a conference call with securities analysts, Paul Otellini, Intel’s chief executive, said that he expected PC demand would grow at half the normal rate in the fourth quarter.

At the same time, he expressed optimism about demand because of a new computer operating system from Microsoft called Windows 8 that will be released Oct. 26. Over 100 new, lighter types of PCs with tabletlike functions would be produced by computer manufacturers using Windows 8, Mr. Otellini said. That could renew demand in 2013.

“It’s pretty hard to say that in good economic cycles we wouldn’t get into normal growth,” Mr. Otellini said. “The tablet is not the end state of computing.”

The chip maker, based in Santa Clara, Calif., said net income in the third quarter fell 14.3 percent to $3 billion, or 58 cents a share, from $3.5 billion, or 65 cents a share, a year earlier. Revenue was $13.5 billion, down 5 percent from $14.2 billion a year earlier.

On Sept. 7, Intel warned that third-quarter revenue would be $13.2 billion after earlier projections of $13.8 billion to $14.8 billion. Industry analysts were expecting earnings of 50 cents a share, according to a survey by Thomson Reuters. The stock, which fell about 3.5 percent in after-hours trading, closed in regular trading up 62 cents, or 2.85 percent, at $22.35.

For the fourth quarter, Intel projected its revenue would be $13.6 billion, plus or minus $500 million, and that its gross profit margins would shrink.

Last week the International Data Corporation, a market research firm, estimated that the worldwide PC market contracted 8.6 percent in the third quarter. The smartphone and tablet manufacturers that Intel sells to tend to have more competition and lower volumes than those in the PC market, which is about 350 million units a year.

Intel has tried to revive the PC market with a small, thin design called the ultrabook, but so far this has been unsuccessful. Recently IHS iSuppli, a market research firm, forecast that just 28 million ultrabooks would be sold in the second half of 2012, down from an earlier estimate of 35 million units.

The pain was being felt by other chip makers, too. Last week AMD said its third-quarter revenue would fall about 10 percent from the $1.4 billion recorded in the second quarter. AMD was expected to lay off a significant number of its staff. Mr. Otellini did not indicate that Intel would be laying people off.

Away from PCs, which accounted for $8.6 billion of total revenue, Intel reported revenue of $2.7 billion in its data center group, an increase of 6 percent from a year ago.

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