Quarterly earnings are the single best way to cut through corporate hype to learn how a company is really doing. But companies count on the tedious financial jargon to dull the interest of anyone outside Wall Street. As the tech earnings season draws to a close, we've sifted through the CFO-speak to bring you what really matters this quarter.
__Yahoo (YHOO)—__Since Marissa Mayer took charge of Yahoo last summer, shareholders got a dose of something they hadn't tasted in a long time: hope. Since then, Yahoo's stock price is up by more than half after years of stagnation. But the hard reality is that Yahoo is still Yahoo. Mayer is buying startups and changing Yahoo's culture to overhaul the company. But it's still an ad business. Yahoo's ad sales not only declined last quarter; the decline was steeper than the same time a year earlier. Profits were up, but only thanks to Yahoo's stake in Chinese e-commerce powerhouse Alibaba. Takeway: Mayer's acquisitions and redesigns must shore up Yahoo's core business soon to show she's the savior the company has been seeking all these years.
__Google (GOOG)—__Forget Google Glass. It's ad sales that are keeping Google's shares above $800 (and a flagging Apple doesn't hurt either). Google's struggle to make mobile ads pay out the way its desktop ads do remained a theme this past quarter. And its Motorola division keeps siphoning money like a slacker living in his parents' basement. But Google still brought in nearly $12 billion in ad revenue this past quarter (at current rates, that's enough to buy out the ad inventory for the next 45 Super Bowls). As for Google Glass, if digital spectacles help Google sell more ads, then its experiment in masculine fashion will be validated. Call me a Luddite, but will anyone really voluntarily overlay their walk down the street with augmented AdWords? Takeaway: Google is working to head off an innovation crunch that could eventually drag down a core search business that for now shows no sign of flagging.
__Netflix (NFLX)—__Netflix openly aped HBO this past quarter by debuting a critically acclaimed hour-long drama to attract subscribers. This same quarter, Netflix passed HBO in number of subscribers. Not bad for a company that not so long ago seemed to have a talent for little else than pissing off customers. In retrospect, the goodwill that started to flow back its way when Netflix agreed to resurrect Arrested Development did more than halt the bad headlines. That positive momentum has only accelerating, pointing the way to Netflix's future. As intractable studios and competition for content from Amazon stymie licensing deals, original programming will keep Netflix relevant (just wait for the hype when Arrested Development launches next month). Takeaway: Welcome to the next cable channel.
__Apple (AAPL)—__What do you say if you're a stock-market legend that is less than 60 percent as legendary as you used to be? If you have enough cash to cover the city of San Francisco's annual budget for the next 20 years? Do you say, "Check out our awesome new TV?" Well, not yet. But Apple CEO Tim Cook did manage to put a human face on a company that has stagnated recently under its sense of its own invulnerability. Cook promised a $100 billion stock buyback and dividend program over the next two years to make up for falling profits and the recent new-product drought. Apple shares are back over $400 following the news. But that's hardly the stuff of legend. Takeaway: Cash payouts are nice, but Apple needs something new and awesome soon to keep up with expectations.
__Microsoft (MSFT)—__Despite the dying market for PCs, Microsoft showed surprising signs of life this past quarter. Profits rose on sales of the same software franchises that have been at the core of Microsoft's business forever: Windows and Office. It wasn't Microsoft's relentlessly marketed Surface tablet that came to the rescue this quarter, though Microsoft didn't actually break out Surface sales. But anyone who expected this lumbering software giant to rise or fall on its shiny new piece of hardware doesn't really understand Microsoft. Yes, people aren't buying new PCs. But that didn't matter so much to Microsoft over the past few months: the billions of dollars collected by Microsoft this past quarter especially were anchored by upgrades. Takeaway: Though PCs aren't selling, plenty of people still have them—and they want to try Windows 8.
__Amazon (AMZN)—__To the surprise of no one, Amazon keeps selling more stuff. With more than $16 billion in revenue this past quarter, setting a pace that has Amazon coming ever closer to matching Target in annual sales. Unlike Amazon, however, Target doesn't have its own e-reader. Or original streaming-video shows. Or a publishing company. Amazon's ambitious forays into digital content are one key reason shareholders forgave the company yet another quarter of paltry profits compared to its tech rivals. And Amazon highlighted those ventures in its earnings release yesterday, for good reason: Digital stuff costs far less to acquire, store and ship than all the physical stuff the company promises to ship you in two days or less. Takeaway: Amazon keeps clawing its way toward the top spot in retail as shareholders load up their Kindles and wait patiently for profits.
