Tag Archive | "global"

D: NFLX Prepares For Deep Spend

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D: All Things Digital, The Wall Street Journal technology conference, is in full swing in Southern California.

Netflix (NFLX) Chief Executive Reed Hastings led off the proceedings this morning talking about international expansion. The Internet movie outfit is going to launch in Toronto first, a “bold” move, going to Canada, he jested. Then, Netflix will open it’s doors in an undisclosed foreign market shortly thereafter.

The upshot: international expansion could hurt profits. “We tell investors that the better it goes, the more money we are going to lose because we are going to invest” more in expansion, Hastings says. He says it takes one to three years for Netflix to establish itself in a new country, which is relatively fast. Hastings, who is a Microsoft (MSFT) board member, would not comment about hedge fund manager David Einhorn’s call for Microsoft CEO Steve Ballmer’s ouster.

He was wiling to discuss his own open letter to short sellers to cover their negative bets, even calling short-selling “healthy” for markets.

“I’m not trying to have a battle with the shorts,” (but) if you have a friend on the short side and you think he’s losing money, and you think he’s wrong, then you want to tell him.”

The conference, now in its ninth year, got off to a rip roaring start last night when News Corp. “acting CEO” Jane Lynch, the star of the Fox Television hit Glee, recommended comic strips be added to the WSJ and other humorous mandates involving Sara Palin and talk show shock host, Glenn Beck.

Google (GOOG) Executive Chairman Eric Schmidt was the opening night keynote. The former CEO, who serves as an advisor to President Obama, says he has no intention to take a cabinet post or agency job, which had been rumored. But he will be active in the coming campaign just as he was during the President’s first election.

Note: For further ongoing coverage of D, see also former Tech Trader editor Eric Savitz’s blog at Forbes.com.

Article courtesy of Tech Trader Daily

Nokia Refutes Talk Of Microsoft Sale; Ticonderoga Likes It

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Shares of Microsoft (MSFT) have been under pressure this morning, and one thing appearing to contribute to downturn are rumors the company would step in to purchase Nokia (NOK) for $19 billion, according to remarks by Eldar Murtazin, a blogger widely credited with scooping Microsoft’s deal with Nokia earlier this year.

Murtazin’s blog appears not to have that claim today, but he is cited as stating such by Todd Haselton in a piece this morning on BoyGeniusReport.

A Nokia spokesperson, however, tells The Wall Street Journal’s Christopher Lawton a short while ago that, “These rumors are completely baseless.”

Murtazin has speculated as recently as May 16th that the two companies were talking about a deal.

Microsoft shares are down 54 cents, or 2%, at $24.47.  Nokia shares are down 34 cents, or almost 5%, at $6.68.

Well, at least one believer this morning is Brian White with Ticonderoga Securities, who follows Apple (AAPL) and has a Buy rating and a $612 price target on that stock.

“We believe reports from Boy Genius highlighting the potential for a Microsoft purchase of Nokia for $19 billion should provide Apple investors with even greater confidence that the company can continue to gain market share at the expense of legacy vendors in the mobile phone market,” writes White.

“In our view, Apple investors could not ask for a better deal, and we believe a transaction would only further Apple’s market share gains in the coming quarters.”

Sounds like White is choosing his words carefully, but it also sounds like he believes the rumor.

Article courtesy of Tech Trader Daily

Nokia Continues Slide: Three Downgrades; Moto Death Spiral?

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Nokia (NOK) shares continue to fall this morning as the downgrades pour in following the company’s cut in its outlook yesterday.

I count three downgrades today, in all, from Goldman Sachs, Sanford Bernstein, and Canaccord Genuity.

As I wrote following that announcement, the bears warned that the worst may not yet be over in terms of the deterioration of the existing business, and that the partnership to develop phones with Microsoft (MSFT) still carries risk.

That’s generally the viewpoint of today’s actions as well. I’ll get to the Goldman and Bernstein notes in a moment.

Mike Walkley at Canaccord Genuity cut his rating to Hold from Buy and cut his price target to $8 from $11, writing that he is “increasingly concerned about sales for Nokia’s Symbian devices during the transition period.”

The vaunted Nokia distribution channel has in fact broken down in China, the company indicated, and the head of operations there has been let go. “Nokia indicated it had mismanaged inventory levels in China and has fired and replaced the head of its China distribution operations.”

Walkley cut his 2011 EPS estimate to $20 cents from 54 cents, and cut his 2012 EPS estimate to 28 cents from 83 cents, but he still thinks Nokia’s phones based on Windows Phone could become a viable third platform, after Apple’s (AAPL) iOS, and Google’s (GOOG) Android, and he models a profit of 83 cents in 2013, on a rebound in sales to €44.9 billion from a likely €39.7 billion in 2012.

Bernstein’s Pierre Ferragu, meanwhile, cut his rating from Market Perform to Underperform, with a $4 target price on the American Depository Receipts, down from $7.33 previously. His target price on Nokia’s ordinary shares goes to €3 from a prior €5.50.

Ferragu notes that he had upgraded the stock on March 11th, when there were 13 Sell ratings on the Street, thinking that investor expectations were low enough to offer some upside on the shares. But yesterday’s cut means the “worst case” scenario that he had imagined is, in fact, crystalizing.

The introduction of the Windows-based phone “will be challenging,” he thinks, “given the likely loss of traction and visibility of the Nokia brand, as well as the speed at which the opportunity for a third ecosystem to emerge is vanishing.”

In fact, Ferragu thinks something is happening to Nokia akin to what befell Motorola back when it lost its grip on the number two spot in the phone market:

This new guidance is to us a strong indication that the company is falling into the Motorola-type scenario we have been worried about for some time. We expect Nokia’s smartphone and mobile phone shipments to shrink sequentially in the second quarter, leading to market shares of 19% and 30%, down 19 pts and 5 pts year on year. This precipitous acceleration of market share loss has two major implications. Nokia is now losing visibility in Europe. The brand lost its first spot to Samsung in the first quarter and our recent store visits indicated a dramatic loss of visibility for Nokia: In some stores, we couldn’t see Nokia phones on display above knee level. Nokia’s emerging market share is not well protected. It now seems clear that Nokia’s more stable position in emerging markets and especially in China was artificial. Management advocated that major inventory build-ups artificially increased shipment volumes in the last quarters. We now believe Nokia will face pressure in these markets similar to what it has been experiencing in Europe.

Goldman’s Tim Boddy cut his rating to Neutral from Buy, writing that the company’s “rapid market share loss threatens Nokia’s distribution advantage.”

Boddy writes that his prior convocation that the stock offered upside if new Windows phones succeeded failed to anticipate how quickly the business would deteriorate.

“With Nokia unlikely to have a full Microsoft- based smartphone line-up across all price points before mid-2012, risks to revenues remain material, threatening Nokia’s ability to retain its distribution relationships and retail footprint when new products arrive.”

Boddy cut his EPs estimate for this year to 17 cents from a prior 53, and cut 2012′s estimate to a loss of 1 penny, versus a prior estimate of 70 cents per share.

And like Ferragu, he draws parallels with the old Motorola’s troubles when it lost its position in phones:

We believe the parallels between Nokia’s situation and Motorola in 2007/8 are becoming more similar. We still argue that Motorola’s position was more precarious, given its dependence on a slim number of high end ‘hit’ models for its profitability, a structurally unprofitable EM business and a weaker balance sheet, but a clear lesson from Motorola’s challenges (or, for that matter, Sony Ericsson’s) is that it is both difficult and time-consuming to rebuild distributor, retail and supplier confidence in your brand once market share has collapsed.

Things that were an advantage for Nokia, moreover, such as in-house manufacturing, may come to be a liability, Boddy believes. For one thing, of the company’s 59,000 employees in its handset operations, about half are based in developed markets. That might make it tough for the company to restructure if it wanted to shift resources to emerging markets where the upside is greater.

Article courtesy of Tech Trader Daily

Apple: iCloud To Increase iTunes Value, Says Sterne Agee

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Following word from Apple (AAPL) yesterday morning that the company will discuss its “iCloud” initiative next week at its Worldwide Developer Conference in San Francisco, Sterne Agee’s Shaw Wu this morning writes that the service is “a very big deal,” with the potential to further enhance the utility of the company’s iTunes program.

“We believe reaching cloud music deals would be a great start and further distance AAPL from GOOG, AMZN, MSFT, and others, which in the last 10 years or so have failed to put even a minor dent to iTunes.”

Wu maintains a Buy rating on Apple shares and a $460 price target.

Apple stock this morning is up $3.39, or 1%, at $351.22.

Article courtesy of Tech Trader Daily

RIM: RBC Sees Risk, Opportunity In Nokia Fall

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RBC Capital’s Mike Abramsky, who has a Sector Perform rating on shares of Research in Motion (RIMM), and a $53.45 price target, writes that the deterioration of Nokia‘s (NOK) business, expressed in Nokia’s financial update this morning, could present opportunity for RIM.

With 16% market share in Europe, RIM “has the opportunity to replicate the success that BBM [the BlackBerry messenger software] has had in the U.K.,” where RIM has the top spot in smartphones with 24% share.

Abramsky had downgraded RIM shares from Outperform back in April.

However, Nokia’s erosion could be an omen, too, of what happens to platforms that are “in transition”:

NOK’s warning, along with RIM’s Q1 warning, shows the risks investors face from handset vendors transitioning to new platforms. Just like carriers de-committing from Nokia’s legacy Symbian platform, carriers may be reluctant to maintain significant channel inventory of upcoming BlackBerry 7 devices which could result in more moderate interim sell-through ahead of next-generation QNX-based smartphones that are expected to launch in early 2012. The difference however is that RIM’s fan base appears more loyal to its core Blackberry experience (helping upgrade cycles) vs. Nokia’s base which has defected to HTC, Samsung (SSNLF), RIM, and Apple (AAPL).

Article courtesy of Tech Trader Daily

QCOM: Positive Bits From Computex, Uplinq Up Next

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This is a busy week for chip and computer watchers, with the mammoth Computex trade show going on in Taiwan. For Qualcomm (QCOM) fans, it’s double the excitement with the company’s “Uplinq” conference in San Diego, taking place tomorrow and Thursday.

The events prompted some reflections from the bulls on the stock this morning:

Vijay Rakesh, Sterne Agee: Reiterates a Buy rating and a $62 price target, noting that the company is starting to make inroads in winning business for its “Snapdragon” line of processors in devices using the “3.0″ version of Google’s (GOOG) “Android” software, dubbed “Honeycomb,” which is all about tablets. Qualcomm announced some design wins with Taiwan’s Asustek, and also will have its chips in the HTC Flyer” tablet.  To date, most Honeycomb devices have relied upon Nvidia’s (NVDA) “Tegra” chip. Rakesh expects the bulk of tablets based on Snapdragon to “ramp” next month and that there will be “tailwinds” for Qualcomm in calendar Q3 of this year.

Mark McKechnie, ThinkEquity: Reiterates a Buy rating and a $75 price target. McKechnie observes that Wednesday’s event will feature presentations from Nokia‘s (NOK) CEO Stephen Elop and HTC’s CEO Peter Chou. “We expect Qualcomm to reiterate its optimistic view of smart phones and tablets and the continued treadmill of faster data-rates from HSPA+ to 4G LTE,” writes McKechnie. He’s also hoping to get some confirmation that the company will win more baseband chip business with Apple‘s (AAPL) iPhone — it currenly has just the CDMA iPhone unit that’s at Verizon Communications (VZ).

Qualcomm shares this afternoon are up $1.01, or 1.8%, at $58.36.

Previously: Nvidia: Auriga Resumes At Buy, $24 Target, May 31st, 2011.

Article courtesy of Tech Trader Daily

RIM: Engadget Sees 4G PlayBook On Track

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Engadget’s Terrence O’Brien this morning speculates that a new version of Research in Motion’s (RIMM) “PlayBook” tablet computer with 4G wireless links could be on the way for the summer, as expected, based on Google search results for the phrase “Sprint PlayBook.”

Such as search comes up with links with provocative titles such as “Sprint | Introducing the BlackBerry 4G Playbook Tablet,” although said links actually lead to nondescript pages.

Article courtesy of Tech Trader Daily

LinkedIn: IPO Pop Was Undewriters’ Mistake, Says FT

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And you thought LinkedIn (LNKD) was fantastically overpriced?

The Financial Times’s April Dembosky yesterday wrote that Facebook investor and PayPal co-founder Peter Thiel thinks LinkedIn’s underwriters, Morgan Stanley, Merrill Lynch, and JP Morgan drastically underpriced the company’s IPO two weeks ago, which seems plainly evident given the stock price today is at $85.80, 91% above the $45 IPO price the banks set.

That means LinkedIn left a lot of money on the table for the rich clients of the banks to scoop up in the after-market.

Thiel predicts Facebook, and others, when and if they go public, will drive a much harder bargain to prevent the Street from such terrible under-valuation of their shares.

Granted, there’s a complaint here — no one likes to leave money on the table — but who’s to say the shares are worth what they trade for today — about 20 times this year’s likely revenue?

Article courtesy of Tech Trader Daily

RIM: WashPo Describes Gov’t Switch To iPads, GMail

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The Washington Post’s Michael Rosenwald this morning pens an interesting piece about how the federal government, under CIO Vivek Kundra, is letting more and more government workers choose their own gadgets of choice, rather than impose on them use of government-specified devices.

Although a number of anecdotes come up in the piece about Apple’s (AAPL) iPhone and iPad, and Google’s (GOOG) Gmail, the article is titled, somewhat more pointedly, “Federal government loosens its grip on the BlackBerry,” meaning, of course, the traditional use of Research in Motion (RIMM) messaging devices.

In part, it’s simply the “consumerization of IT,” as many have identified, and as Kundra maintains, but it’s also RIM’s failure to win third-party developers with a “flexible” software platform, Rosenwald writes.

Rosenwald cites several instances of switchover:

At [Bureau of Alcohol, Tobacco, and Firearms], there are about 50 iPads or iPhones in use, and the number could increase to 100 soon. At the Pacific Northwest National Laboratory, the 1,000 BlackBerrys used last year have dropped to about 700 as workers picked other smartphones. The State Department is testing iPads. Congress now allows iPads and iPhones on the House floor. And the Department of Veterans Affairs is getting ready to allow its clinicians to choose an iPad or iPhone instead of a BlackBerry.

Update: In a note to clients today, Mike Abramsky with RBC Capital Markets, who maintains a Sector Perform rating on RIMM and a $53.45 price target, argues that RIMM will hold onto some clients who prize security above all. Reflecting on the Wash Po article, he writes,

While these developments offer headline risk to valuation and may continue to pressure RIM’s share in the US, BlackBerries are unlikely to lose favor with higher-risk users, as security remains a high priority following recent high profile security breaches and privacy concerns (Lockheed Martin’s secure VPN network was recently hacked, which could slow Android/Apple deployment in regulated industries like banks and the government. The U.S. Senate recently focused on mobile privacy concerns; House oversight committee chair Darrell Issa raised concerns White House employees could circumvent federal record-keeping laws by using iPhone and iPads.

Article courtesy of Tech Trader Daily

Tech Up In Early Trading As World Equities Rise

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The U.S. stock market returns on an “up” note as world stock indices rise, following what had been a mixed market overseas on Monday. Europe’s FTSE 100 is up 0.9%, while France’s CAC 40 is up 1.5%, The Hang Seng is up 2%, and the Nikkei 225 is up 2%.

S&P 500 futures are up 10.7 points at 1,340.60, and Nasdaq 100 composite futures are up 24.5 points at 2,357.

Shares of most major techs are rising, albeit less than some other sectors such as banks and basic materials, with Intel (INTC) up 31 cents, or 1.4%, at $22.52; Microsoft (MSFT) up 19 cents, or 0.8%, at $24.95; Cisco Systems (CSCO) up 13 cents, or 0.8%, at $16.59; Hewlett-Packard (HPQ) is up 24 cents, or 0.7%, at $37.20; and Apple (AAPL) is up $2.10, or 0.6%, at $339.51.

And the new young tech is doing well as well: LinkedIn (LNKD) is up 68 cents, or 0.8%, at $89, and Netflix (NFLX) is up $2.04, or 0.8%, at $266.55.

Article courtesy of Tech Trader Daily