Though IBM (IBM -3.2%) reiterated its 2014 EPS guidance, it was "really reset lower" given the company lowered its full-year tax rate forecast to 20% from 23%, says Cowen's Moshe Katri, reiterating a Hold. "The big issue is IBM's legacy businesses are getting hit by multiple points."
Bernstein's Toni Sacconaghi reiterates an Outperform, but nonetheless states IBM's Q1 numbers "likely reinforced prevailing concerns about revenue growth, cash flow and earnings quality."
Wells Fargo (Market Perform) sees some silver linings: Services margins grew, WebSphere middleware sales were up 12% Y/Y, and cloud, security, and mobility sales are growing well. But it also notes services signings of $11.2B missed a $13B consensus, and that Power (-22% Y/Y), mainframe (-40%, six quarters into a product cycle), and Chinese (-20%) sales remain weak.
Mentioned on the CC (transcript): 1) IBM still expects to grow 2014 free cash flow from last year's $15B, in spite of producing just $600M in Q1. 2) Though $8.2B was spent on buybacks in Q1, full-year buybacks are expected to be less than 2013's $13.9B. 3) IBM's app outsourcing ops have seen "pretty substantial price pressure."
Cloud-related revenue (boosted by SoftLayer) rose 50% Y/Y, and is now on a $2.3B/year run rate, but that still makes it less than 3% of total revenue. Meanwhile, job cuts led opex to fall 8% Y/Y to $7.4B.
As previously reported, the ads leverage Twitter's expandable card format. They also leverage Twitter's online ad-buying platform, and can be delivered on 3rd-party apps via MoPub's mobile ad exchange.
Twitter is looking to take a bite out of Facebook's (FB +0.1%) app install ad business, which has reeled in thousands of developers struggling to get recognized on the App Store and Google Play.
Facebook's app install ads drove 245M downloads last year Video ad support was added last fall.
Beta testers for Twitter's solution include Spotify and top Japanese mobile game platform Gree. The company suggests it plans to launch additional targeted ad products in tandem with MoPub.
After initially trading near breakeven following a Baird upgrade to Outperform, SolarCity (SCTY +1.7%) has moved higher.
Baird's Ben Kallo thinks the 35% drop seen since Feb. 27 provides a great buying opportunity for "the stock most levered to the U.S. rooftop market, which will likely undergo a boom over the next several years."
He also argues SolarCity's cost cuts and scale give it a competitive edge, and that solar asset-backed notes provide it with cheap capital to "capitalize on the expansive U.S. greenfield opportunity."
Netflix (NFLX +3.6%) is in talks with Vodafone (VOD +1.1%) about a deal that would give the giant international carrier's subs "free access to Netflix content for a period of time," Bloomberg reports.
Vodafone has majority ownership of networks in 15 European countries, including three Netflix markets - the U.K., Ireland, and the Netherlands. The company already has deals with Spotify and Sky Sports that provide free content access to new U.K. 4G subs.
The report comes as AT&T tries to get Netflix and other streaming service providers to sign up for its Sponsored Data program, which allows content providers to subsidize customer data usage.
Microsoft (MSFT -1.4%), whose enterprise software ops compete against both IBM (middleware, databases, developer tools) and SAP (ERP/CRM apps, databases), is trading lower. As is IBM archrival H-P (HPQ -2.6%).
A few enterprise cloud software vendors, some of whom compete against SAP, are also off: JIVE -3.5%. N -2%. VEEV -1.9%. MKTO -2.2%.
Though SAP's (SAP -2.1%) non-IFRS cloud subscription/support revenue rose 32% Y/Y in Q1 (even with Q4's rate) to €221M, its traditional software license revenue fell 5% to €623M after growing 1% in Q4.
Much like archrival Oracle's 2013 license revenue misses, the latter figure is bound to trigger fears about the impact of cloud software competition.
Support revenue (driven by software licenses, relatively steady) rose 5% Y/Y to €2.21B, and all other revenue fell 8% to €643M. Opex rose just 2% Y/Y.
A strong euro took a toll: Whereas revenue and op. profit each rose 2% Y/Y at current exchange rates, they've would've risen 6% and 7% at constant currency. SAP expects a similar forex impact for the whole of 2014.
SAP now has 3.2K+ Hana customers, up from 3K+ at the end of 2013, and nearly 1K customers now run its core Business Suite on Hana (up from 800). But no Hana revenue figure is given; Hana revenue rose 61% in 2013 to €633M.
Cloud billings rose 23% Y/Y to €228M (36% exc. forex), and the cloud deferred revenue balance 20% to €454M (29% exc. forex).
In spite of the Q1 miss, SAP is reiterating its full-year revenue and op. profit forecasts.
JPMorgan's Philip Cusick has upgraded Gogo (GOGO +3.1%) to Overweight, and set a $28 PT.
Cusick calls the in-flight Wi-Fi provider's recent selloff "macro or sentiment-driven," believes its business aviation ops are worth $11/share alone, and sees plenty of U.S. and international opportunities as Gogo "accelerates the pace of RFPs."
The upgrade follows deals with Boeing and Air Canada, and the unveiling of Gogo's high-capacity 2Ku satellite connectivity platform.
Zoosk, an online dating platform claiming 26.4M members and 650K subscribers, has filed for a $100M IPO under the symbol ZSK. The underwriters: BofA/Merrill, Citi, RBC, Oppenheimer, and William Blair.
Zoosk tries to differentiate itself in a crowded market by leveraging behavioral data to form connections. The company has users in 80 countries, and claims to have the top-grossing iPhone dating app in the U.S.
2013 revenue totaled $178.2M (+63% Y/Y), and net loss $2.6M. Competitors include InterActiveCorp's (IACI) Match, OKCupid, and Tinder properties. Tinder was reportedly valued at $500M in a recent transaction.
Adam Gefvert expects You On Demand (YOD) to trade at $1.50 by the end of 2014, and $0.50 by the end of 2015.
He points out YOD only had ~$300K in 2013 revenue in spite of potentially reaching 18.2M Chinese households as of 2012, and that even a 3x 2014 revenue increase would leave shares trading at over 120x sales.
Gefvert also notes the Chinese VOD service provider has to contend with the huge popularity of pirated content, and (given Q4 SG&A spend of $8.3M) declares management is "fleecing shareholders."
With a large number of outstanding warrants and preferred shares having sub-$2 conversion prices, Gefvert thinks YOD could fall below $2 if holders "get worried and convert and sell their stock before it falls any closer to the exercise price."
"Better than headlines suggest," says Baird's Colin Sebastian of Google's (GOOG) earnings results last night. Reiterating his Outperform rating and $675 price target, Kallo says the results are largely inline with expectations, and the company remains on track to leverage multiple long-term growth opportunities.
"Our view on Google remains positive given the solid growth in the Websites business and multiple drivers that we expect to keep revenue growth near 20%," says Needham's Kerry Rice. Drivers include: "1) the push to bring brand advertising dollars to search and display, which we expect to become an important revenue driver over the next 18-24 months, and we note that an earlier ramp could drive upside. 2) The Android ecosystem puts Google as a preeminent mobile player. 3) We expect a modest but gradual improvement in CPCs. 4) Network revenue growth, while sluggish, should have a stronger H2."
Calling Q1 a "small bump," Piper's Gene Munster says Google remains on track for steady growth in its core business as it invests in other products. "We continue to view Google as the best long term large cap story in our coverage space."