By Larry Gellar
If there is one stock that did not have a happy Friday last week, it was Research In Motion Limited (RIMM). RIMM was down nearly 19%, as the company’s earnings report was a stark disappointment, even for analysts who had already reduced their expectations. In fact, net income, the most important measure of a company’s performance, was down 66 cents per share from this time last year. Additionally, revenue and units shipped were much lower than expected. Quite simply, the BlackBerry is no longer as popular as it once was now that there are so many new competitors out there. Furthermore, Research In Motion’s Playbook wasn’t as well received as the company hoped it would be. Future endeavors for the company include BBM Music and its QNX-based operating system. While QNX is a much-needed update to the BlackBerry platform, we’re not such big fans of BBM Music. This application seeks to take advantage of BlackBerry Messenger, although use of it could end up being quite clumsy. Important competitors for Research In Motion include Apple (AAPL), Microsoft (MSFT), and Nokia (NOK). These companies have vastly higher price to earnings ratios, although price/earnings to growth and price to sales for Research In Motion is closer to average. Margins for RIMM are also average: gross margin is 44.01% and operating margin is 21.76%.
Still celebrating the removal of CEO Carol Bartz, investors boosted Yahoo! Inc. (YHOO) up a bit last Friday. A possible acquisition from private equity firm Silver Lake also has shareholders excited. That company’s plan for Yahoo would reportedly involve selling off the company’s Asian business, and then either operating the main business or selling it someone else. In the meantime, speculation still abounds as to why Bartz was fired all the sudden. Apparently, the board wasn’t planning to evaluate her performance for another few months, but sentiment quickly changed. Bartz’ lack of strategic vision became more apparent, and the board also needed to make a move before an activist investor changed this for them. This came in the form of Daniel Loeb from Third Point LLC. Important competitors for Yahoo include AOL (AOL) and Google (GOOG). For measures like price to earnings and price/earnings to growth, AOL is the lowest, Yahoo is in the middle, and Google is the most expensive. Yahoo is in the middle for price to sales as well, except AOL and Google’s positions are reversed. As for margins, Google has the best, with Yahoo coming in second and AOL in third. Quarterly revenue growth (year over year) has been a disaster for Yahoo – that number is -23.3%.
Oracle Corp. (ORCL) was up over 1% last Wednesday, and investors are eagerly awaiting Oracle’s next earnings report, due to come out this Tuesday. As discussed here, the most important part of the report will be how Oracle’s server software is doing. Specifically, the focus is on Sun Microsystems, a company that Oracle recently bought. In regards to the actual earnings, analysts are expecting a 5-cent per share increase over what happened last year at this time. That seems reasonable, and we believe that Oracle may even surpass these expectations. The company’s software remains the go-to platform for a variety of industries. Oracle’s hardware has also been pretty strong, as demand continues to increase for its exadata racks. These new racks are smaller, faster, and consume less energy than the old teradata racks. Investors are also excited about an announcement that the company is making on September 26th. On that day, a new product for datacenters will be introduced. Important competitors for Oracle include IBM (IBM), Microsoft, and SAP (SAP). Oracle boasts the lowest price/earnings to growth ratio out of these 4 stocks, although its price to sales is also the highest. Both gross margin (76.43%) and operating margin (35.73%) come in second place to Microsoft. Cash flows for Oracle have been strong: the company brought in $6.249 billion for the fiscal year ending May 31st.
Comcast Corporation (CMCSA) was up over 1% last Friday, and an announcement has been made that the company is expanding its Internet Essentials program to Michigan. As explained by executive vice president David L. Cohen, “Internet Essentials helps level the playing field for low-income families by connecting students online with their teachers and their school's educational resources as well as enabling parents to receive digital literacy training so they can do things like apply for jobs online or use the Internet to learn more about healthcare and government services available where they live.” This isn’t exactly a cash cow for Comcast, but it may help the company’s tenuous public relations. In fact, the company has been under fire for quite some time for its restrictive stance on net neutrality. What is making money for Comcast though is the NFL – specifically, Sunday Night Football on NBC. In fact, the company’s broadcast of the Packers-Saints game tallied up a 16.7 rating. Important competitors for Comcast include DIRECTV (DTV) and Dish Network (DISH). These companies offer lower price to earnings and lower price to sales ratios, although Comcast falls in the middle for price/earnings to growth. Margins for Comcast are strong: gross margin is 55.36% and operating margin is 20.47%.
Online auctioneer eBay Inc. (EBAY) had a big day last Friday, up over 5%. That can partially be explained by an upgrade the stock received from Wedbush, although the company’s actual ventures are also stirring up excitement. For example, the company is starting a new division called X.commerce, and this Reuters article goes into more depth about it. The idea here is that developers will make applications that work with eBay products like eBay Marketplaces, PayPal, and GSI Commerce. Applications can also be made to work on Magento, which an e-commerce platform that eBay recently bought. eBay hopes that X.commerce will build eBay’s other operations the way that developers fuel the success of the iPhone and iPad. Important competitors for eBay include Amazon (AMZN), Google, and Yahoo!. Margins for eBay are pretty strong: gross margin is 71.69% and operating margin is 22.14%. As for value metrics like price to earnings, price/earnings to growth, and price to sales, EBAY falls in the middle of AMZN, GOOG, and YHOO. In fact, Amazon is still a bit of a mystery with its 105.56 price to earnings ratio and 4.19 price/earnings to growth ratio. Cash flows for eBay have been mixed with $1.577 billion coming in during 2010 and $2.311 billion flowing out in the first half of 2011.