Wall Street dives as tech giants Google and Microsoft reports loses

 The Nasdaq Index fell 1.18% today as Google, and Microsoft reported weak performances in the previous quarter.

The two tech giants are usually seen as proxies for the wider economic condition, in part because their business fortunes tend to fluctuate with global spending. Google’s advertising revenue, which still makes up the bulk of its business, it closely tied to the wider economy, and Microsoft still makes a lot of its money off desktop software sales, which also fluctuate with the economy.

Google’s quarterly results fell short of Wall Streets expectations; the initial report stated a 20% decrease in revenue resulting in the Internet giant’s stock drop of 9%. The earnings report, which had not been expected until after the market close, revealed a weakening in Google's core Internet advertising business and persistent losses at its recently acquired cellphone business, Motorola Mobility.

The slowdown in revenue growth came on the back of falling advertising rates as users shift increasingly to mobile devices, where it charges less than it can on computers or laptops.

"It was just too rapid a deceleration," said Pivotal Research Group analyst Brian Wieser. "Many of the same underlying trends drive Facebook advertising."

Shares in Facebook, which took a dive shortly after Google's inadvertent filing, were down 4.6 percent. Click prices declined for the fourth consecutive quarter after rising for eight consecutive quarters before then. That's a negative. This is the mobile problem."

For the fourth consecutive quarter, the company reported a decline in average cost-per-click (CPC), a critical metric that denotes the price advertisers pay Google.

Average CPC declined 15 percent from a year ago and 3 percent from the second quarter of this year. Analysts say that Google, like many of its peers in the Internet industry, has been struggling to adapt to the rapid consumer uptake in mobile devices. Advertisers pay far less for adds on smartphones and tablets than for similar ads on desktop computers.

"The core business seems to have slowed down pretty significantly, which is shocking," said B. Riley analyst Sameet Sinha. "The only conclusion I can look at is, search is happening more and more outside of Google, meaning people are searching more through apps than through Google search."

"That could indicate a secular change, especially when it comes to ecommerce searches. The big fear has always been, what if people decide just to go straight to Amazon and do their searches? And potentially that's what could be happening."

Google has recently overtaken Microsoft to become the second-largest U.S. technology company by capitalization, right behind Apple.

Microsoft Corp's also reported a fall in fiscal first-quarter profit greater than the expected 22 percent as a result of a dip in computer sales running its Windows operating system. Its shares fell 2 percent in after-hours trading.

The world's largest software company said quarterly profit fell to $4.47 billion, or 53 cents per share, from $5.74 billion, or 68 cents per share, in the year-ago quarter.

Sales fell 8 percent to $16.01 billion, partly caused by the dip in demand for personal computers running Windows, as consumers held off new purchases in the tight economy or opted to buy tablet devices instead. Microsoft is hoping to revive PC sales next week with the launch its new Windows 8 system on Friday.