Seeking Alpha
  • Today - Tuesday, April 28, 2015

  • 10:01 AM
    • Apr. Consumer Confidence: 95.2 vs. 103.0 consensus; 101.4 (revised) in Mar.
    • The Present Situation Index decreased to 106.8 from 109.5 in Mar.
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  • 9:00 AM
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  • 7:07 AM
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  • Monday, April 27, 2015

  • 5:01 PM
    • With strong iPhone sales (and perhaps also lower memory prices) providing a lift, Apple (NASDAQ:AAPL) had an FQ2 gross margin of 40.8%, up 150 bps Y/Y and above guidance of 38.5%-39.5%. FQ3 GM guidance is at 38.5%-39.5%.
    • Product line performance: iPhone revenue (69% of total revenue) +55% Y/Y to $40.3B; units +40%. iPad -29% to $5.4B; units -23%. Mac +2% to $5.6B; units +10%. Services (iTunes, App Store, AppleCare, Apple Pay, etc.) +9% to $5B. Other products (iPod, Apple TV, Beats) -10% to $1.7B.
    • Regional performance: Americas revenue +19% to $21.3B. Europe +12% to $12.2B. Greater China +71% to $16.8B. Japan -15% to $3.5B. Rest of Asia-Pac +48% to $4.2B. International sales were 69% of revenue, up from FQ1's 65%.
    • iPhone ASP was $659, down from FQ1's $687 but up from FQ4's $603 (iPhone 6 Plus boost). iPad ASP was $430 vs. $419 in FQ1 and $432 in FQ4. Mac ASP was $1,231 vs. $1,258 in FQ1 and $1,200 in FQ4.
    • GAAP SG&A spend rose 18% Y/Y to $3.46B. R&D spend rose 35% to $1.92B.
    • $7B was spent on buybacks, up from FQ1's $5B. Apple ended FQ2 with over $193B in cash/investments (much of it offshore), and nearly $44B in debt.
    • Apple's increased quarterly dividend of $0.52/share is good for a yield of 1.5% at current levels. The next dividend is payable on May 14 to shareholders on record as of the May 11 close.
    • AAPL +1.5% AH to $134.59. The CC is underway (webcast).
    • FQ2 results/FQ3 guidance, PR
  • 4:35 PM
    • Apple (NASDAQ:AAPL): FQ2 EPS of $2.33 beats by $0.17.
    • Revenue of $58.01B (+27.1% Y/Y) beats by $1.95B.
    • 61.2M iPhones (above expectations), 12.6M iPads (below expectations), 4.6M Macs (near expectations).
    • Expects FQ3 revenue of $46B-$48B vs. $47.06B consensus.
    • Dividend increased by 11%, buyback authorization increased by $50B to $140B.
    • Shares +2.2% AH.
    • Press Release
  • 4:20 PM
    • Stocks slipped from last week's record levels, as investors turned cautious ahead of major earnings reports and the two-day Fed meeting.
    • Big declines in biotech names (-4.2%) caused the Nasdaq to snap a five-session winning streak and pressured the health care sector (-1.8%) to the bottom of the day's leaderboard.
    • The tech sector (+0.4%) kept the market from sliding deeper into the red thanks to solid gains among large cap components, particularly Apple (+1.8%) ahead of its earnings, while chipmakers held up relatively well despite Applied Materials' 8.4% plunge on news that it ended its merger deal with Tokyo Electron due to regulatory concerns.
    • Today's investor participation was ahead of recent averages, with more than 780M shares changing hands at the NYSE floor.
    • U.S. Treasurys recouped most of their early losses, with the 10-year yield ending higher by a basis point to 1.92%.
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  • 7:03 AM
  • 2:42 AM
  • Sunday, April 26, 2015

  • 4:57 PM
  • Friday, April 24, 2015

  • 5:14 PM
    • Thanks to a better-than-feared Q1 report that included lower-than-expected spending figures, Google (NASDAQ:GOOG) rallied to its highest levels of the month today. Class C shares are now up 16% from a January low of $487.56, and 6% below a 52-week high of $599.65.
    • At least 6 firms have hiked their targets. Deutsche's Ross Sandler (Buy) notes net profit margin was flat in Q1 "after imploding for three years," something he attributes to both cost discipline and management changes.
    • Looking at the top-line, Morgan Stanley (Equal-Weight) is worried U.S. revenue growth slowed to 11% Y/Y (the slowest pace since Q4 2009). With YouTube having likely grown over 40% Y/Y, MS thinks U.S. search revenue (higher-margin) was only up 9%-10%.
    • On the CC (transcript), CFO Patrick Pichette stated a mix shift towards YouTube ads - any un-skipped video ad is counted as a click - was pressuring Google's ad prices (CPCs), and not mobile. "Excluding the impact of YouTube TrueView ads, growth in site clicks would be lower, but still positive, and our CPCs would be healthy and growing year-over-year." Sales chief Omid Kordestani noted YouTube's TruView advertiser count rose 45% in 2014.
    • BofA/Merrill (Buy) is pleased with the CPC disclosure, as well as sales growth and margin stability. "We continue to see opportunity for sentiment improvement on new products (I/O in May), anticipation of new CFO, spending trajectory change, and YouTube strength.
    • Meanwhile, eyewear maker Luxottica has announced it's working with Google on a commercial version of Google Glass that will launch soon (no ETA is given). Sales of the $1,500 Explorer Edition ended in January.
    • Glass chief Ivy Ross previously stated the next version will be cheaper, have a longer battery life, and a better display and sound quality. Himax (NASDAQ:HIMX) is expected to remain Glass' microdisplay supplier, and Intel is expected to be its CPU supplier. Eric Schmidt affirmed Google's commitment to Glass last month.
    • Prior Google earnings coverage
  • 4:25 PM
    • Stocks ended the week with gains, as excitement over tech stocks propelling the Nasdaq to another all-time high thanks mostly to a number of solid corporate earnings reports.
    • The Nasdaq - whose members are generally less impacted by the strong U.S. dollar and energy prices - rose a hefty 3.3% for the week, while the S&P - which also posted a new record close - advanced 1.8% and the Dow added 1.4%.
    • Microsoft surged more than 10% after posting earnings and revenue that beat estimates, with growth in hardware sales and commercial cloud computing; Amazon jumped 14% to a new intraday high despite reporting a decline in earnings, as revenue beat expectations.
    • Biotechs struggled, however, with Biogen sliding 6.6% after missing earnings and revenue estimates, as the bar has been set even higher for the sector that has made a major contribution to Nasdaq's rally.
    • Overall, Q1 earnings are coming in above lowered expectations; of the 201 companies in the S&P 500 that have reported earnings, nearly 75% have reported earnings above the mean estimate.
    • U.S. crude settled at $57.15/bbl, down 1%, but Brent rose 0.7% to $65.28, trading at its highest levels since December.
    • Treasury prices rose modestly, with the 10-year yield falling 3 bps to 1.92%.
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  • 2:03 PM
    • Though the Nasdaq is up 0.7% thanks to market-pleasing earnings from Google, Microsoft, and Amazon, chip stocks (SOXX -2.1%) are adding to their Thursday losses after Freescale, Altera, Microsemi, and Maxim joined the ranks of chipmakers offering soft Q2 guidance; Texas Instruments, Xilinx, and Qualcomm did so on Wednesday afternoon.
    • NXP (NXPI -4.3%), set to merge with Freescale in a cash/stock deal, is selling off ahead of its April 29 Q1 report. RF chipmakers Skyworks (SWKS -3.8%), Qorvo (QRVO -4.4%), and Avago (AVGO -5.2%) are also seeing steep declines.
    • Other decliners include a slew of telecom/networking, microcontroller, and analog/mixed-signal chipmakers. The group includes Marvell (MRVL -3%), ON Semi (ON -6.9%), Atmel (ATML -3.3%), Cypress (CY -4%), Lattice (LSCC -3.9%), Semtech (SMTC -6.9%), Cavium (CAVM -6%), PMC-Sierra (PMCS -2.9%), InPhi (IPHI -3.8%), and Silicon Labs (SLAB -2.9%). Chip packaging/testing firm Amkor (AMKR -5.7%) is also off; its Q1 report arrives on Monday.
    • As was the case with TI and Xilinx, soft telecom equipment chip demand was often blamed by those guiding light yesterday afternoon. Freescale (FSL -3.5%) stated it expects network processor division sales to be down Q/Q and RF (base station power amplifier) division sales to be flat. Microcontroller, automotive, and analog and sensor division sales are expected to rise.
    • Altera (ALTR -3.3%) stated its "telecom and wireless business, and particularly our wireless business globally looks to be quite weak in [Q2], while the rest for our business will in aggregate be flat to slightly up." Regarding its Q1 miss, the company notes "Industrial, test, compute and storage, and to a lesser extent military, fell short of our forecast" (share loss to Xilinx?).
    • Maxim reports seeing "broad-based softness in communications infrastructure demand" and soft industrial bookings to go with healthier mobile/auto demand. The Galaxy S6 appears to be giving a lift to Maxim's mobile sales.
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  • 12:39 PM
    • Janney, JPMorgan, and Raymond James have upgraded Amazon (NASDAQ:AMZN) after the company beat Q1 estimates on the back of a 24% Y/Y increase in North American segment revenue, guided in-line, and (importantly) reported AWS had a $265M Q1 op. profit on revenue of $1.57B ($680M and $5.16B for the trailing 12 months). At least 7 other firms have hiked their targets. Amazon's market cap is at $181.6B.
    • JPMorgan's Doug Anmuth (upgrade to Overweight, $535 target) now values AWS at $66.3B, or 16x estimated 2016 EBITDA. "[W]e think the reported profitability level far exceeded virtually all expectations. CSOI margins of 17% in 1Q15 and 14% in 2014 have been driven by increasing scale and greater utilization, along with additive services beyond core EC2 and S3 [computing and storage] services. When factoring in heavy depreciation, AWS has EBITDA margins of around 50%."
    • Janney's Shawn Milne (upgrade to Buy): "AWS segment margins of 16.9% in Q1, 14.2% in FY14 — well ahead of general Street thoughts that AWS was in 'investment mode,' and losing 5-10% (or more)." He does note Amazon's North American retail op. margin fell to 2.5% in 2014 from 2.8% in 2013 (thanks largely to the Fire Phone debacle), but adds it rebounded to 3.9% in Q1.
    • Raymond James' James Kessler (upgrade to Outperform) focuses on Amazon's total margin improvement. "Non-GAAP operating margin of 3.1% was ~100 bp above our/consensus estimates driven by improved gross margins and modestly lower than expected operating expenses. Amazon also guided 2Q margins above consensus at the high end."
    • On SA, Brian Nichols argues AWS would be worth $50B at 45x forward op. income, and thinks the business could be valued at $85B if publicly traded by itself. The Panoramic View: "Facebook and other leading tech companies used to garner a 10x revenue valuation when they were in similar stages of development. I think that the same can be applied to AWS."
    • On the CC (transcript), Amazon stated active customer accounts rose by 8M Q/Q to 278M (260M paying customers). Y/Y paid unit growth was steady at 20%, and 3rd-party sellers made up 44% of sales vs. 43% in Q4.
    • Prior Amazon earnings coverage
  • 9:15 AM
    • Comcast (NASDAQ:CMCSA) is trading up 1.3% premarket, and Time Warner Cable (NYSE:TWC) is 0.8% higher as well, after confirmation that their $45B merger deal is dead.
    • In statements by the Justice Dept. and FCC thanking each other for their cooperation, it's clear that FCC Chairman Tom Wheeler was against the deal, which would have made agency approval a very long shot.
    • It's also clear why Wheeler was opposed: It's about broadband, not cable, and protecting the burgeoning streaming video market. "The proposed merger would have posed an unacceptable risk to competition and innovation especially given the growing importance of high-speed broadband to online video and innovative new services."
    • While Comcast doesn't pay a breakup fee with the deal's end, that doesn't mean everyone walks away cheaply: Advisers including bankers and lawyers will lose out on $380M in fees, chiefly Goldman Sachs (NYSE:GS), banker for Charter Communications (NASDAQ:CHTR). J.P. Morgan Chase (NYSE:JPM) will drop from second to third in the league tables. As a mitigating factor, more deals are likely on the way, though.
    • Other sector players premarket: AT&T -0.3%; Verizon -0.2%.
  • 8:34 AM
    • After a late Thursday board meeting, Comcast (NASDAQ:CMCSA) has confirmed it's dropping its $45B plan to acquire Time Warner Cable (NYSE:TWC) -- a stunning reversal of a 15-month plan, which got less stunning as hurdles began to mount in recent weeks.
    • "Today, we move on," says Comcast CEO Brian Roberts. "Of course, we would have liked to bring our great products to new cities, but we structured this deal so that if the government didn't agree, we could walk away." It's a cheap walk-away for Comcast, which had no breakup fee in the deal.
    • What next? Consolidation is still likely in a deeply uncompetitive industry. Other companies are now officially front and center in pursuit of TWC, notably John Malone's Charter Communications (NASDAQ:CHTR), which could re-launch its own failed effort. CHTR-TWC would have 16.5M broadband subscribers together, less than Comcast's 22M.
    • Charter's deal with Comcast aimed at divestment and easing the Comcast-TWC transaction also blows up. What about Charter's deal to acquire Bright House?
    • As for Comcast, it could take its stored-up momentum outside of cable -- to someone like Netflix (NASDAQ:NFLX), as BTIG's Rich Greenfield hints? Or to a telecom like T-Mobile (NYSE:TMUS)?
    • Updated: Time Warner Cable statement. "We have always believed that Time Warner Cable is a one-of-a-kind asset," says Chairman and CEO Robert D. Marcus. "We are strong and getting stronger."
  • 8:31 AM
    • Mar. Durable Goods: +4% to $240.2B vs. +0.6% expected, -1.4% prior.
    • Ex-transport -0.2% vs. +0.3% expected, -1.3% (revised from -0.4%) prior.
  • 7:27 AM
  • 2:36 AM
  • Thursday, April 23, 2015

  • 4:20 PM
    • It took 15 years but the Nasdaq Composite finally punched through to a new all-time record close, outperforming the other major indexes which ended with tepid gains as investors sorted through a heavy batch of earnings reports.
    • The S&P 500 hit a fresh intraday record but pared gains to settle a few points below its previous closing record.
    • The session overcame disappointing manufacturing data from China, Japan and some European economies, U.S. new home sales that missed expectations, and several U.S. earnings reports that failed to show Y/Y revenue growth, as sentiment took hold that the Fed would remain at the zero-bound for longer.
    • IBM jumped 3% on positive follow-through from its earnings report on Monday, as investors are seeing a company that is "turning around and showing some progress as it's turning around," says a portfolio manager.
    • AT&T surged 4.2% despite missing revenue estimates, and U.S. crude oil climbed 2.8% to a year's high $57.74/bbl, sparking the telecom and energy sectors to the top of today's leaderboard.
    • Investor participation was in-line with average, as more than 780M shares changed hands at the NYSE floor.
    • Treasury prices climbed alongside equities, pressuring the 10-year yield by 4 bps to 1.94%.
  • 4:06 PM
    • Amazon (NASDAQ:AMZN): Q1 EPS of -$0.12 beats by $0.01.
    • Revenue of $22.72B (+15.1% Y/Y) beats by $330M.
    • Expects Q2 revenue of $20.6B-$22.8B (+7-18% Y/Y) vs. a $22.1B consensus.
    • Expects Q2 op. income of -$500M to $50M vs. -$15M in Q2 2014.
    • Shares +3.2% AH.
    • Press Release
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