MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Tuesday, May 21, 2013
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7:39 PM Amazon's (AMZN) ad ambitions pose a threat to Google (GOOG), thinks ReadWrite's Derek Brown. In addition to Amazon's vision/ambition, obsession with customer satisfaction, and willingness to forgo near-term profits, the e-commerce giant's mountains of consumer purchase data stand to give it an edge as it pushes ads on its sites, on Kindles, and through a targeted display ad network. Moreover, Amazon could provide customers/partners with "relevant online transaction activity that might follow [its ads], effectively offering a closed loop marketing environment unlike any other." Of course, Google isn't standing still either. Comment!
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7:26 PM "We commend the positive steps taken by NetApp (NTAP) today" says Elliott Associates portfolio manager Jesse Cohn in response to news the enterprise storage giant has more than doubled its buyback authorization to $3B (with plans to buy aggressively), initiated a $0.15/share dividend (with plans to increase it), and is planning to cut ~900 jobs. Cohn adds Elliott, an activist investor, owns ~16M NetApp shares (good for a 4.3% stake), and looks forward to "the company's continued commitment to creating shareholder value." Shares +2.7% AH. (previous) 1 Comment
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7:07 PM VMware (VMW, EMC) officially launches its vCloud Hybrid Service, which allows clients to pair on-premise workloads with a VMware-run public cloud infrastructure. VMware claims the service supports more than 90 OS', has high-availability options, and allows public and on-premise workloads to be jointly managed. VMware also says it will offer SAP software, including Hana, "as a subscription service on premise and in the cloud." vCloud Hybrid competes with Amazon Web Services, Microsoft's Azure (perhaps the most direct rival), and Rackspace's OpenStack offerings. ITWorld calls it "ideal for a significant set of enterprise applications," but adds it's "no Amazon killer," given AWS' focus on low cost and ease-of-use. 3 Comments
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6:38 PM SolarWinds (SWI) attempts to move downmarket and obtain a stronger cloud presence by striking a deal to acquire private N-able for $120M in cash. Whereas SolarWinds' IT management offerings are more focused on enterprises (it has been gaining share here against the likes of CA, BMC, H-P, and IBM), N-able sells cloud-based IT management software to service providers, who in turn use them to offer IT management services to SMBs. (PR) Comment!
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6:27 PM France Telecom (FTE) will invest up to €50M ($64M) in video site Dailymotion and once more begin looking for a partner this fall, says Orange CEO Stephane Richard. With the French government (27% stake) having scuttled the Yahoo deal, FTE has reportedly been fielding Dailymotion bids from local tech/media players. 1 Comment
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6:15 PM Telecom Italia (TI) is mulling a 3-way split, multiple sources tell Reuters: one unit would contain the carrier's Italian mobile ops, another its Italian wireline ops, and another Brazilian carrier TIM. The report come a month after TI's board signed off on talks with a Hutchison Whampoa about a possible Italian mobile merger (Hutchison's demands could get in the way), and ordered management to study the feasibility of a wireline spinoff. Comment!
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6:01 PM Apple (AAPL) roundup: 1) iOS 7 will reportedly feature integration with additional online services, including Flickr (YHOO) and video site Vimeo. Yesterday, Yahoo announced a big overhaul for Flickr. 2) Peter Misek remains downbeat, predicting Apple's gross margin will be pressured by its use of OGS touch sensor tech in the iPhone 6 (differs from the iPhone 5's in-cell tech), and by app processor price hikes from Samsung (checks indicate 25%-50% hikes). 3) As Senate hearings dominate headlines, EU leaders are looking to end the tax shelters Apple and other tech companies have created. 4) BrandZ again ranks Apple the world's most valuable brand; it's followed by Google IBM, McDonald's, and Coca-Cola. (Apple/Yahoo report) 12 Comments
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5:35 PM 3D Systems (DDD) shareholders signed off on increasing the company's share authorization to 220M from 120M at its annual meeting. The 3D printer maker says the increase restores its flexibility to use stock "for appropriate corporate purposes." Do those purposes include another split and/or acquisitions? 9 Comments
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5:23 PM Avid (AVID) -12.7% AH to $6 after announcing it has received a NASDAQ non-compliance warning due to its failure to file its 2012 10-K on time, that it expects to restate its 2009-2012 results due to its (previously-announced) accounting review, and that its review now extends to "accounting for certain restructuring expenses related to lease obligations and other exit activities" for Q2 and Q3 2012 - Avid thinks restructuring expenses may have been overstated by ~$3.5M on a pre-tax basis. Shares are close to a multi-year low of $5.85. 1 Comment
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5:06 PM "We are designing Xbox One to enable customers to trade in and resell games. We’ll have more details to share later," says Microsoft (MSFT). GameStop (GME), whose shares were drubbed on concerns the One's requirement to install games on its 500GB hard drive (and tie them to an Xbox Live account) would eliminate used game sales, must be pleased. Microsoft also refutes rumors its next-gen console will need a Web connection to work, though developers using Azure cloud services can insist on it. Xbox 360 games won't be supported, and (unlike Sony with the PS4) there are no plans for a streaming service that can offer older titles. (earlier) 1 Comment
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4:51 PM Tech guidance roundup: 1) Analog Devices (ADI - earnings) expects FQ3 revenue of $655M-$685M and EPS of $0.51-$0.56, below a consensus of $688.3M and $0.58. 2) Intuit (INTU - earnings) expects FQ4 revenue of $702M-$727M and EPS of $0.03-$0.07, largely below a consensus of $726.7M and $0.11. 3) Compuware (CPWR - earnings) expects FY14 revenue of $1B and GAAP EPS of $0.35-$0.37; consensus is for revenue of $1.01B and non-GAAP EPS of $0.42. ADI -1.3% AH. INTU +0.5%. CPWR +0.9%. (Analog Devices PR) (Intuit PR) (Compuware PR) Comment!
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4:30 PM More on NetApp: $1B in buybacks promised over next 4 months, $2B over next 12 months; FQ4 buybacks totaled $180M. Company is cutting 900 jobs (~7% of workforce) in restructuring (Piper predicted 1,300), expects to take $50M-$60M in pretax charges. NetApp claims "double-digit growth in branded bookings," which suggests OEM sales (to IBM?) are weak. FQ4 product revenue (66% of total) -2% Y/Y, software/maintenance +6%, services +8%. Gross margin was 61.2%, +160 bps Y/Y. FQ1 guidance likely to stoke share loss worries. NTAP +2.1% AH. (PR) 1 Comment
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4:08 PM NetApp (NTAP): FQ4 EPS of $0.69 beats by $0.01. Revenue of $1.72B (+1% Y/Y) misses by $40M. Expects FQ1 revenue of $1.475B-$1.575B and EPS of $0.45-$0.50, below consensus of $1.6B and $0.53. Initiates $0.15/share quarterly dividend (1.6% yield) with intention to increase over time. Increases buyback authorization by $1.6B to $3B. Shares +3.3% AH. CC at 5:30PM ET (webcast). (PR) Comment!
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3:52 PM Clearwire (CLWR +4%) reschedules its special shareholder meeting to May 31, so as to give investors time to weigh Sprint's (S) new $3.40/share offer. Crest Financial says it still isn't satisfied, arguing Clearwire's spectrum deserves a higher price tag. Shares are currently at $3.39, a penny below the offer price. 2 Comments
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2:53 PM In what could be a win for PayPal (EBAY), Google (GOOG) is shutting down Checkout in 6 months to focus its online payments efforts on Wallet. Though Google will still handle payment processing for developers selling on Google properties (Play, Chrome Web Store, Offers Marketplace), 3rd-party merchants using Checkout and lacking an internal processing solution will have to find an alternative. The announcement comes a week after Google announced several new Wallet features, including new developer APIs and an option to attach money to Gmail messages. 3 Comments
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2:31 PM Vodafone (VOD +0.3%) views its Verizon Wireless stake as a more attractive long-term asset than its slumping European ops, and is thus loath to sell it, argues Bernstein's Robin Bienenstock in the wake of the carrier's FQ4 report (included major Y/Y drops in Italian/Spanish revenue). Bienenstock, no stranger to throwing cold water on deal expectations, also thinks Vodafone's remarks about keeping its new $3.15B VZW distribution are a sign Verizon (VZ -1.3%) won't be issuing fresh distributions in the near-term; recent comments from Verizon's CFO also back this up. 5 Comments
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2:20 PM A little more on the Xbox One: The console will launch "later this year;" Microsoft won't get more specific. No price details yet. A deal has been struck with the NFL to provide "exclusive content" via SmartGlass/Kinect, as well as interactive broadcasts. Gameplay recording/sharing are now supported, as are Skype and group video chat . There isn't any game streaming feature similar to what's promised for the PS4 (SNE). Activision (ATVI) says Call of Duty: Ghosts will arrive on the One. With the One, Microsoft is trying to both address a secular opportunity - soaring demand for Web-based living room entertainment, and a secular threat - a shift in gaming spend/activity to mobile and social titles. (live blog) 2 Comments
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