Jul. 17, 2014, 7:53 AM
Jul. 16, 2014, 10:43 AM
- Intel (INTC +6.2%) has received 19 PT hikes following yesterday's Q2 beat, strong guidance, encouraging PC/server figures, and buyback announcement. UBS has upgraded shares to Buy, while predicting improving margins and a healthy balance sheet (to fuel buybacks) will drive upside.
- "A Tim Howard quarter; no holes," gushes Credit Suisse. Its PT is up to $40. Drexel Hamilton now has a Street high of $50. Stifel ($36 PT) notes Intel "continues to wring out costs" from its 22nm manufacturing processes, and includes the pending launch of Grantley (22nm Xeon E5) and 14nm Broadwell CPUs on its list of catalysts.
- Morgan Stanley ($30 PT) is more cautious: It argues non-PC/server initiatives "continue to be problematic," that buybacks stand to bring net cash to zero, and that mobile revenue could turn negative in Q3 due to contra revenue payments to tablet OEMs.
- Notable CC remarks (transcript): 1) The Data Center Group saw cloud, networking, HPC, and enterprise sales all grow over 15% in Q2. 2) Bay Trail Atom CPUs now make up nearly 20% of notebook mix (enabling lower price points, but pressuring ASPs). 3) Intel is seeing "clear signs" of an enterprise/SMB PC refresh, but thinks consumer demand "remains challenging," largely due to emerging markets.
- When pressed about its mobile ops, Brian Krzanich argued moving downmarket with platforms such as SoFIA is crucial to making the business profitable. CFO Stacy Smith admitted Intel needs to develop integrated baseband/app processors, and promised mobile losses would narrow (but not disappear) next year.
- H-P (HPQ +1.8%) has joined AMD (previous) in following Intel higher.
- Prior Intel coverage
Jul. 15, 2014, 8:20 AM| 4 Comments
Jul. 14, 2014, 2:30 PM
- H-P (HPQ +0.6%) will offer a quality $199 Windows laptop for the holidays, Microsoft (MSFT +0.3%) COO Kevin Turner promises at his company's partner conference. Turner also says H-P will sell 7" and 8" Windows tablets for $99, and that Toshiba will sell a $249 notebook with an 11.6" screen and 32GB SSD.
- "We’ve got a great value proposition against Chromebooks," claims Turner, driving home whom he considers competition. IDC noted last week Chromebooks, which added offline app support last year, contributed to a Q2 rebound in low-end notebook sales.
- Turner's remarks come as Digitimes reports Microsoft is planning to end Windows license fees for all sub-$250 tablets. The company has already eliminated fees for all sub-9" mobile devices.
- Turner also declares SharePoint to be a $2B/year business, says Office has "rescued" 785 Google Apps customers in the last 18 months, and reports Azure added 42K+ customers in FY14 (ended in June). (live blog)
- He claims (citing market share data) Microsoft's Hyper-v is "eating VMware's (VMW +1.8%) lunch" in the server virtualization market. Wells Fargo cited slowing server virtualization growth as a reason for downgrading VMware last week, while asserting "most industry analysts agree that Microsoft has essentially closed the functionality gap with [VMware's] vSphere."
- Microsoft and VMware both report on July 22.
Jul. 10, 2014, 12:51 PM
- Mark Interrante, until now Rackspace's (RAX -2.1%) SVP of products and engineering, has been hired by H-P (HPQ +0.4%) to be the SVP of engineering for the company's cloud services unit
- Both H-P and Rackspace offer cloud infrastructure (IaaS) services based on the OpenStack platform; Rackspace is an early leader within the market. H-P also offers cloud app platform (PaaS) services with the help of a partnership with Cloud Foundry (a part of EMC/VMware's Pivotal spinoff). Each company faces intense competition from Amazon, Google, and Microsoft.
- Meanwhile, re/code states multiple sources have "categorically denied" a TechCrunch report stating H-P made a $43/share bid for Rackspace. As it is, dealReporter had expressed skepticism about the reliability of a source providing similar info.
Jul. 9, 2014, 5:29 PM
- Global PC shipments fell only 1.7% Y/Y in Q2 to 74.4M, says IDC. That's much better than the firm's forecast for a 7.1% drop, and smaller than the 4.4% and 5.6% declines respectively seen in Q1 and Q4. Gartner is even more positive, estimating shipments rose 0.1%, thus ending a long string of declines.
- Unsurprisingly (especially given INTC's Q2 guidance hike), IDC thinks business PC upgrades stemming from Microsoft's (MSFT) ending of Win. XP support helped out. But it also says consumer demand was better than expected, with sales of low-end PCs (inc. Chromebooks) improving amid slowing tablet growth.
- Sales in the U.S. and EMEA (two high-ASP regions) rose, while Asia-Pac (exc. Japan) still fell by nearly double digits. IDC now thinks full-year industry growth "could get closer to flat, rather than the May projection of -6%."
- IDC's Q1 share data points to industry leaders gaining at the expense of smaller players: Lenovo (LNVGY) 19.6% share, +270 bps Y/Y. H-P (HPQ) 18.3%, +190 bps. Dell 14%, +180 bps. Acer (ACEIY) 8.2%, -10 bps. Asus (ASUTY) 6.2%, +30 bps. Everyone else 33.6%, -690 bps.
- HPQ +0.6% AH. Other names with strong PC exposure: AMD, NVDA, MU, STX, WDC, HTCH.
Jul. 2, 2014, 8:13 AM
- Rackspace (RAX) is in talks with a P-E firm about a deal to take the company private, reports TechCrunch, with an eye towards maybe making an official announcement this week.
- "The pressures of being a public company are too much," says one source, and the idea of going private "has gained sufficient traction" in the boardroom.
- The going-private leak comes amid at least three acquisition bids, says TC, including one from H-P (HPQ) for up to $43 per share.
- RAX +9.6% to $37 premarket
- Previously: Rackspace falls on negative M&A report
Jun. 27, 2014, 2:22 PM
- Reuters reports H-P (HPQ -0.3%) has agreed to settle 3 shareholder suits over the infamous Autonomy acquisition, and that the shareholders' attorneys will now assist the company in "pursuing claims" against ex-Autonomy CEO Mike Lynch and other execs.
- The payout is unknown, but it could be substantial: H-P recently paid $57M to settle a less high-profile class-action suit alleging ex-CEO Leo Apotheker and other execs defrauded investors by abandoning a business model they previously talked up.
- The IT giant took a colossal $8.8B write-down in 2012 on its $11.1B Autonomy purchase, after declaring it had uncovered evidence Lynch and his team were guilty of many accounting misdeeds. H-P and Lynch have since been involved in a bitter war of words.
- In spite of the write-down, H-P has remained committed to Autonomy, arguing its enterprise search/indexing software is pivotal to a big data software lineup that also includes the company's Vertica analytics database.
- Update: H-P says it's "in serious discussions" to settle the Autonomy suits, but adds "no final deal has been reached yet."
Jun. 27, 2014, 7:26 AM
- Another Hewlett-Packard (HPQ) lawsuit pertaining to former CEO Mark Hurd's false expense reports and unwanted sexual advances has been dismissed. H-P was charged with failing to disclose Hurd's violations after a 2010 internal investigation found him breaching company policy. A similar shareholder suit was also dismissed last year.
- HPQ -0.1% premarket
Jun. 12, 2014, 4:26 PM
- Citing stronger-than-expected business PC demand, Intel (INTC) now expects Q2 revenue of $13.4B-$14B, better than prior guidance of $12.5B-$13.5B and a $13B consensus.
- Moreover, the chip giant now expects "some revenue growth" for the whole of 2014, after previously guiding for flat sales; the consensus is for 0.7% growth.
- Full-year R&D/MG&A spending guidance has been upped by $300M to $19B-$19.4B.
- The guidance hike follows several quarters of narrowing PC shipment declines, thanks in large part to healthy corporate demand. Windows 7 system purchases tied to Microsoft's decision to end Windows XP support have played a key role.
- Other PC industry names are up in sympathy: MSFT +1% AH. AMD +1.4%. HPQ +0.8%. NVDA +0.7%.
Jun. 12, 2014, 7:16 AM
- "Our thesis has been proven wrong as H-P management has executed far more effectively than we anticipated," says analyst Bill Shope, throwing in the towel on Goldman's Sell rating for Hewlett-Packard (HPQ).
- "Following H-P Discover in Las Vegas, we walk away incrementally more positive on the progress of the turnaround ... Restructuring efforts have gone a long way towards 'right-sizing' the cost base, providing a sustained buffer to our secular concerns."
- Shares +1.2% premarket
Jun. 10, 2014, 3:08 AM
- H-P (HPQ) has unveiled a water cooling technology for its new Apollo family of server computers that run financial models and create complex designs. The innovation will replace energy gobbling power fans that previously stopped models from overheating.
- The new design takes the heat out of the machine from a safe distance, unlike gamers’ machines that pump water near heat-generating processors. By keeping the water farther away, there will less likely be a leak on expensive components.
- "The innovation opens the door for H-P to chase orders in a $4B segment of the market where it hasn’t had products before," says Antonio Neri, chief of the company’s servers business.
Jun. 6, 2014, 6:40 PM
- Thanks to a 25% drop in high-end storage spend, external disk storage and total disk storage sales respectively fell 5.2% and 6.9% Y/Y in Q1, says IDC. Those figures contrast with Q4 growth rates of 2.4% and 1.3%.
- Market leader EMC, which depends heavily on its high-end Symmetrix line, saw its external share fall 110 bps Y/Y to 29.1%, and its total share fall 50 bps to 22.4%. EMC previously reported its high-end sales fell 22% in Q1; strong flash/scale-out storage sales partly offset the drop.
- NetApp's (NTAP) low high-end exposure allowed its shares to grow 30 bps and 50 bps to 15.1% and 11.7%, in spite of a 2.8% revenue drop. H-P's (HPQ) external share rose 40 bps to 8.8% (3PAR strength), but its total share fell 20 bps to 15.1% (server weakness).
- Things still look bleak for IBM, which reported a 23% Y/Y Q1 system storage revenue drop: Its external share fell 200 bps to 8.8%, and its total share 180 bps to 10.1%.
- The total disk share of non-top-5 vendors rose 370 bps to 28.8%. Chalk that up to both surging demand for cloud storage (getting cheaper by the quarter) running on commodity hardware, and solid momentum for flash/hybrid storage upstarts such as Nimble (NMBL), Pure Storage, and Nutanix.
- Hard drive/assembly suppliers: STX, WDC, HTCH
Jun. 5, 2014, 7:40 PM
- Dozens of companies, including IBM and H-P (HPQ), found an unwelcome surprise in their supply chains in their search for "conflict minerals," part of the Dodd-Frank Act designed ferret out any connection to mines controlled by armed groups in the Congo: Many of their products contain North Korean gold.
- IBM, for example, disclosed that the North Korean gold was used to make its memory storage systems.
- North Korea’s central bank provides currency for the country and refines gold, but U.S. sanctions law bars importing materials from the country, even if it comes from deep within a supply chain.
- "There is still a long way to go in understanding supply chains," says an attorney who deals with conflict mineral disclosures.
- Other companies making the discovery included Ralph Lauren (RL), Rockwell Automation (ROK) and Williams-Sonoma (WSM).
May 30, 2014, 6:41 PM
- IDC estimates global server sales fell 2.2% Y/Y in Q1, a slightly smaller decline than the 4.4% drop seen in Q4. Gartner, however, puts the decline at 4.1%.
- The embrace of white-label hardware by Web giants continues taking a heavy toll: IDC thinks white-label sales, which it calls ODM Direct, grew 75% Y/Y (up from Q4's 47% clip) and made up 7.3% of industry revenue, up from 6.4% in Q4 and 4.1% a year ago.
- IDC estimates market leader H-P (HPQ) saw its share hold steady at 26.5%, after having grown (at IBM's expense) 260 bps Y/Y in Q4. #2 IBM, whose hardware sales have been battered, saw its share fall 600 bps Y/Y to 19.1%.
- #3 Dell's share slipped 20 bps to 18%, while #4 Cisco (CSCO), which just reported a 29% Y/Y April quarter sales jump for its UCS server segment, saw its share rise 170 bps to 5.7%. #5 Oracle (ORCL), whose server sales are finally stabilizing thanks to engineered systems growth, rose 20 bps to 4.9%.
- Sales of x86 servers, over 90% of which contain Intel (INTC) CPUs, rose 4.9% after growing 7.8% in Q4. Non-x86 server sales tumbled 25.2%, and now make up just 17.9% of industry revenue.
- Cisco now has an estimated 24.4% of the blade server market, behind only H-P's 43.7%.
May 23, 2014, 10:47 AM
- Credit Suisse and UBS have respectively hiked their H-P (HPQ +6%) PTs to $35 and $34 after the company posted an FQ2 revenue miss to go with in-line EPS, and announced fresh job cuts. Both cite positive earnings/cash flow trends.
- CFO Cathie Lesjak mentioned on the CC (transcript) H-P had FQ2 free cash flow of $2.3B, soundly above net income of $1.7B. She added the company's cash conversion cycle fell by 3 days Q/Q to 13.
- Lesjak offered more cautious remarks on PCs/printing: Toner sales are expected to "remain under pressure" for the rest of the year, and "higher component costs" (at least a partial reference to DRAM prices) are expected to pressure PC margins.
- Enterprise hardware margins are still being dinged by a "competitive pricing environment," but Lesjak promises restructuring moves will yield better 2H profitability. From a top-line standpoint, the business has benefited from IBM's struggles, but is also hurt by rising demand for white-label hardware.
- The new job cuts are expected to produce a $500M charge. Their impact on FY15 profitability won't be shared until the October analyst meeting.
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