More commentary is coming in as regards Nokia’s (NOK) cut in its outlook this morning, with bears warning that things will get worse before they get better. It’s not just the continued deterioration of the Symbian-based phones, but also some risk still in the company’s ability to make its partnership with Microsoft (MSFT) pay off:

Jennifer Fritzsche, Wells Fargo: Reiterates a Market Weight rating on Nokia, while cutting her range of possible stock values to $6.90 to $7.40, from a prior $9 to $10. “While NOK has continued to say that 2011 is a transition year, we believe today’s announcement highlights how quickly the shift is occurring in the competitive environment. While we believe the Windows phone could be a transitional even for NOK there is still much to prove, in our view and much integration risk that comes with such an event.” Fritzsche cut her estimate for this year to 21 cents from a prior 59 cents per share in earnings, and cut her 2012 outlook to 49 cents from 77 cents.

Alkesh Shah, Evercore Partners: Reiterates an Underweight rating and cuts his price target to $6 from $8, writing that the company is not yet in the “transition trough,” arguing that the stock is “not cheap at 28 times our fiscal 2012 EPS forecast,” or 18 times, when factoring in cash per share. Smartphones are going to be under pressure from low-end smartphones, while Nokia’s feature phones will face competition from “white box manufacturers.” Things may “worsen over the next few quarters,” shah thinks, and “consensus estimates may still not be low enough.” Shah lowered his own EPS estimate for this year to 22 cents from 48 cents, and cut his 2012 estimate from 61 cents to 25 cents.

Meantime, Nokia shares have rallied from the lowest point of the day, now down just $1.18, or 14.5%, at $7.01, versus an intraday trough of $6.79.

Article courtesy of Tech Trader Daily

In case you missed it, The Wall Street Journal had a couple pieces on the gadget wars this morning: A report by Stuart Weinberg says that Research in Motion (RIMM) is on track to sell half a million units of the PlayBook tablet computer in the quarter ending this month, a feat Weinberg calls, “A respectable entrance into the competitive tablet market.”

(I should note BoyGeniusReport’s Jonathan Geller on Friday wrote that the PlayBook’s sales have “fallen far short of expectations,” citing an anonymous source at “a major big box retailer.”)

Also in today’s Journal, Justin Scheck and Ben Worthen chronicle Dell’s (DELL) failed bid to offer consumer electronics, having “pulled the plug” on initiatives such as a music player and an online music store. “Apple-like success hasn’t followed” Dell’s purchase of Zing, a software maker that was supposed to kick-start Dell’s music efforts, the authors write.

The sidebar to that piece is an autopsy of the failure of Dell’s first tablet computer, the $500 “Streak” that was roundly panned when it appeared last year. Scheck and Worthen write that anonymous sources expect Dell may delay a 10-inch version of the Streak, expected this summer, until later in the year because of necessary bug fixes.

Article courtesy of Tech Trader Daily

BrightEdge, a search engine optimization management (SEO) platform, said today that is has partnered with digital performance measurer ComScore to help companies get the highest online ranking possible, Jim Yu, founder and chief executive, told VentureBeat.

San Mateo, Calif.-based BrightEdge uses tools to help companies increase their prominence on search engines like Google.

“Search marketers need a holistic view of what is impacting their search rankings,” Yu told VentureBeat. “It makes perfect sense to collaborate with ComScore to combine their competitive intelligence with our organic insights so that our customers can get this complete picture instantly in the BrightEdge platform.”

As part of the new partnership, ComScore’s intelligence into consumer search behavior, which is based on its panel of three million Internet users, will be fully integrated into BrightEdge’s current SEO platform.

BrightEdge said this combination of collective intelligence and “deeper” SEO analytics will enable SEO managers and executives to get a complete view of their competitive position across the Internet.

That view will be crucial for companies hoping to identify new strategies to cut through the Web clutter and drive SEO performance.

“The landscape of SEO is evolving quickly, with new channels like social media and mobile becoming more and more important factors into SEO performance,” said Yu. “Companies who don’t understand these new search behaviors are optimizing for yesterday’s SEO.”

The money at stake is huge. The SEO market opportunity in the U.S. is greater than $40 billion, three to four times larger than paid search which, according to independent technology and market research company Forrester, was close to a $13 billion market in 2009.

BrightEdge’s closest competitors are customized in-house solutions and similar SEO companies Covario and ConductorSearchLight.

It has been growing at a rapid pace. In the last few months, the company says it became the first SEO platform with global capabilities; was joined by the former chief architect of Baidu to consult on international platform expansion; and introduced BrandSafe Link Audit to expose disreputable SEO techniques to brand marketers before they end up in the headlines.

In March, it began integrating social media signals into its platform, allowing its customers to analyze the content of Tweets and Facebook “likes” and “shares” to pinpoint the exact areas in social media that will boost SEO, and offer specific recommendations to increase activity in these places.

Founded in 2007, BrightEdge has so far raised $8.5 million from Battery Ventures, Altos Ventures, and Illuminate Ventures.

Companies: Altos Ventures, Baidu, Battery Ventures, BrightEdge, comscore, ConductorSearchLight, Covario, Google, illuminate Ventures

People: Jim Yu

Article courtesy of VentureBeat » deals

Analysts at Gleacher & Co. downgraded shares of National Semiconductor (NSM) to Neutral from Buy, arguing that further competitive bidding on the company is unlikely after the $25 a share offer from Texas Instruments (TXN).

“The deal is expected to close in six to nine months with about $1 of upside,” wrote analyst Doug Freedman in a research note. “We advise investors to rebalance towards Analog Devices (ADI) and Texas Instruments.”

Freedman raised his target price to $25 from $17.

National Semiconductor is trading flat midday at $24.05.

Texas Instruments is down 0.9% at $34.88.

Analog Devices is down 2% at $38.32.

Article courtesy of Tech Trader Daily

Shares of Netflix (NFLX) are up $7.68, or almost 4%, at $220.52, after Credit Suisse analyst John Blackledge this morning raised his rating on the stock to Outperform from Neutral, and raised his price target to $280 from $180, arguing that the stock now fairly reflects the competitive risk and that the international potential is becoming clearer, making valuation “more appealing.”

International markets will boost the potential subscriber base for Netflix, Blackledge asserts, with 167 million broadband subscribers in the top markets, worldwide, excluding Japan and China. Combined with the U.S. and Canada, that means 267 million addressable broadband subscribers for the company, he argues.

Blackledge is projecting Netflix to enter 1 top global market every year from now through 2016, boosting its subscriber base to 33 million by the end of this year, up from his prior projection of 32 million, and reaching 69 million by the end of 2016.

Netflix had 20 million subscribers at the end of last year.

Blackledge’s new discounted-cash-flow valuation is based on an expected $7 billion in revenue in 2016, up from $3.3 billion projected this year, and operating margins of 20% or so come 2013, up from 14% today, assuming streaming content costs of $3 billion by that time, up from $1 billion or so today.

For this year, Blackledge is modeling $3.29 billion in revenue and $5.16 per share in EPS. That is well above the average estimate on the Street of $3.1 billion and $4.39.

According to Credit Suisse’s “proprietary survey,” notes Blackledge, “the introduction of Amazon.com’s (AMZN) streaming service for Prime members should have very little impact on current NFLX subscribers intentions of churning off of Netflix […] Less than 1% of Amazon Prime and Non Prime users and current NFLX subscribers would be willing to churn off of its NFLX subscription for the AMZN streaming service.”

Blackledge’s discounted cash flow value, by the way, assumes a 3% terminal growth rate, a 9% weighted average cost of capital, a 24% annual rate of growth in free cash flow form now through 2016, for a total equity value of $15 billion.

Article courtesy of Tech Trader Daily

JP Morgan’s Mark Moskowitz this morning sounds the alarm on what he sees as the rising risk of a bubble in tablet computer production this year.

“We think that this potential risk increased after the introduction of Apple’s (AAPL) iPad 2,” writes Moskowitz. “In our view, the technical and form factor improvements of the iPad 2 stand to make it tougher for the first generation of competitive offerings to play catch-up, meaning actual shipments could fall well short of plan.”

Put another way, “we do not think the first generation of tablet offerings from the Apple wannabes will be enough to drive incremental purchasers within vendors’ projections.”

Moskowitz sees the entire tablet group, including Apple and all its competitors, planning to build 81 million tablet units this year. He applies a 20% discount to that plan, to account for reality setting in, and to some units just not getting resources, and the result is a more likely build of 65 million units, in Moskowitz’s view.

However, the problem is, Moskowitz thinks these vendors, including Apple, can ship perhaps as much as 47.9 million units this year, with Apple getting about 60% of that. That delta between build and ship rates implies a 17.2 million-unit bubble in production — 36% of tablet builds cannot be shipped, in other words.

So who gets hurt by the tablet bubble? Moskowitz, mentions only a couple of Apple “wannabes” by name. Shoppers who don’t like Apple’s products, the “holdout” customers, “will be underwhelmed by the iPad 2 alternatives,” Moskowitz believes. “Aside from Motorola’s [Mobility (MMI)] Xoom and Hewlett-Packard’s (HPQ) TouchPad (which does not have a price tag yet), the competitive offerings appear to be light on attraction, in our view.”

As he’s said in past, Moskowitz actually thinks component makers will be left holding the bag in a tablet bubble.

“Of note, glass displays, processors, and, to a lesser extent, NAND Flash are the components that could be most at risk,” he writes.

And Moskowitz’s colleague, Christopher Danely produced a companion report today. Danely, who just turned more bullish on semis last week, is not giving up his overall positive view of the industry:

In the big picture, we do not expect tablets to have a major impact on semiconductor revenues since the 48 million unit tablet market is marginal in relation to the overall PC market (~ 375 million units in C11) and handset market (~ 1.5 billion units in C11).

The bubble could be a “slight negative” for Cypress Semiconductor (CY), and Texas Instruments (TXN), he writes.

I would note that TI said last night on its mid-quarter conference call with analysts that the tablet market appears at the moment to be “strong.”

Article courtesy of Tech Trader Daily

Computer giant IBM today announced it plans to acquire network and compliance company BigFix for an undisclosed amount, although Bloomberg BusinessWeek claims an inside source is saying the deal is worth about $400 million. The acquisition will bring IBM customers added compliance and security for their network of computers.

BigFix gives customers visibility into their entire networks, anywhere from 1,000 to 100,000 computers. The system works with the customer’s IT standards and alerts the customer when a computer may drop out of compliance or if there’s a security threat. The alerts happen in real time.

According to PC World, the acquisition will even out the competitive landscape against known network and compliance companies Hewlett-Packard, BMC and CA Technologies.

Based in Emeryville, Calif., BigFix was founded in 1997 and currently claims 200 employees and 700 customers, all of whom will be rolled over to IBM. The deal is scheduled to close this quarter.

Tags: network compliance, security

Companies: BigFix, IBM

Article courtesy of VentureBeat » Deals & More

The proposed Hewlett-Packard (HPQ) acquisition of Palm (PALM) has just turned up the competitive fires in the smart phone sector, to the disadvantage of almost all of the other players. While Palm has hardly made a dent in the market – sales of the Pre and Pixi have dropped to [...]

Article courtesy of BARRONS.com: Tech Trader Daily

AOL (AOL) today told employees that it it will sell or shutdown the social network Bebo – and that the company will make the decision by the end of May, according to PaidContent.org. AOL had acquired Bebo in March 2008 for $850 million.

In a memo to staff, AOL Ventures EVP Jon Brod told staff that the company can’t afford to invest in Bebo:

“The strategy we set in May 2009 leverages our core strengths and scale in quality content, premium advertising and consumer applications, positioning us for the next phase of growth of the Internet. As we evaluate our portfolio of brands against our strategy, it is clear that social networking is a space with heavy competition, and where scale defines success.

Bebo, unfortunately, is a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space. AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking.

AOL is committed to working quickly to determine if there are any interested parties for Bebo and the company’s current expectation is to complete our strategic evaluation by the end of May 2010.”

Article courtesy of BARRONS.com: Tech Trader Daily

Sprint (S) CEO Dan Hesse thinks that 3G networks are running out of steam – and that huge growth in mobile video content is fueling a need for 4G. He also says that with 4G, Sprint can offer better access at a lower cost. This is somewhat self-serving, given the company’s new push into the 4G market with WiMax service from Clearwire (CLWR) ahead of the LTE rollouts from AT&T (T) and Verizon Wireless (VZ, VOD) – but he nonetheless has a point.

Hesse made the comments during a keynote session at the CTIA Wireless conference in Las Vegas on Wednesday. He was interview on stage by CTIA chief Steve Largent. (Yes, THAT Steve Largent.)

• Hesse says choosing WiMax over LTE or other technologies was based on time to market.
• He concedes that LTE will be the largest of the 4G standards.
• Time to market is our competitive advantage, he says.
• Hesse said the decision to merge WiMax operations into Clearwire reflects the strength of their pooled spectrum positions, as well as Clearwire’s key partnerships with the cable companies.
• Hesse sees applications for 4G speeds for security, education and health care; health care spending on wireless IT should grow dramatically.
• Hesse notes that the company’s new 4G phone from HTC – introduced yesterday – serves as a hot spot for up to 8 other devices, allowing easy connections to various medical equipment and sensors. He thinks it will “revolutionize” health care.
• Hesse new 4G devices will have faster processors and higher resolution screens; he also expects more non-phone entertainment devices to be introduced. A “plethora” of devices, he says.

Not a whole lot of news, basically.

Article courtesy of BARRONS.com: Tech Trader Daily