Weekly Tech Business Recap: RIM’s PlayBook Premiering July 31, Netflix Takes a Nosedive
Canadian investor Prem Watsa’s Fairfax Financial Hld Sub’s (FRFHF.PK) stake in Research In Motion Limited (NASDAQ:RIMM) rises to 51.9 million shares, with a total value of approximately $351 million, which comprises 9.9 percent of the company. Watsa calculates that RIM’s is undervalued, and recovery could take between three and five years.
Amazon.com, Inc. (NASDAQ:AMZN) intends to launch up to 5 or 6 tablet SKUs, including one for a 10″ model, reports Staples’ United States’ retail head. The various SKUs could represent unique tablet models, or perhaps versions of the same tablet that differ only slightly. Chatter regarding new Kindle Fire models is rife, although it has not stopped sales estimates from getting revised downwards from competitive fears, and reports of share loss. Lab 126, which is the Amazon division responsible for the Fire, has been hiring quite assertively.
Vringo, Inc. (AMEX:VRNG) shares are jumping, perhaps due to a column from SA’s John H. Ford, who contends that Vringo could deliver gigantic returns if it can get even a modest royalty rate on Google search advertising revenue through a patent it owns for ranking search and ad results. The analyst also thinks that recent developments in Vringo’s company’s infringement suit against Google, AOL, and others have been positive.
AT&T Inc. (NYSE:T) has made three-year agreements with the Communications Workers of America which cover more than 18,700 employees. The union says that the contracts, which include annual wage and pension rises, do not include any major concessions on its part.
It’s a complex patent infringement situation in an Australian court, as Samsung (SSNLF.PK) says that it has cancelled an agreement with the chipmaker Qualcomm, Inc. (NASDAQ:QCOM) to not sue it or its customers for using its 3 gigabyte patents, following Apple, Inc. (NASDAQ:AAPL) filing suit over the Galaxy Tab. Qualcomm’s chips are utilized in 3 and 4 gigabyte iPad models, along with the iPhone 4S. Samsung’s cancellation of the deal might have affected Qualcomm’s decision to restructure its operations, to protect its huge IP licensing division.
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Nokia Corporation (NYSE:NOK) is said to be in talks with France Telecom (NYSE:FTE), plus other European carriers, regarding exclusive launches, along with sharing the proceeds. The ongoing discussions mark a point of departure from Nokia’s traditional strategy of reaching as many sales points as possible, and could be born of desperation to bring some hype to the autumn intro of its pricey Windows Phone 8 model.
Facebook (NASDAQ:FB) shares are down modestly on Monday, following ComScore and others claiming that the company has experienced a significant growth slump in United States. This possibility has Jason Helfstein at Oppenheimer concerned that Facebook might miss its second quarter revenue estimates, to be posted on Thursday, as he forecasts that domestic advertising growth will decline to a paltry 7 percent from the first quarter’s 27 percent, with international growth at 32 percent, which would be down from 48 percent over the same period. On the bright(er) side, the analyst concedes that his figures do not take the firm’s nascent mobile ad sales into account.
Unlike its counterpart in the U.K., a German court has issued an European-wide ban on Samsung’s (SSNLF.PK) Galaxy Tab 7.7 for resembling the iPad, but at the same time it refused to do the same for the 10.1N. Somewhat separately, Apple (NASDAQ:AAPL) is seeking $2.5 billion in damages for Samsung’s use of its IP, plus future royalties of $31.14 per unit to license its design IP along with 3 software patents.
Research In Motion’s (NASDAQ:RIMM) PlayBook tablet in a 4 gigabyte LTE version will finally arrive on July 31st, according to MobileSyrup. The product will reportedly feature a dual-core 1.5 gigahertz processor, dual cameras, and 32 gigabytes of storage, for $550.
Google Inc. (NASDAQ:GOOG) and the European Commission are said to have reached a settlement outline of the latter’s antitrust inquiry. The rumored arrangement will likely follow new concessions from Google which extend the proposed PC search remedies to mobile devices along with other platforms. However, Google’s stateside struggles with the Federal Trade Commission do not seem close to being resolved.
Shares of the mortgage and real estate information provider CoreLogic, Inc. (NYSE:CLGX) shatter their 52-week high after the firm once again exceeded expectations for its second quarter results, helped along by a 28.5 percent rise in revenue from its mortgage origination services division, driven mostly by increased demand for credit and tax services.
Apple’s (NASDAQ:AAPL) April sales in China wildly exceeded expectations and helped to bring a strong earnings per share beat despite of declining American iPhone sales. Observers are now wondering if the same Chinese factor could reoccur, as the country’s 3-gigabyte base increased by 118 percent year-over-year in June to 176 million subs, and smartphone growth has been huge as well. Impressive sales in iPads and a boost to margins from low prices in flash memory haven’t exactly hurt Apple, either.
Shares of Cisco Systems, Inc. (NASDAQ:CSCO) and Juniper Networks (NYSE:JNPR) slide as investors analyze the impact of VMware’s acquisition of Nicira, which currently has minimal sales, but its working model targets the elimination of proprietary Ethernet switches from firms such as Cisco and Juniper, supplanting them with commodity gear managed by its software. Cisco is currently developing a similar process, but its main priority remains the sales of its proprietary Nexus and Catalyst switches.
Microsoft Corporation (NASDAQ:MSFT) reaches a patent cross-licensing arrangement with Amdocs Ltd. (NYSE:DOX) which should result in payments being sent back to the former. The deal in part covers Amdocs’ use of Linux servers in its data servers, and if using the open-source operating system is deemed to violate Microsoft’s IP, then the number of companies Microsoft could target would appear to be without limit.
Microsoft Corporation (NASDAQ:MSFT) is being said by observers to be paying a new attention to detail, no matter how Windows 8 will be received. The firm reports that it’s utilizing a wide range of techniques to enhance Windows 8’s graphics performance by 2 to 5 times that of comparable Windows 7 hardware. Everything from a high definition video to text rendering is covered in the claim, which might not herald good news for graphics chip vendors Nvidia Corporation (NASDAQ:NVDA) and AMD, since it might induce more mainstream PC users to consider that integrated graphics are good enough.
Analysts are bearing down (no pun intended – maybe) on Apple’s (NASDAQ:AAPL) Tuesday afternoon results. Bill Shope at Goldman commented that “Our sense is that Apple’s management spent more time discussing macro pressures than in any other quarter over the past decade.” Shope also disliked the size of the iPhone slowdown and Apple’s fall in its gross margin, although he predicts that margins will bounce back in the iPhone-loaded December quarter. In the meantime, he reduces his price target to $790 but keeps his Buy. Other analysts have defended Apple, and say that investors might look ahead to the next-gen iPhone and iPad Mini. William Blair mentions that the shares trades at only 9 times the fiscal year 2013’s earnings per shares estimate (excluding cash). Sterne Agee keeps a $780 price target, but is concerned that the new iPad’s retina display is affecting profits.
Shares of Netflix, Inc. (NASDAQ:NFLX) were down about 25 percent in late afternoon, following word that the company’s second quarter DVD subscriber losses exceeded its domestic streaming gains, plus its guidance for a 1 million to a 1.8 million third quarter rise in domestic streaming subscribers that makes full-year guidance for 7 million additions appear unlikely. In addition, the firm’s guidance for another 600,000 to 900,000 DVD losses was also worrying. In spite of all this, Netflix contends that it’s driven to move into continental Europe, even if such a push wipes out near-term profits.
Amazon.com, Inc. (NASDAQ:AMZN), is selling off ahead of Thursday’s second quarter report. The company’s Euro exposure is weighing on many investors, as are Kindle sales plus the impact of the state sales tax collections problem. Citi maintain its Buy, and believes that investors should focus on Amazon’s potential to double its share of domestic online retail during the next decade. Nomura forecasts that the company will post another quarter of margin improvements, as it collects the benefits from giant warehouse investments.
Positive results from Broadcom Corporation (NASDAQ:BRCM) and other chips companies are helping to rally stocks from that sector, as are several suppliers to Apple (NASDAQ:AAPL), which initially dipped on the fiscal third quarter miss. Cirrus Logic, Inc. (NASDAQ:CRUS), has more than a 60 percent exposure to the former, but its shares spiked as well. There are at least two possible causes for this mini-phenomenon: the Street expects that Samsung will make up for any iShortfall, and/or investors are less bothered by Apple’s iPhone shipments, than its margin and active server page declines.
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Juniper Networks (NYSE:JNPR) and Riverbed Technology, Inc. (NASDAQ:RVBD) shares make up for their lackluster performances in the spring, by continuing to fly following the posting of second quarter results and issuing better-than-feared guidance. Reaching a partnership linked to Riverbed’s application delivery controller technology didn’t exactly hurt, either.
Nokia Corporation (NYSE:NOK) is abandoning a software project that it had hoped could compete with Google’s (NASDAQ:GOOG) Android, say sources. The Linux-based software platform, code-named Meltemi, would have supplanted Nokia’s Series 40 software, but a large cost-cutting drive is said to have caused the company to let it go.
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Shares of discount carrier MetroPCS Communications, Inc. (NYSE:PCS) jump through the roof, subsequent to second quarter results that greatly exceeded depressed expectations. The firm lost 186,000 subscriptions during the period and saw churn rise 30 basis points to 3.4 percent, but investors had already been expecting such numbers. What was apparently not expected was that MetroPCS’ average revenue per user would move higher to $40.62, or its cost per gross addition to fall $44 quarter-over-quarter to $191, or its adjusted earnings before interest, taxes, depreciation and amortization to rise $215 million quarter-over-quarter to $477 million. Leap Wireless International, Inc. (NASDAQ:LEAP) shares also jumped, in sympathy.
E2open (EOPN) is not enjoying the best of initial public offerings Thursday. The shares were first priced at $15, opened at $14.14 and are trading in late afternoon in the mid-$13 range; this performance contrasts with those of other recent enterprise technology IPOs. E2open is a relatively small member of the supply-chain management software market, and worries might be afoot regarding its ability to compete over the long run with such firms as SAP and Oracle, as they accelerate development of their cloud investments.
Facebook (NASDAQ:FB) shares plummeted over 10 percent after-hours after disappointing earnings. Facebook booked a net loss of $157 million, or 8 cents per share in the April-June period, primarily due to stock compensation expenses. That compares with earnings of $240 million, or 11 cents per share, in the second quarter a year ago. Revenue grew 32 percent to $1.18 billion from $895 million a year ago. Adjusted earnings of $295 million, or 12 cents per share.
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In the meantime, Zynga’s (NASDAQ:ZNGA) crashed 38 percent after yesterday’s horrific earnings miss.
Apple’s (NASDAQ:AAPL) Mac OS X 10.8 is out, and its iOS-like features are igniting intense debate, although so far the feedback is mostly positive. Good Technology calculates that iOS comprised 70.8 percent of the firm’s second quarter enterprise mobile device activations, which is lower than the first quarter’s 79.9 percent, but it still far exceeds Android’s (NASDAQ:GOOG) 27 percent. Separately, the next iPhone will be delayed because of Qualcomm Incorporated’s (NASDAQ:QCOM) 28nm baseband chip shortage, says China’s First Financial Daily.
Zynga’s (NASDAQ:ZNGA) second quarter faux pas is now history, but Pac Crest questions whether it took part in some pre-IPO financial machinations that pushed its game monetization up to unsustainable levels so as to make its offering more attractive. At any rate, monetization has shrunk, and the analyst believes that Zynga will have to increase spending to sets things right. A problem with that is that research and development already comprise 52 percent of revenue.
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Facebook (NASDAQ:FB) shares are down Friday after meeting understated estimates along with reporting significant slumps in payments growth, Western user growth, and domestic advertising impressions, plus large spending rises. So far, analysts remain more positive than not (which did not happen with Zynga). Needham predicts that mobile monetization should improve as advertisers become more used to the platform. Goldman believes that advertising costs per impressions will grow by 10 percent this year and 13 percent in 2013. Topeka points out Facebook’s rising average revenue per user and success with Sponsored Stories. However, Barclays is displeased with the lack of second half guidance, and Capstone still frets over declining growth in Facebook’s most accretive markets.
Shares of Amazon.com, Inc. (NASDAQ:AMZN) climb strongly post-earnings, as an increasing gross margin outweighs worries regarding top-line weakness and aggressive spending. Margin gains are now accruing from the increasing sales of e-books, Amazon Web Services server/storage capacity, and third-party merchandise. Goldman forecasts that these trends will lead to Amazon’s operating margin bottoming later in 2012, and hitting 3.7 percent next year.
A123 Systems, Inc. (NASDAQ:AONE) shares collapse Friday, subsequent to word that Qualcomm Chief Executive Paul Jacobs has stepped down from the company’s board, a move which he explained was to focus more on his day job. In view of A123’s dubious financial position, it could be that investors are looking for an excuse to get out.
Groupon, Inc. (NASDAQ:GRPN) and eBay, Inc. (NASDAQ:EBAY) shares take advantage of Amazon’s stellar second quarter report on Friday, perhaps getting fuel from Amazon’s impressive sales of 3rd-party merchandise, much of which is sold by small businesses. Groupon is being heavily shorted, and has been beaten down in recent weeks on a list of worries, along with poor analyst commentary.
Improving European markets are said to be helping Nokia Corporation (NYSE:NOK) rally more than 20 percent this week as value investors are betting that the firm can become stable. A website in China recently reported that Nokia will reveal two Windows Phone 8 models at its Sep. 5th Nokia World event, and its also rumored that Nokia WP8 devices could go on sale soon afterwards.
Research In Motion Limited (NASDAQ:RIMM) shares closed up more than 5 percent on the day, possibly due to the top-line beat posted by contract manufacturer Celestica’s (NYSE:CLS) second quarter results. Celestica is fading out its RIM business, but in the second quarter, RIM comprised 17 percent of Celestica’s sales. That number is a bit down from 19 percent in the first quarter, but better than some observers might have feared.
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