Apple Wins, Samsung Loses; Amazon Going Curbside?; Twilio's Good Results - Eye On Tech

| About: Apple Inc. (AAPL)

Summary

Apple could see its iPhone sales climb 8 million units this year as a result of Samsung's production halt of the Galaxy Note 7.

Amazon is experimenting with convenience and curbside pick-up locations.

Twilio moves higher on better-than-expected third quarter preliminary results, but a possible secondary offering still weighs on the stock.

Apple (NASDAQ:AAPL) and Samsung (OTC:SSNLF) continue to weave a complicated web, as the number of different stories between these companies continues to climb. On Monday, we pointed out the problems surrounding Samsung's Galaxy Note 7. It seemed, at least by my interpretations, that the company was suspending production of the phone due to its flammable battery issue. Meaning, the company was working on a fix.

Just one day later though, the situation has changed once more. Samsung is reportedly - and I believe has confirmed - "halting production of the phone altogether."

From the SA News Alert, (linked above): "That could translate into lost sales of up to 19M phones, or nearly $17B, according to analysts including those at Credit Suisse."

That is a massive blow for a company like Samsung - and a massive green-light for a company like Apple. To little surprise, the latter is up Tuesday, although the market's larger pullback has taken its toll on the stock for the day.

Some analysts project that Apple could see its calendar year 2016 iPhone sales climb by 8 million units as a result of Samsung's error. Would Apple really be the only one to benefit though?

In my view, it seems that a lot of people are either iOS users or Android users. I believe some people will switch to Apple, but others will try out different Android smartphones, like Alphabet's (NASDAQ:GOOGL) (NASDAQ:GOOG) new Pixel device. Call me crazy, but could there have been a better time to intro a brand new device if you're Google? The top Android smartphone maker (Samsung) has arguably the biggest smartphone recall issue that we've ever seen. It would be foolish to think that Google won't see a positive impact as a result. The question is, how much of an impact?

A number of Android devices could pick up the slack. I guess it was wise of Apple to up its components orders when it first heard of Samsung's struggles. It's tough to say who will benefit the most from Samsung's woes. But any way you slice it, it's a big hit to the South Korean electronics maker.

But That's Not All

Apple and Samsung are also headed to court Tuesday, as the latter looks to battle a ruling that ordered it to pay Apple $399 million.

Years of dispute have landed the two in the U.S. Supreme Court, which will hear its first design patent-related case in more than 100 years. Previously, it was ruled that Samsung infringed on the iPhone design and was ordered to pay Apple nearly $400 million related to three patents.

Samsung says it's too much - the total profit of 11 disputed devices - while Apple says it's justified. Is a settlement in store? We won't know until the gavel hits the sound block, but in any event, it could be setting up to be an expensive time for Samsung. Who knows how much the Galaxy Note 7 will ultimately cost it, but if another $300 million to $400 million is tacked on from the courts, it will only make a bad situation worse.

According to some though, the figure may be reduced.

Amazon Working Curbside

The e-commerce juggernaut is reportedly working on Project Como, which includes curbside pick-up and convenience stores. From the Wall Street Journal:

"The new stores are designed to capture the large share of people who prefer to pick out their produce or bring home their groceries on the way from work… Groceries account for about a fifth of consumer spending, but online grocery purchases make up only about 2% of U.S. grocery sales, according to Morgan Stanley Research."

There's a few interesting nuggets of information in there. The first is that, just 2% of grocery sales take place online. That's not surprising, but it also reminds me of where Amazon (NASDAQ:AMZN) was in the broader retail market, say, a decade ago when so many had doubts over the company's impact on the sector.

Why can't Amazon do to grocery what it did to overall retail? Will Kroger (NYSE:KR) and Whole Foods (NASDAQ:WFM) suffer the same fate that companies like Macy's (NYSE:M) have?

Along the same lines though, if Amazon is going the bricks-and-mortar route, why can't Wal-Mart (NYSE:WMT) - which emphasized e-commerce last week - make a similar turn? Meaning that, with its logistics expertise and warehouses, what prevents Wal-Mart from making strides in the e-commerce market? Nothing.

Yes, Amazon is the best and yes, Amazon has the best talent. But that doesn't mean Wal-Mart can't build a price-competitive machine with quality customer service and perks like curbside pick-up.

I'm not saying Wal-Mart will knock off Amazon or that it will even be a close race - particularly in the next few years. But there's little reason that Wal-Mart can't become a viable No. 2 in the online commerce world given its resources. If played correctly, Wal-Mart can continue operating a profitable bricks-and-mortar business, while also complimenting it with a solid online business as well.

Twilio Preliminary Results Look Good

Shares of Twilio (NYSE:TWLO) have been punished this week, after the company announced that it may look to raise $400 million. Given that the stock is up 130% since its June IPO, a raise should come as little surprise.

Sometimes, a capital raise is good, as institutional investors are looking to sink their teeth into more stock - especially from a newly public company that doesn't have many shares out on the open market.

However, it does normally weigh on the share price in the short term. On Tuesday though, management gave investors some good news, which helped boost the share price despite a sea of red in the broader market.

Twilio filed its preliminary third-quarter results, where revenue estimates and gross profit expectations both topped analysts' expectations. Net income came in ahead of expectations as well.

These are all pretty good results, but many continue to question the valuation. Is a company that is expected to generate about $40 million in third-quarter gross profit really worth $4.4 billion? That's a question a lot of people have asked, despite the stock price soaring higher.

For me, trading IPOs has always been tough business, unless you really, really like it. For some investors, maybe getting in now looks attractive. For me - admittedly not a nimble-footed trader - I still feel that I've missed the boat and would simply sit this one out.

Tech Tidbits:

Morale at Twitter (NYSE:TWTR) is supposedly plunging, as CEO and co-founder Jack Dorsey warms up to a sale. Despite his feelings, the stock has plunged from $25 to $17-and-change in a matter of days as hopes vanish over a deal. However, reports suggest talks are ongoing.

Yahoo (NASDAQ:YHOO) is about 50% to 60% done with its investigation, according to Verizon (NYSE:VZ) CEO Lowell McAdam, who also said it's a "speculation" that Verizon will seek a reduction in its deal to acquire Yahoo's core business. He didn't necessarily rule it out though.

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