Weekly Tech Business Recap: Netflix Explosive Earnings, Apple’s Digital Textbooks
Nokia’s (NYSE:NOK) Lumia handsets seem to have made a strong start. They went on sale in November, and an analyst poll estimated that 1.3 million were sold globally by the end of the year. One analyst suggests half a million would have been a good goal, but the survey also forecast Nokia’s first quarter sales of Lumia would be roughly 3.2 million.
Don’t Miss: Lumia Sales to Lift Nokia.
Research in Motion (NASDAQ:RIMM) jumped following the resignation of its co-Chief Executive Officers. Deustche Bank’s Brian Modoff upped his rating to Hold from Sell. His price target is up $8 from $10 to $18. However, he cautions that much of the old structure of management is still of issue within new management.
Salesforce.com (NYSE:CRM) is working on its tools to help its clients analyze social networking traffic. In November, Salesforce introduced its Social Marketing Cloud product, which put it into direct competition with Constant Contact, Inc. (NASDAQ:CTCT).
Sirius XM Radio (NASDAQ:SIRI) dropped after Morgan Stanley lowered its rating to Equal Weight from Overweight. It warns of the Street’s 2012 subscriber growth forecasts may be too high and that some analysts have “an overly benign view of customer reaction” to SIRI’s recent price increase. SIRI preannounced it’s fourth quarter subscriber growth and shares have climbed 15% since then.
Apple’s (NASDAQ:AAPL) digital textbook initiative is off to a decent start. Global Equities Research estimates over 350,000 textbooks have been sold thus far, but they don’t expect a $15/book price tag to hurt publisher profits. McGraw-Hill Companies, Inc. (NYSE:MHP) also does not expect the price to hurt profits, thanks to a lack of reselling and lower production and distribution costs.
Investing Insights: Apple Analyst Cheat Sheet: How Wall Street Foresees Earnings.
Amazon’s (NASDAQ:AMZN) fourth quarter sales of it’s refreshed Kindle lineup could be bolstered by a January Pew survey of United States adults that found 19% claim to own a tablet, and an equal percentage claim to own an e-reader. Both figures are up from just 10% in December. The survey isn’t bullet proof, but it might also assist Apple’s (NASDAQ:AAPL) iPad sales. However, the survey did find e-reader ownership to have been down between May and August.
Oracle Corporation (NASDAQ:ORCL), Accenture Plc. (CAN) and others have already taken a hit from softening Eurozone IT spending. It would not be surprising to see some of the enterprise tech firms reporting over the next two weeks that they are observing similar weaknesses in the budget for third-party hardware, software and services. The International Data Corporation claims that Western European IT spending budgets are down far more than 2011 levels, following downbeat survey results.
Deutsche Telekom (DTEGY.PK) the parent company for T-Mobile, if approved by the Federal Communications Commission to do so, will have $1 billion in wireless airwaves transferred to it from AT&T (NYSE:T). AT&T promised to turn over the airwaves and $3 billion in cash after the failure of its $39 billion T-Mobile bid.
Nokia (NYSE:NOK) shares fall dramatically premarket. One of the Finnish firm’s suppliers warns of low sales. STMicroeletronics (NYSE:STM) says that its first quarter revenue will fall as much as 10% quarter-over-quarter. Lagging sales at a joint venture that makes components for Nokia phones is partly to blame.
Investing Insights: AMD Earnings Consensus Estimate at $.16 EPS.
EMC (NYSE:EMC) achieved record results during the fourth quarter in a variety of metrics, including net profit. A jump of 16% to $1.07 billion was seen. The firm expects $22 billion in 2012 revenue, and adjusted earnings per share of $1.70 versus estimates of $22 billion and $1.71. EMC is benefitting from cloud computing “transforming the way we work and live.”
Meredith (NYSE:MDP) is acquiring Allrecipes.com for $1.75 million. Meredith believes Allrecipes.com is the number one digital food site, and expects the acquisition to dilute the fiscal year 2012, which ends in June earnings per share by $0.10. However, it will be “modestly accretive” to fiscal year 2013 earnings per share. Meredith also reported second fiscal quarter revenue of $328.7 million, which was down 10% year-over-year, and earnings per share of $0.70. Both missed by $13.5 million and $0.03, respectively.
Investing Insights: Yahoo! Earnings Consensus Estimate at $.24 EPS.
Intel (NASDAQ:INTC) has never been a major player in mobile base station processor space. Qualcomm Inc. (NASDAQ:QCOM), Texas Instruments Incorporated (NYSE:TXN) Freescale Semiconductor Holdings I, Ltd. (NYSE:FSL), and several network processor specialists have all previously dominated the market. An initiative called Cloud-RAN could give Intel a foothold however. Cloud-RAN involves a base station processing which is shifted to data centers. Intel’s vision of Cloud-RAN would allow for its Xeon CPU’s to handle the processing rather than specialized chips.
Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), and Google (NASDAQ:GOOG) have suspicion looming about the privacy protections offered by their cloud services. The European Union specifically is raising concerns for these United States company services. The Patriot Act, in the view of the European Union, could grant the United States government access to such data, even if it belongs to the citizens of Europe and is hosted overseas. The United States claims that its privacy protections are solid, and InfoWorld’s David Linthicum thinks protectionism is at work.
Don’t Miss: Who Gets iPhone Profits?
SAP (NYSE:SAP) expects operating profit to rise. Perhaps as high as 11.5% profits will jump this year, and maybe even with “significant momentum” going into 2012. Fiscal year operating profit will rise to 5.05 billion euros – 5.25 billion euros from 4.71 billion euros in 2011, surpassing analysts’ 2012 expectations of 4.91 billion euros.
Don’t Miss: Apple-nomics Trickles Down to Suppliers.
Xerox (NYSE:XRX) fourth quarter revenue from services is up. However, a 15% increase in signings continues to put near-term pressure on gross margins. Sales from its technical operations dropped 5%. Sales were hurt by European Union economic weakness. First quarter guidance for adjusted earnings per share was $0.21-$0.24 versus $0.24 consensus, and fiscal year adjusted earnings per share was $1.12-$1.18 versus $1.16 consensus.
Amazon (NASDAQ:AMZN) weighs a move to spruce up its video-streaming service. Amazon may develop it into a stand-alone, subscription-based operation that would set it in the same competitive orbit as Netflix (NASDAQ:NFLX), NY Post reports. “The big issue is their bundled media service,” an industry executive says. “The subscription service, with the goodies being free video, is contractually an issue for the licensers.”
Investing Insights: Netflix 4Q Earnings Brings High Expectations on Subscriber, Streaming News.
Oracle (NASDAQ:ORCL) moves from Outperform to Neutral at Macquarie. The firm’s confidence had been rooted in growth of ORCL’s Exadata database servers, but what was originally expected was not met. “We still contend the products are advantaged in the market, but we see fiscal year second quarter evidencing an unintended consequence of entering the hardware business: cyclicality,” says Oracle.
Apple’s (NASDAQ:AAPL) shares are up as it experienced a remarkable fiscal first quarter. MarketBeat rounds up the love-fest as Ticonderoga’s sets a price target of $666. Hudson’s price target is set at $700.
Intel (NASDAQ:INTC) announces a quarterly dividend of $0.21 a share. It will be payable on March 1 to stockholders of record on February 7.
In spite of Larry Page’s interest in focusing on a smaller number of projects, Google (NASDAQ:GOOG) spent nearly $2B on 79 acquisitions in 2011, according to its 10-K. That figure is up sharply from the ~$1B Google spent on 48 acquisitions in 2010. The largest of the 2011 deals was Google’s controversial $676M purchase of travel information provider ITA Software. Its $12.5B purchase of MMIis still pending.
Don’t Miss: Google Spent $2 Billion in Acquisitions in 2011.
Riverbed (NASDAQ:RVBD) crashes for the second time in 6 months, after investors fail to be appeased by the company’s excuse for its weak Q1 guidance – “product transition” issues related to next-gen hardware for its flagship Steelhead appliance line. A 120 bps Q/Q decline in Riverbed’s gross margin in Q4, partly blamed on higher hard drive prices, also isn’t going over well.
A software suite announced this week by VMware (NYSE:VMW) represents a challenge to old-guard systems management software firms such as IBM, H-P (NYSE:HPQ), CA, and BMC Software (NASDAQ:BMC). VMware’s solution is tailored to the needs of virtualization environments, and combines many previously disparate functions into one product. Microsoft has its own ambitions for boosting its systems management presence.
Investing Insights: Leaked: Facebook Revenue and Operating Profit.
A SEC filing reveals that Monster Worldwide (NYSE:MWW) CEO Salvatore Iannuzzi is a buyer of shares on the heels of yesterday’s weakness.
Apple’s (NASDAQ:AAPL) iPhone is the new smartphone champ for Q4, according to separate reports from Strategy Analyticsand IHS iSuppli, delivering 37M vs. Samsung’s (SSNLF.PK) 36.5M; Samsung was the top vendor for the full year, edging Apple and well ahead of 2010 leader Nokia (NYSE:NOK). Q4 smartphone sales rose 54% Y/Y.
The ASP for 10-gigabit Ethernet switches fell 53% in 2011, according to research firm Dell’Oro, and that’s contributed to a surge in demand. Cisco (NASDAQ:CSCO), estimated to have 76% of the 10-gig market, is hoping this demand offsets the weak sales and price competition it’s seeing for less powerful switches. ChipmakersBRCM and MRVL are also hoping the 10-gig market gives them a lift.
Companies taking a hit from pension contributions is a major theme this earnings season. AT&T (NYSE:T) contributed $1B to its pension plan in Q4 and took a $6.3B charge in 2011 related to re-measuring its pension and post-retirement benefits. Verizon (NYSE:VZ) reported similar issues. The moves highlight the downside of shifting to accounting for their pension plans on a mark-to-market basis.
Don’t Miss: Apple Sits on the Throne of Smartphones.
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