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Google Slides After Strong Earnings, Why?

Thursday, 15 Apr 2010 | 5:24 PM ET

Google slid lower in extended trade Thursday, despite earnings that topped expectations.

What happened?

Google failed to make the ‘whisper’ numbers, disappointing investors and costs per click spooked the Street, explains Fast Money host Melissa Lee.

And Google added about 800 employees. The increase in payroll combined with a pledge by management to spend heavily in developing new products also dragged down investor sentiment.

Why Is Schmidt Going Silent?
Eric Schmidt will no longer be involved in earnings calls, with Colin Gillis, BGC Financial analyst.

But perhaps the biggest drag on the stock was the noticeable absence of CEO Eric Schmidt from the call. “It triggers speculation about whether he will remain in control of the company,” says Colin Gillis of BGC.

Looking more closely at the results, Google, the world's most popular search engine and advertising giant said it earned $6.76 a share in its first quarter excluding one-time items, up from $5.16 a share last year.

Sales for the most recent quarter rose to $5.04 billion, excluding traffic acquisition costs (TAC), or the amount that Google pays to other Web sites that send it visitors.

Word on the Street
The Fast Money traders take a look at today's top business stories.

What’s the trade?

I like Google on fundamentals and may add to my position on this weakness, says Joe Terranova.

At this level, I also think it’s attractive, says Karen Finerman.

At $580, I’m also a buyer, says Tim Seymour.

The pledge by management to spend heavily in developing new products may be bearish for Google but it should benefit Intel, Akamai , and Cisco , says Pete Najarian. They're going to need to have more routers and chips to go onto those new servers. That's where I think you can win.


> Click here for more CNBC coverage of Google earnings

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ICAHN BOOSTS OFFER FOR LIONS GATE

After hours on Thursday legendary activist investor Carl Icahn increased his bid for Lions Gate to $7 from $6.20 a share.

He said he also intends to replace Lions Gate's board with his own slate of nominees. Icahn said the offering period will expire on May 14.

What must you know?

I don’t think $7 will work either, muses Karen Finerman.

There's no love lost between Icahn and the board of Lions Gate. As you might remember Carl Icahn and Michael Burns of Lions Gate slugged it out on Fast Money back on March 24th

At issue was Icahn’s belief that Lions Gates was bidding to acquire MGM. Soon after their conversation Lions Gate dropped out of the bidding.

Want more? Click here to see our post from March 24th.

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PLAYING THE GLOBAL GROWTH STORY

China’s economic growth surged to 11.9 percent in the first quarter but inflation was lower than expected, easing pressure on Beijing to increase interest rates and slow the economy’s rebound from the global slump, the government said on Thursday.

That suggests global growth is very much in play to the Fast Money traders and each have some ideas for trades.

1. COAL AND STEEL.

I’m bullish Arch Coal, says Pete Najarian. Global growth suggests that demand for coal should remain strong.

In this space, like players such as Terex and Deere , adds Tim Seymour.

2. OIL & ENERGY

I like XCO and SouthWestern Energy, says Joe Terranova. I see a lot of upside potential in both names; long term its a bet that nat gas prices are going higher.

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BLACK CLOUD OVER EUROPE

The volcanic ash cloud currently spreading over Europe is a bad omen, says Steve Cortes of Veracruz.

Of course, Cortes tends to carry around a giant cloud of worry wherever he goes! But he’s legitimately concerned about troubles overseas.

Worries are mounting that debt-plagued Greece is ready to use an emergency bailout package. And many analysts including Cortes believe that other nations in Europe are in equally dire situations.

As a result Cortes is bearish on the euro and suggests playing it short the FXE or long the EPV.

Want to hear more? Check out our entire interview with Cortes. Watch the video now.



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Trader disclosure: On Apr 15, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (C), (INTC), (MSFT); Grasso Owns (C), (AAPL), (BAC); Terranova Owns (AXP), (HES), (TER), (APA), (YHOO), (MOS); Terranova Is Short (LCC); Terranova Is Short (BRE); Terranova Owns (C) Calls; Terranova Owns (GOOG) Calls; Terranova Owns (SONC) Puts; Seymour Owns (BAC), (AAPL), (EEM), (INTC), (MON), (MGM), (MGM); Seymour's Firm Owns (POT); Seymour's Firm Is Short (X); Najarian Owns (BAC) Call Spread; Najarian Owns (C) Calls; Najarian Owns (CLF) Call Spread; Najarian Owns (GOOG) May Calls, Short April Calls; Najarian Owns (GE) Calls; Najarian Owns (PCX) Call Spread; Najarian Owns (MOS) Call Spread; Najarian Owns (SUN); Najarian Owns (YHOO) Call Spread; Najarian Owns (TCK); Najarian Owns (F); Finerman Owns (GOOG), (AAPL), (RRI), (BAC), (YUM); Finerman's Firm Is Short (IJR), (MDY), (IWM), (IYR), (SPY); Finerman's Firm Owns S&P Puts; Finerman's Firm Owns (JPM); Finerman Own (JPM); Finerman's Firm Owns (GLW); Finerman's Firm Owns (BAC); Finerman's Firm Oww (BAC) Preferred; Finerman's Firm Owns (WFC) Preferred; Finerman Owns (WFC) Preferred; Cortes is Short (LVS) & (WYNN); Cortes Owns (GS); Cortes Owns (MS); Cortes Is Short S&P Futures ; Kinahan Owns (C); Kianahan Owns (GE)

GE is the parent company of CNBC

For Steve Grasso
Stuart Frankel And Its Partners Are Short (AAPL)
Stuart Frankel And Its Partners Own (PDE)

For Eugene Profit:
Profit's Fund Owns (GE)
Profit's Fund Owns (GOOG)
Profit's Fund Owns (UPS)
Profit's Fund Owns (INTC)
Profit's Fund Owns (MRO)





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