Technology Stock Roundup: YHOO & FB's Bad Week

Last week was a mixed one with some good news and some bad, but Yahoo (YHOO) and Facebook (FB) pulled down tech companies.

Yahoo Stuck with the Bing Thing

Last week saw U.S. District judge Robert P. Patterson ordering Yahoo to start offering Bing search in Hong Kong and Taiwan, the last of the 16 markets in which Yahoo operates. The judge’s ruling follows the decision of the arbitrator, which concluded that Yahoo’s delays had caused Microsoft irreparable harm.

Yahoo wanted to delay adoption until 2014, by which time Microsoft is expected to have a new CEO. Yahoo’s concern that the new CEO could have limited enthusiasm for the deal was thrown out the window.

The search alliance formed in 2010 and running up to 10 years, remains an albatross for Yahoo although it has proved beneficial for Microsoft. Bing has been gaining market share mostly at Yahoo’s expense (and not Google as was the original plan). The business remains a drag, but one that Microsoft is willing to maintain so Google doesn’t increase its dominance. Yahoo continues to receive the minimum amount guaranteed, since monetization on Bing remains unsatisfactory.

The agreement requires Microsoft to offer an RPS guarantee during the transition period if monetization falls below expectations. And with the transition complete, Microsoft may not offer the RPS guarantee again. Neither party may opt out until mid-2015, which means that Yahoo is stuck with Bing for a long time still, whether it loses money or not.

Twitter Is Hotter Than Facebook

In yet another Facebook-fatigue report, Piper Jaffray says that teens these days prefer to use Twitter (TWTR) rather than Facebook, with 26% considering it their most important social site. Facebook’s 23% can’t be considered bad, except in contrast to its own peak share of 42% in the not-too-distant past. Teens still like Instagram, which has seen its popularity among teens go from 12% to 23% over the past year. But Snapchat (where photos self-destruct upon being viewed) is catching on and could eat into Instagram’s success.

Easy monitoring by parents, difficulty in maintaining privacy, meaningless sharing, Facebook’s monetizing initiatives (including ads in the news feed) and open targeting of teens has been turning them off. So Twitter’s simplicity is gaining momentum instead.

However, a recent study conducted by Pew Internet & American Life Project, shows that 94% of American teens retain their Facebook accounts even when they have reduced usage mostly because of its utility. So Facebook just might become popular again if other networks make mistakes or if other newer networks don’t come into being.

Microsoft Seems To Know Better

Despite all the criticism flung its way, Microsoft (MSFT) went on to launch the next generation of Surface RT tablets although it now prefers to call this low end version Surface (without the RT). That’s because Microsoft is actually seeing some strength in sales, which just goes to show that lower-end devices with a certain level of functionality sells.

Granted, Microsoft is seeing relatively greater success in the academic and government verticals, where it may be better positioned to push sales, but the fact remains that last quarter’s results benefited, even with a very limited number of apps. So with more apps and better distribution, things can only improve. Microsoft also launched Surface Pro 2, which includes Office and is heavily targeted at the BYOD segment. Nokia’s Lumia tablet will join the club once the takeover formalities are completed next year.

Apple’s (AAPL) iPads remain in very strong demand at the high end and chromebooks based on Google’s (GOOG) chrome OS are now some of the hottest-selling items on Amazon.com (AMZN). Microsoft is pricing its products closer to Apple devices rather than Google devices because of the margins involved. This seems to be a good idea though of course there is some risk involved.

The other interesting thing about its results was the success in the cloud business where both Office 365 and Azure grew triple digits and total cloud revenue jumped 103%. So the devices and services strategy appears to be on track.

Other stories you may have missed-

Apple Product Refresh: Last week, Apple showcased a new full-size tablet called iPad Air that weighs a pound and an updated iPad Mini with a faster processor and a sharper display. While iPad Air launching in a number of markets on Nov 1, iPad Mini will launch later in the month. It also launched the new Macbook Pro laptop and Mac Pro desktop at lower price points. Most notably, it is offering a lot of free software, including its iWork productivity suite. Apple’s pricing initiatives are obviously in response to Microsoft’s aggressive moves to wrest some market share.

Google Announces uProxy: Google has funded a new software program called uProxy. The program was developed by the University of Washington and a nonprofit group called Brave New Software with the intention of circumventing censored Internet. A person using the software can connect to another in a place like the U.S. where thr Internet is not censored, establishing a VPN-like connection. Therefore, users in places like China can with the help of friends in other countries, experience the Internet the way they do.

Yahoo Beats Google Again: According to comScore’s Internet traffic data for September, Yahoo sites had the greatest number of unique U.S. visitors in September, the third straight month that it achieved this. Monetization remains well behind Google, according to eMarketer. Google is expected to end the year retaining its number one spot (by a wide margin), followed by Facebook and then Yahoo.

Companies Reporting This Week: A large number of companies are reporting this week, including Apple, Facebook, Corning, Expedia, Teradata, IRM and CSC. Catch our previews in the Earnings Preview section.

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