Weekly Tech Business Recap: Facebook FALTERS, Apple’s WWDC Yields CHATTER

Tuesday

Sprint (NYSE:S) obtains a $1 billion credit facility that will enable it to buy equipment from Ericsson (NASDAQ:ERIC) for its 4 gigabyte LTE intro. In another matter, Sprint announces that it intends to redeem $1 billion worth of 6.875 percent notes due in fourth quarter 2013; the company posted $14.7 billion in net debt on its balance sheet as of March 31.

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Double trouble for Research In Motion (NASDAQ:RIMM) as it not only gets ready for large layoffs, but now the possibility of another huge inventory write-down looms. A Bloomberg report has it that the value of the company’s in-house inventories jumped 18 percent during its first quarter, compared to the previous period, and that BlackBerries have also been accumulating in the pipeline as share losses increases. RIM took a $485 million inventory charge related to its PlayBook tablet in December, and another at $267 million related to BlackBerry inventories in March.

Shares of Cirrus Logic (NASDAQ:CRUS) spike due to chatter that Apple’s much-rumored TV set will use Cirrus’ audio codec chips. Apple already uses Cirrus’ chips in the iPhone and iPad, and that comprises the major share of the company’s revenue. Moreover, Cirrus said last month that it’s taking out a $100 million credit line to support “multiple new products this fall”, though rumors at the time revolved around an iPad Mini.

It’s getting closer. The Chinese site Sina reports that the Apple (NASDAQ:AAPL) TV set has entered the “trial production stage” at contract manufacturer Foxconn. Though an announcement supporting this latest report was earlier attributed earlier to Foxconn chairman Terry Gou (and later denied), other rumors substantiating the story have since appeared. Meanwhile, RBC’s Amit Daryanani forecasts Apple’s iPhone sales flying above 55 million in the fourth quarter, driven by a redesigned iPhone featuring 4 gigabyte connectivity. The analyst also sees iPhone unit sales increasing 77 percent for the full year of 2012, and 42 percent in 2013.

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Amazon (NASDAQ:AMZN) has “kicked the tires on a few mobile-ad companies”, says AdAge, as a part of its strategy to boost its mobile ad business, and to better monetize its Kindle line in the process. A possible target is reportedly JumpTap, which is one of the biggest independent mobile ad networks. In addition, Amazon has recruited ex-Microsoft mobile marketing chief Jamie Wells to lead its ad sales efforts.

The market may be rallying strongly Tuesday, but shares of Facebook (NASDAQ:FB) are doing just the opposite, diving below $30 for the first time since the IPO. Reasons ventured include the likelihood that the stock remains overvalued, and (more likely) investors not being happy over FB’s rumored intentions to become a smartphone supplier. The plunge in shares goes on, even after CLSA’s James Lee beginning its coverage with a Buy and $40 price target. The analyst notes that FB’s ad click rates go far higher when an ad targets a “fan” of a product or service, and he forecasts that this pattern and others will push online ad share gains at Google’s (NASDAQ:GOOG) expense. However, FB-related stocks Zynga (NASDAQ:ZNGA), Firsthand Tech Value Fund (SVVC), and GSV Capital (GSVC) move down in tandem.

Wednesday

Sony (NYSE:SNE) and Panasonic (NYSE:PC) are said to be the top competitors for an equity investment in Olympus (OCPNY.PK), says Asahi Shimbun. The winning bidder will probably make a stake in excess of 10 percent, representing several hundred million dollars, it’s thought, and a decision on the process is expected in June.

Investing Insights: Will Apple Surprise Us With This New Software at WWDC?

Google (NASDAQ:GOOG) reports that the inclusion of its Knowledge Graph panel within search results for millions of subjects, has generated a significant rise in search activity. Sources to the Wakk Street Journal have it that between 10 and 20 percent of searches could feature the panels. However, Google still has work to do, in growing its declining search ad rates, and improving the integration of social networking data within its search results. Separately, the company is said to regret not acquiring Twitter before its valuation jumped to $8 billion, reports a source to BI, and that it still believes that it’s the only one capable of effectively monetizing the microblogging service. Meanwhile, an inside source close to Twitter says that the firm’s initial public offering plans haven’t gone very far, perhaps due to watching the recent notorious IPO of another firm. It’s also rumored that Twitter, which has reached a search arrangement with Bing (NASDAQ:MSFT), is still open to a bid from Google.

Shares of Zynga (NASDAQ:ZNGA) move to new lows, despite an overall upbeat talk from its CEO Mark Pincus at the D10 conference, in which he defended his firm’s acquisition of Draw Something developer OMGPOP. The game has experienced a fall in traffic, but Pincus maintains that the aim was to buy a multi-year franchise, as opposed to a one-time hit. In addition, he led a pep rally on the prospects of Project Z, which investors hope will lower Zynga’s dependence on Facebook.

Apple (NASDAQ:AAPL) shares move higher Wednesday following Tim Cook’s presentation at D10, as David Einhorn remains convinced that the company will eventually have a $1 trillion market cap. The latter rejects the idea that extensive hedge fund ownership of Apple is a negative, given that hedge funds only hold 5 percent of outstanding shares, and also believes that critics are overlooking how Apple’s software/services ecosystem both amount to a switching cost, and that that encourages the purchase of additional Apple gear.

Business might not be ready to upgrade to Windows 8, opines Microsoft (NASDAQ:MSFT) observer Paul Thurrott, because features of the new operating system are mostly targeted towards consumers, and the completely reconfigured desktop UI, won’t impress corporate buyers. Further, the analyst contends that the decision by MSFT to orient Windows 8 to consumers was a “calculated risk” to hopefully catch up with Apple in that market, but at the same time it could alienate the sector which comprises a large and increasing share of its margins.

Facebook (NASDAQ:FB) shares fall further Wednesday, after rallying slightly in early trading, following its first options trading day on Tuesday. That day’s trading was in-line with the selloff seen in the company’s shares with 202,938 Facebook put contracts were purchased, compared to162,582 call contracts. Implied volatility for the contracts was 63.50, which was higher than that of all but 7 of S&P 500 stocks.

Thursday

Research In Motion (NASDAQ:RIMM) has within itself “A bunch of people that still don’t understand how dire the situation is”, says a source to The Wall Street Journal, who added that the company “still isn’t actively shopping itself outright”, even though activist shareholders are pressuring it to do so. However, the same source says that “nobody is serious about buying RIM right now.”

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Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB) are competing for an investment in the popular music video site, Vevo, says the New York Post, and that a lucrative advertising deal is at stake. Their quarry is a joint venture that features Universal, Sony (NYSE:SNE), and Abu Dhabi Media, and is said to be valued at $1 billion, on revenue of $150 million. At present Vevo depends upon YouTube for PC distribution, but it also possesses mobile apps independent of YouTube, and has gotten a boost from integration with Facebook Open Graph.

Yelp (NYSE:YELP) shares are moving down in tandem with the overall selloff in high-beta Internet and social networking stocks. The firm’s shares have now fallen 25 percent since Facebook’s IPO, and are nearing its own IPO price of $15. Further, Google’s recent reconfiguration of its local commerce content, which includes free Zagat reviews, might also be contributing.

Oracle’s (NASDAQ:ORCL) and Hewlett-Packard’s (NYSE:HPQ) separation trial gets under way Thursday, with jury selection due to begin. The dispute centers on the former’s decision in 2011 to cease the development of database software for H-P servers that run Intel Itanium CPUs, which production the latter wants the court to force to be continued.

Shares of prepaid carrier Leap Wireless (NASDAQ:LEAP) spike and fall back, following word that it will begin selling the iPhone (NASDAQ:AAPL) on June 22, at the same time of a $55 per month unlimited voice/text/data plan. Leap’s subsidies are far lower, as the phone will be sold without contracts, which should help it get past its tough first quarter, when it lost market share to competitors nationwide. Several regional domestic carriers are now offering the iPhone, and Leap’s 16 gigabyte iPhone 4S will sell for $500, and the 8 gigabyte iPhone 4 is priced at $400.

Amazon (NASDAQ:AMZN) shares move up on Thursday after Nomura posits that the firm’s margins might be bottoming. Margins have continually fallen as AMZN ramped its e-commerce, Kindle, and web services investments. The analyst pointed out higher fees for shipping and other changes to policy that could “signal an increasing sense of economic discipline”, as may $1.2 billion worth of stock repurchases.

Friday

It’s now two weeks since Facebook’s (NASDAQ:FB) IPO, and the company’s shares are trading around $10 below the starting price, despite Baird’s new Outperform and a price target of $37. That analyst noted FB’s tech focus and user experience, which ‘puts it in the same league as Google and Amazon’, commenting that “We expect Facebook to continue down the ‘Google Path,’ allowing the hacker culture to guide management decision making.”. However, a New York Times column panned the company’s Sponsored Stories product, pointing out its inadequate ad-matching capabilities, plus privacy problems, which the Los Angeles Times noted when reporting that some American teens are turning against Twitter and Tumblr, for the same reason.

Leap Wireless’ (NASDAQ:LEAP) arrangement to carry the iPhone doesn’t impress Canaccord’s Greg Miller, who opines that it’s “virtually impossible” to imagine that the deal has a positive risk versus reward for the carrier. Leap is marketing the phone with limited subsidies, and most details about the agreement remain unknown. Further, the analyst contends that the fact that Leap trades at only 3.9 times its estimated earnings before interest, taxes, depreciation and amortization, makes the valuation in-line with those of other companies “whose future is in doubt”.

Shares of Groupon (NASDAQ:GRPN) hit new post-IPO lows on its share lockup expiration day. The stock saw sizable losses on Thursday, and the expiration on Friday allows approximately 600 million shares that are held by insiders to be sold. Less than three weeks ago, the company experienced a huge pre- and post-earnings rally.

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Google (NASDAQ:GOOG) faces court action unless it changes its rules for search results and ads by July 2, says European Union antitrust head Joaquin Almunia. The most prominent worry of the EU appears to be the ‘preferential placement’ given to Google sites within its search results, but Almunia allows that he might be open to a settlement on that topic. At the same time, there appears to be no resolution in sight regarding Google’s problems with the FTC.

Steve Jobs’ three-prong goal of Apple’s (NASDAQ:AAPL) transforming the textbook, TV, and photographic industries, seems to be working out. The company’s footprint is already felt in the first, rumors have it that the Apple TV is coming in the fall, and an iLounge source says now that Apple is developing a high-end point-and-shoot iSight camera. However, that site does say that its comments fall into the category of speculation.

Shares of Seagate (NASDAQ:STX) and Western Digital (NYSE:WDC) continue their week-long decline Friday, as worries mount concerning slowing PC demand, plus the end of a favorable supply and pricing climate for hard drives due to Thai manufacturing disruptions, make their effects. It didn’t help matters when on Thursday Barclays made their concerns known regarding the impact of solid-state drives and tablet cannibalization on hard drive demand.