Week's Winners and Losers: Apple Sizzles, Microsoft Fizzles
A handful of analysts lowered their price targets on Microsoft after the software giant posted uninspiring quarterly results. The Wall Street pros also hosed down their earnings forecasts.
The future is murky for Microsoft. It may seem to be doing all of the right things by announcing that it would make the upcoming Windows 10 operating system upgrade free to existing users for the first year, but that should sting near-term profitability.
Microsoft is making waves in consoles and smartphones, but Xbox gaming systems and Lumia devices are low-margin fare. The company is flush with cash and with plenty of time to get it right, but the next few quarters will be challenging.
The world's largest consumer tech company just pulled off the world's most profitable quarter. Fueled by a healthy spike in iPhone sales, Apple came through with earnings topping $18 billion. Eyeing the list of the 25 most profitable quarters -- excluding one-time windfalls -- it's really just oil companies and a handful of Apple appearances.
There may be concerns that too much is riding on the iPhone. Back out the iconic smartphone and Apple's revenue would have declined 7 percent instead of soared 30 percent. However, it's hard to knock Apple for being a one-trick pony when it's a pretty amazing trick.
Ruby Tuesday(RT)-- Loser
The struggling casual-dining chain can't seem to catch a break. It was sued Tuesday by the U.S. Equal Employment Opportunity Commission, which accused Ruby Tuesday of workplace sex discrimination.
The federal agency is alleging that Ruby Tuesday posted temp summer positions at a high-traffic Utah location, but only opened the applications to women. The temp gig included housing, and Ruby Tuesday reportedly didn't want to deal with any potential challenges of having to house women and men together.
It may not seem like a big deal, but it is for a company that's been slumping since a short-lived turnaround last year.
Brinker International (EAT)-- Winner
Ruby Tuesday may have made waves for the wrong reason, but larger rival Chili's is doing pretty well. Brinker International, the parent company of Chili's and Maggiano's Little Italy, posted better-than-expected quarterly results.
Chili's posted another quarter of solid restaurant-level growth. In the fickle world of casual dining, Maggiano's Little Italy stretched its streak of positive comps to an impressive 20 quarters in a row.
China's largest e-commerce company took two hits this week, and only one of them was self-inflicted. Alibaba was initially weak after Yahoo (YHOO) announced that it would spin off its 15 percent stake in the Chinese Internet darling. The fear here is that many Yahoo investors will dump the stock when the spinoff is complete by year's end.
Alibaba then made matters worse by posting financial results that fell short of Wall Street's top-line expectations. That's the kind of weakness that stings both Yahoo and Alibaba, since the 15 percent stake that was initially valued at $40 billion was closer to $34 billion by Thursday's close.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple and Yahoo. The Motley Fool owns shares of Apple, Microsoft and Yahoo. Try any of our Foolish newsletter services free for 30 days. Looking for a winner for your portfolio? Check out The Motley Fool's one great stock to buy for 2015 and beyond.