By Larry Gellar
Today we’ll be taking a look at the 5 most traded NASDAQ stocks from a recent trading session. While Cisco (CSCO) and Intel (INTC) have struggled, the big story is Research In Motion (RIMM), which had some rather disappointing things to say at its latest conference. The newest Internet IPO Zynga (ZNGA) also didn’t go as well as planned. Clearly, uncertainty in the marketplace is affecting the performance of these 5 stocks. Let’s see what specifically has been affecting them:
Zynga Inc. (ZNGA) – This stock had its initial public offering on Friday but finished down about 5%. In fact, after poor showings from Pandora (P), Groupon (GRPN), and Nexon (traded outside the US), this wasn’t terribly shocking. As discussed here, investors were worried about how much the Internet gaming company relies on Facebook as well as questions about how Zynga will grow in the future. Another concern is that CEO Mark Pincus has a large amount of voting power in the company despite a relatively small share of the equity. In fact, here’s what Pincus had to say about that issue:
Investors who want to see the company deliver long-term value are going to be better served by the fact that I can continue to ensure the company keeps its focus on the long term and we don't let short-term swings and opportunities reduce that.
Regardless of what you think of Mark Pincus, Zynga is one way for investors to get exposure to Facebook before that company goes public. Additionally, the IPO was successful in the sense that Zynga was able to raise $1 billion – the most that an Internet company’s been able to raise since Google’s (GOOG) $1.9 billion IPO in 2004.
Microsoft Corporation (MSFT) has been up a bit the past few days, and it appears that the company won’t have to deal with a lawsuit from Novell Inc. for the time being. Novell, former maker of the WordPerfect software, claims that Microsoft allowed it to develop software for Windows 95 but then canceled on them in order to benefit their own Office suite. Novell says that it did not sue earlier because of other antitrust situations surrounding Microsoft, and the trial will have to be re-done due to a deadlocked jury.
In other news, Microsoft in conjunction with private equity firm Silver Lake and venture capital firm Andreessen Horowitz could be preparing to make a new offer for a 10 to 15 percent stake in Yahoo (YHOO). That’s the type of move that would definitely add value for MSFT shareholders, provided that the company pays a reasonable price. Important competitors for Microsoft include Apple (AAPL), Google, and Oracle (ORCL). Microsoft has the lowest price to earnings and price to sales ratios out of those companies, although its price/earnings to growth ratio is the highest. Meanwhile, margins for Microsoft are terrific – those numbers are 77.20% gross and 38.78% operating. MSFT stock has a beta of 0.98.
Cisco Systems, Inc. (CSCO) has been down a bit lately, which means now could be a good entry point. The stock has been unnecessarily beaten down and should be one of the first to benefit once governments increase spending on networking equipment. Cisco is strong financially as well, bolstered by its recent efforts to cut costs. On the other hand, investors should take note of the departure of David Lawler. Lawler was crucial for Cisco’s success with servers in his role as vice president of the Unified Computing System Server Access Virtualization Business Unit.
In other news, Cisco is continuing to push for a tax holiday to allow it to bring overseas cash back to the US In fact, some of Cisco CEO John Chambers’ remarks on the matter can be found here. Important competitors for Cisco include Alcatel-Lucent (ALU), Hewlett-Packard (HPQ), and Juniper Networks (JNPR). Cisco’s price to sales ratio is the highest out of those stocks, although price to earnings and price/earnings to growth ratios are closer to average.
Meanwhile, Cisco margins remain quite strong – those numbers are 61.43% gross and 20.14% operating. As for cash flows, $3.081 billion came in during fiscal year 2011, while $2.915 billion has flowed out in the 3 months after that. Recent outflows have been mostly due to acquisitions and the company’s stock repurchase program.
Intel Corporation (INTC) has been moving down lately, although a new reorganization plan should certainly get investors excited. Intel currently will be combining four divisions: netbook and tablets, ultra mobility, mobile communications, and mobile wireless. Indeed, those divisions will now be the Mobile Communications Group, with Mike Bell and Hermann Eul heading up the new segment. Bell is notable for working on the first Apple iPhone, while Eul previously worked with Infineon. Here’s what spokesman Robert Manetta says about the plans:
We are trying to speed and improve the development of Intel-based mobile devices. That is what all this is about. We are serious about it.
While Intel has struggled in the mobile market against companies that can put out chips that use less power, Google has announced its support for Intel’s work with its Android phones. Regardless, some investors remain unconvinced that Intel’s mobile business will improve – one such opinion can be found here. Important competitors for Intel include Advanced Micro Devices (AMD) and Texas Instruments (TXN). Intel has the lowest price/earnings to growth ratio out of those stocks, while price to earnings and price to sales ratios fall in the middle. Intel’s margins remain terrific – those numbers are 62.46% gross and 32.77% operating.
Research In Motion (RIMM) is plummeting, and some investors believe that the only way to save the business is to scrap the BlackBerry. Although the BlackBerry was at one point arguably the best phone on the market, times have certainly changed. The company has reduced their projection for future sales of the device, and production delays are also putting a damper on things. That means that Research In Motion’s most valuable assets are actually some of its less thought about – specifically, the company’s special network that powers its BlackBerry messaging amongst other things. In addition to the plan described above, Jaguar Financial, one of BlackBerry’s shareholders, has called on the company to change CEOs (Mike Lazaridis and Jim Balsillie currently run the company).
Meanwhile, Research In Motion’s Playbook has also struggled despite the fact that it runs the company’s new operating system, called QNX. Important competitors for Research In Motion are Apple, Google, and Nokia (NOK). Those stocks have much higher price to earnings and price to sales ratios, and Research In Motion’s price/earnings to growth ratio is actually negative. As for margins, Research In Motion’s gross margin of 42.87% and operating margin of 19.48% are about average. This stock has a beta of 1.59.