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Facebook Soars on Strong Earnings: Tech Winners & Losers

Tickers in this article: CTXS FB FFIV MSFT NOK T

NEW YORK ( TheStreet) –– Facebook shares shot up 7.3% to $76.45 after the company reported strong second-quarter earnings.

Facebook reported yesterday it earned 42 cents a share on $2.91 billion in revenue, a 61% increase from the same quarter last year. $2.68 billion of the Menlo Park, Calif.-based company's revenue was from advertising, a 67% increase year-over-year; 62% of advertising revenue was from mobile, up 41% year-over-year. Analysts polled by Thomson Reuters forecasted 32 cents a share on $2.81 in revenue.

The social network averaged 829 million daily active users (DAUs) in June 2014, a 19% increase year-over-year, while mobile DAUs during the same period increased 39% year-over-year to 654 million. Monthly active users (MAUs) and mobile MAUs increased 14% and 31% year-over-year, respectively; both topped 1 billion. Facebook ended the quarter with $13.96 billion in cash and marketable securities.

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In response to the results, several analysts upgraded their ratings of Facebook stock. Jefferies analysts maintained their “buy” rating and raised the price target to $100 from $85, citing margin expansion. Wells Fargo analysts reiterated their “outperform” rating and raised the price target to $85-$87 from $78-$80, highlighting Facebook’s strong user growth and monetization. Analysts at Credit Suisse reiterated their “outperform” rating and raised the price target to $92 from $90, noting strong mobile advertising revenue growth. Sterne Agee analysts, who also cited digital advertising, reiterated their “buy” rating and raised the price target to $85 from $80.

Shares of AT&T fell 0.9% to $35.56 after second quarter earnings missed estimates.

The telecom giant’s revenues rose 1.6% year-over-year to $32.6 billion, or 62 cents a share. Analysts were looking for 63 cents on $33.2 billion in revenue. Its profit of $3.5 billion was down from $3.8 billion a year earlier. Revenues in the Wireless segment grew 3.7% from the second quarter last year.

AT&T added 634,000 wireless customers this quarter for a total of 116.6 million. Its churn rate—the rate at which customers leave—was the company’s lowest ever: 0.86%. The company also added 700,000 post-paid smartphone users and sold 1.6 post-paid smartphones; nearly 80% of AT&T post-paid phone users own smartphones.

AT&T forecasts revenue growth of 5% and stable margins, with adjusted earnings growth of 3$-4%, for full-year 2014.

"The quarter was marked by several transformative moves to grow our wireless, broadband, and video services," said AT&T CEO Randall Stephenson in a statement. "Our move to simple pricing and no-device-subsidy plans is repositioning the wireless business model, resulting in our best postpaid net adds in nearly five years and our lowest-ever postpaid churn."