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  • Why We Think Amazon's Stock Is Fairly Valued At $295
    Tue, Feb. 24 AMZN 21 Comments

    Summary

    • Notwithstanding the substantial change in valuation at $380 per share, we believe Amazon's stock is actually fairly valued at $295.
    • There are three key factors that support this estimate, including revenue growth that's likely to slow down over the coming years owing to difficult year-over-year comparisons.
    • The other two: operating margins that are likely to be pressured by fulfillment, marketing, technology, content and other costs that grow faster than revenue; and the continued heavy investment in various growth strategies.
  • Increasing Competition In Cloud May Temper Salesforce's Revenue Growth In Q4
    Tue, Feb. 24 CRM 2 Comments

    Summary

    • Salesforce's revenue growth in the fourth quarter is expected to come from existing revenue streams, which face stiff competition from competitors.
    • In the third quarter of fiscal 2015, Salesforce's revenue growth slowed to 30%, down from 37% growth in the third quarter of fiscal 2014.
    • Salesforce has guided fourth quarter revenue to range from $1.436 billion to $1.441 billion, implying a year-on-year revenue growth rate of 25% to 26%.
  • Storage Weekly Notes: SSD Market Presence Of Seagate, Western Digital And SanDisk
    Sat, Feb. 21 WDC, STX, SNDK 1 Comment

    Summary

    • Western Digital and Seagate Technology announced mixed quarterly results in late January, with unit shipments witnessing limited growth.
    • On the other hand, flash storage provider SanDisk Corporation saw robust growth for its SSD storage products in the December quarter, even as weakness in its embedded storage division continued through the full year.
    • We take a quick look at the developments in the SSD market pertinent to these storage companies.
  • Factors That Led To A 46% Decline In Our Valuation Of Travelzoo
    Wed, Feb. 18 TZOO 7 Comments

    Summary

    • Travelzoo released its Q4 2014 results on January 22nd, reporting a 16% decline in revenue.
    • Travelzoo has seen revenue decline over the past few quarters on account of its increased investment in a new hotel booking platform and changes to the selling format of its Local Deals business.
    • It seems that the company still has a long way to go before it sees any signs of profitability.
  • Collaboration With Seagate Will Increase Micron's Presence In The Growing Enterprise Flash Market
    Tue, Feb. 17 MU 5 Comments

    Summary

    • Micron announced a multi-year strategic agreement with Seagate to deliver new and innovative flash-based storage solutions.
    • The collaboration with Seagate will accelerate Micron’s push in the enterprise market, expanding its portfolio of enterprise drive technology and platforms.
    • Our price estimate of $32.23 for Micron is in line with the current market price.
  • Why We Think Best Buy's FY2016 Bets Make A Lot More Sense
    Sat, Feb. 14 BBY 4 Comments

    Summary

    • Best Buy's just ended fiscal year was marked by tough market conditions, high competition and management's efforts to reinvent itself to thrive in an evolving industry.
    • Best Buy decided to expand aggressively into categories which are growing and capital intensive, such as large appliances and connected home through its "store-within-a-store" concept.
    • Under a new chief marketing officer, hired in November '14, Best Buy is stepping up its personalized digital marketing.
  • Riding On Strategic Acquisitions And Insightful Investments, TripAdvisor Delivers A Healthy Fourth Quarter
    Fri, Feb. 13 TRIP 4 Comments

    Summary

    • Propelled by growing click-based revenues and the full quarter contribution of its acquisitions, the company posted revenues of $288 million in Q4, up 35% year-on-year.
    • We believe TripAdvisor will eventually reap the benefits of its investment initiatives and it will translate its strong top line performance into healthy bottom line growth.
    • The earnings results came out at the higher end of management expectations.
  • Nvidia Closes Fiscal 2015 On A Strong Note: Growth Driven By Gaming, Automotive, Data Center And Cloud
    Thu, Feb. 12 NVDA 6 Comments

    Summary

    • The company seems to be making excellent progress on its strategy of creating an ecosystem in gaming, enterprise graphics, accelerated computing and automotive.
    • Nvidia's focus on addressing the top 30% of the market (mainly vertical segments where visual computing matters) is clearly paying off and has helped it outpace the PC market.
    • Its gaming business is growing at over 30%. In Q4 2014, its automotive, cloud computing, enterprise computing and GRID businesses almost doubled year-on-year.
  • Oracle Triggers Price War In The Server Market
    Wed, Feb. 11 ORCL 5 Comments

    Summary

    • Oracle has introduced the fifth generation of its Exadata line, named Oracle Exadata Database Machine X5, at cutthroat prices.
    • Oracle commands more than half of the specific-purpose integrated systems market but lags behind competitors VCE, Cisco and EMC in the general-purpose integrated systems market.
    • Given that Oracle has a long way to go before it catches up to rivals, the former may have signed up for considerable short-term pain from its hostile pricing strategy.
  • Zynga Pre-Earnings: Trends We Are Watching
    Wed, Feb. 11 ZNGA 5 Comments

    Summary

    • Zynga's stock tumbled by around 30% in 2014, due to a decline in its user base, a surge in losses, and a lack of new major game launches.
    • The company aims to reinvigorate its growth by improving its core franchises and partnering with leading brands for new game launches and marketing.
    • We expect Zynga to face profitability pressure in the fourth quarter, as development of new mobile offerings and the launch of new games will lead to a surge in marketing and R&D expenses.
  • Shutterfly Q4 2014 Earnings Preview: Margins Likely Remain Under Pressure
    Wed, Feb. 11 SFLY Comment!

    Summary

    • Shutterfly will report its Q4 2014 earnings on February 12th.
    • For the nine months ended September 30, 2014, net revenues increased by 18% on a year-over-year basis, to $438 million.
    • Our $45 price estimate for Shutterfly is in line with current market price.
  • Nvidia's Q4 2015 Earnings Preview: Gaming, Tegra And Data Centers In Focus
    Mon, Feb. 9 NVDA 4 Comments

    Summary

    • Tegra processor sales continue to grow, led by auto infotainment systems, mobile devices, embedded systems and the onset of Shield tablet sales.
    • Transition to Maxwell driving growth in high-end PC gaming.
    • Large-scale data centers are expected to become a significant source of future growth.
  • Monster Pre-Earnings: Growth Likely Accelerated In Q4, But Currency Headwinds Could Hit Earnings
    Fri, Feb. 6 MWW Comment!

    Summary

    • We expect Monster to report sequential growth in the top-line for the fourth quarter, bolstered by results in the North American region.
    • Monster is taking several steps to revive its business, amid a rapidly changing competitive environment.
    • Our $5.59 price estimate for Monster’s stock, represents around 30% premium to the current market price.
  • Revising IBM To $204
    Fri, Feb. 6 IBM 22 Comments

    Summary

    • The software division has witnessed robust growth in the past few years, and currently accounts for over 45% of IBM's pretax income.
    • In the past few quarters, IBM's cloud initiative reported growth of over 70% and is the primary reason for revenues stabilizing in its technology and global business services division.
    • IBM projects that cloud services will generate $7 billion in revenue by 2015.
  • Why Costco Seems A Little Overpriced
    Thu, Feb. 5 COST 28 Comments

    Summary

    • The retailer's stock has been up just 18% in the last one year, despite sturdy growth in comparable sales amid a weak retail environment.
    • It appears that the market is not reacting too positively to Costco's steady growth anymore, due to the anticipation that it will continue in the future without any hurdles.
    • Still, we believe that the company might be a little overpriced.
  • Sirius XM Earnings Preview: Steady Subscriber Additions And Bottom Line Growth To Continue
    Wed, Feb. 4 SIRI 23 Comments

    Summary

    • We believe Sirius XM’s growth continued in the fourth quarter, driven by healthy growth in new car sales between October and December.
    • We do not expect there was significant improvement in Sirius XM’s new vehicle penetration rate, since it is already on the higher side (70%).
    • Our current price estimate for the company stands at $3.49, which is roughly inline with the current market price.
  • Pandora Earnings Preview: Margins And Monetization In Focus
    Tue, Feb. 3 P 12 Comments

    Summary

    • Due to the company's aggressive investment in sales and marketing, its profits likely remained under pressure.
    • Similar to Q3 2014, Pandora's ad monetization likely grew, both sequentially and year-over-year, driven by a continued uptick in its mobile ad business.
    • Generally, the fourth quarter is seasonally stronger for Pandora as compared to the third quarter, which should be reflected in its Q4 revenue per member.
  • Higher Volumes Help Colgate-Palmolive Beat Currency Troubles In Q4
    Tue, Feb. 3 CL 1 Comment

    Summary

    • Colgate-Palmolive reported strong fourth quarter and full year results.
    • The company fought back foreign currency headwinds on the back of across-the-board volume expansion, ably supported by price hikes.
    • The company expects the combination of a benign commodity cost environment, the continuation of savings from the Funding the Growth program, and increased selling prices in emerging markets to facilitate gross margin expansion in 2015.
  • Yelp Earnings Preview: Will Local Ad Revenue Growth Keep Up With Expectations In Q4?
    Tue, Feb. 3 YELP Comment!

    Summary

    • While the company continues to report growth in its core local ads business, the pace of growth is related to the duration of its presence in the regions where it operates.
    • We believe the pace of local ads growth will slow down as cohorts within the U.S. mature and revenues from newer regions kick in.
    • in this earnings announcement, growth in the local ads business will be the key focal point and will give us an indication of expected revenue growth in the coming quarters.
  • Symantec's Revenues Set To Decline In Q3 As Restructuring Continues
    Tue, Feb. 3 SYMC 2 Comments

    Summary

    • Symantec is currently in the midst of several restructuring measures in an attempt to revitalize itself.
    • For the third quarter, Symantec is guiding revenue to be in the $1.65 billion to $1.69 billion range, which is a decrease of 1% to 3% year on year.
    • We have a price estimate of about $25 for Symantec, which is almost level with its current market price.
  • Spotify Is Quickly Catching Up With Pandora
    Mon, Feb. 2 P 13 Comments

    Summary

    • While Pandora reported just 5.2% growth in its active listeners to 76.5 million in Q3 2014, Spotify added more than 10 million users in the last two months.
    • With its bottom line already under tremendous pressure, the last thing Pandora would want is competition getting intense.
    • Our price estimate for Pandora stands at $24, implying a premium of over 40% to the current market price.
  • Broadcom Q4 Earnings Review: Better Than Expected Performance In Reportable Segments
    Fri, Jan. 30 BRCM Comment!

    Summary

    • Revenue of $2.14 billion was at the high end of the guided range, and non-GAAP EPS of $0.90 for the quarter came in ahead of the consensus estimate.
    • Excluding cellular baseband (which the company exited in June), reportable segment revenue was down 3% and up 10% year-over-year as the broadband, connectivity and infrastructure businesses performed as expected.
    • Broadcom expects continued geographic expansion to fuel growth in its broadband business and sees opportunities for new technologies, like NFC and wireless charging, to drive long-term growth.
  • Google Earnings: Strong Mobile Performance Backed By Programmatic Platform Boosts Revenues
    Fri, Jan. 30 GOOG, GOOGL 8 Comments

    Summary

    • The company reported 15% year-on-year growth in revenues, to $18.10 billion.
    • However, operating income declined marginally to $4.40 billion, primarily due to an increase in investment in research and development and spending on SG&A.
    • Pricing pressure on online ads continued to drive a 3% year-over-year decline in cost-per-click. However, aggregate paid clicks, which represent the number of ads served across Google properties, grew 14% year-over-year.
  • Why We Are Revising Our Price Estimate For Netflix
    Fri, Jan. 30 NFLX 14 Comments

    Summary

    • Netflix overcame the disappointing third quarter results and its international operations continue to strengthen.
    • Netflix’s international expansion could have a significant impact on both its subscriber additions as well as contribution margins.
    • We are revising our price estimate for Netflix to $376 based on the following analysis.
  • Activision Blizzard To Retain Dominance In FPS Domain
    Thu, Jan. 29 Comment!

    Summary

    • The FPS genre is becoming more popular, and Activision Blizzard has dominated the FPS domain for the last five years, primarily driven by the Call of Duty franchise.
    • Activision went into the holiday period with two new and highly awaited titles - Call of Duty: Advanced Warfare and Destiny.
    • Call of Duty has generated over $9 billion of life-to-date revenues and around 150 million units sold to date.
  • Qualcomm Reports A Strong Q1'15 But Lowers Guidance For Fiscal 2015
    Thu, Jan. 29 QCOM 10 Comments

    Summary

    • At $7.1 billion and $1.34, revenue and non-GAAP earnings per share for the quarter were up 7% and 6% year on year, respectively.
    • Our price estimate of $72 for Qualcomm is in line with the current market price.
    • We are in the process of updating our model for the Q1 2015 earnings release.
  • Constant Contact Q4 Earnings Preview: Toolkit And SinglePlatform Will Continue Driving Revenues
    Wed, Jan. 28 CTCT Comment!

    Summary

    • The introduction of Toolkit as an "integrated online marketing suite," coupled with SinglePlatform's 100% year-on-year top line growth, are primary reasons for revenue growth.
    • The healthy top line growth trickled down to the bottom line too.
    • The three revenue drivers for Constant Contact are: new customer additions, Average Revenue Per User and customer retention. For the first nine months of 2014, it performed well in terms of all three drivers.
  • Electronic Arts Q3 Earnings: Record Digital Revenue Drives Growth
    Wed, Jan. 28 EA Comment!

    Summary

    • EA's non-GAAP net revenue reached $4.337 billion, and digital receipts accounted for more than half of the revenues ($2.178 billion) for the first time ever, up 17% y-o-y.
    • The company's core sports titles - FIFA 15, Madden NFL 15, and Hockey Ultimate Team - recorded a massive 82% y-o-y growth.
    • 2014 proved to be a huge success for EA, as it was the No. 1 publisher on all the major platforms in the world.
  • Juniper Earnings: Profit Beats On Cost Cuts, Sales Still A Concern
    Wed, Jan. 28 JNPR Comment!

    Summary

    • Juniper reported Q4 net income of 41 cents a share in the fourth quarter.
    • In terms of guidance, the company said that it was expecting overall revenues of $1.2-$1.6 billion for the first quarter of 2015.
    • Our $28 price estimate for Juniper is about 15% ahead of the current market price.
  • Revenues Continue To Lag As Yahoo Firms Up Plans To Spin Off Alibaba
    Wed, Jan. 28 YHOO 12 Comments

    Summary

    • Yahoo's core advertising revenues continued to disappoint as the revenues decreased marginally by 1% year on year to $1.253 billion.
    • Yahoo continued to report growth in its total mobile unique visitors, which grew to over 575 million in the quarter.
    • At present, we have a $47.29 price estimate for Yahoo, which is in line with the current market price.
  • Expedia Boosts Its North American Dominance By Acquiring Travelocity
    Tue, Jan. 27 EXPE 4 Comments

    Summary

    • In August 2013, Expedia inked a strategic marketing agreement with rival Travelocity.
    • Expedia’s technology platform began powering Travelocity’s U.S. website in Q1 2014.
    • The 2013 agreement between Expedia and Sabre, provided Expedia with the option to acquire certain assets from Travelocity at a later date.
    • Expedia will gain a greater market share, primarily in North America, as a result of this acquisition.
  • Amazon Earnings Preview: Can Company Deliver A Beat This Quarter?
    Tue, Jan. 27 AMZN 40 Comments

    Summary

    • As some early indicators suggest, the company's top-line growth could continue to outperform in Q4 due to a solid holiday season.
    • Amazon's same stores sales rose at over twice the overall e-commerce growth rate during October and November, helped in part by an early start to the holiday season.
    • However, the same figure dropped somewhat in December, but still remained above the broader market's growth rate.