TECHNOLOGY giants Facebook and Apple silenced talk of a tech bubble last night as they trumped all expectations, both delivering record earnings for the first quarter of 2014.
Facebook’s booming mobile advertising business led the social network to revenues of $2.5bn (£1.5bn) in the quarter, above the expected $2.36bn, and profit of $642m, up more than 70 per cent on the same period last year.
“Our mobile app adverts have been one of our best performing products to date since they launched in January of last year,” said chief executive Mark Zuckerberg on a call with investors.
Facebook now has over a billion mobile users,which helped to propel its mobile advertising revenues during the first quarter to $1.47bn, or 59 per cent of its total advertising revenue, and buoyed its shares four per cent in after-hours trading last night.
Facebook’s results were swiftly followed by Apple’s which also beat expectations in the first quarter by selling 43.7m iPhones since Christmas.
Apple’s revenues from the quarter hit $45.6bn, up 4.5 per cent year-on-year, and profit grew 7.3 per cent to $10.2bn, its highest earnings growth in six quarters.
The tech giant also boosted its share buyback scheme by an additional $30bn to total $90bn, increased its dividend by eight per cent and announced plans to split its stock seven to one in June.
“The size of the share buyback increase is a signal of the board and the management team’s strong confidence in the future of Apple,” said chief executive Tim Cook.
“We’re very proud of our quarterly results, especially our strong iPhone sales,” said Cook. “We’re eagerly looking forward to introducing more new products and services that only Apple could bring to market.”
Cook also revealed Apple has acquired 24 companies over the past 18 months and is “on the prowl” for further acquisitions.
Apple’s shares soared more than seven per cent in after hours trading.
IG market analyst Chris Beauchamp said the results would eliminate concerns over a tech bubble in the two stocks.
“There have been worries that we were reaching ‘peak Facebook’, but that’s clearly not the case,” said IG market analyst Chris Beauchamp pointing to its mobile growth.
“The worries around momentum stocks haven’t gone away... but these earnings will go a long way in restoring confidence from the broader market,” he added.