Transcripts

The Dow Closes Above 14K Despite Google's Earnings Gaffe

SUSIE GHARIB: A milestone on Wall Street: the Dow closed above 14,000 for the first time today, up 82 points to 14,000.41. The S&P 500 also closed at a new record, up seven points to 1553. IBM's strong earnings powered today's rally. But late today investors reacted differently to earnings from Google. Shares of the Internet search giant tumbled almost 8 percent in after hours trading on news that its second quarter earnings fell short of Wall Street expectations. Excluding items, Google earned $3.56 a share, $0.03 below analyst estimates. But revenues rose over 60 percent to $2.72 billion, slightly better than expected. Rick Summer, equity analyst at Morningstar, says Google needs to look beyond search engines.

RICK SUMMER, EQUITY ANALYST, MORNINGSTAR: You can't continue to grow beyond the moon, if you will. So it's a great market, it's a large market. It will be saturated eventually and the real question is, let's not think that Google is terrible. Right now what we have is we have a valuation that is, in our mind, really ahead of itself. And what is Google going to do beyond search is critically important to be able to justify this sort of valuation.

GHARIB: Also moving lower, Microsoft shares, which fell almost 2 percent in after hours trading after the software giant reported earnings that matched analyst expectations. Despite charges of more than a billion dollars to repair its X-box 360 game consoles, the software giant earned $0.39 a share in its fiscal fourth quarter. Revenues jumped 13 percent to $13.4 billion. Looking ahead, Microsoft says its core businesses are healthy and it expects to post double-digit gains in profits and revenues in its next fiscal year.