Tag Archive | "wedge-partners"

Apple: Pay Heed To The Amazon Tablet, Says Wedge

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Wedge Partners analyst Brian Blair writes this morning that there is, indeed, a tablet forthcoming from Amazon.com (AMZN), about which there was some buzz last week, and “Apple better pay attention.”

“We believe that Amazon will indeed follow the success they have seen with the Kindle and offer a 10 inch media-centric tablet that leverages the broad range of content currently offered through Amazon.com,” writes Blair. “We expect at least one version the Amazon tablet to launch for the holiday season.”

Blair does not cite sources for the assertion.

The tablet will probably use Google’s (GOOG) Android software, and will exploit Amazon’s “cloud” computing storage facilities, maybe offering streaming content or a “Cloud Drive app.”

Why this is important is that Amazon is the only tech company aside from Apple (AAPL) that has an ecosystem of content, he observes. “As with Apple’s iTunes, users could log into the Amazon tablet using their existing Amazon ID and instantly gain access to movies, TV shows, music, digital games, Android Apps (yes, Amazon recently launched an Appstore for Android), and more.”

Blair thinks the tablet will use Nvidia’s (NVDA) quad-core “Kal El” chip as a “powerful way to enter the market.” He notes that Nvidia management has hinted at a large customer that may have product around the back-to-school season.

Amazon shares today are up 70 cents, or 0.4%, at $193.21, while Nvidia shares are down 55 cents, or 3%, at $17.15. Apple shares are down $1.80, or half a point, at $331.50.

Article courtesy of Tech Trader Daily

Nokia, RIMM: Wedge Sees Signs Of Hope

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Wedge Partners analyst Brian Blair this morning offers some hopeful, encouraging thoughts on both Nokia (NOK) and Research in Motion (RIMM) as the two pursue overhauls of their smartphone repertoire.

In the case of Nokia, Blair writes that his “checks” (he doesn’t specify, though I have a call in to his office to clarify) suggest that the company may introduce its first smartphones running Microsoft’s (MSFT) software sooner than expected. Blair thinks Nokia will host a “Nokia World” conference, which it does annually, sooner than usual. I’m not quite sure what he means, because he mentions a date of mid-October as being “earlier than usual,” when in fact Nokia World 2010 was in September of last year, in London.

In any event, Blair writes that the company’s “ahead of schedule in terms of development,” and he thinks the show could be used to debut Microsoft-powered handsets.

As for the big picture, “While we continue to feel the next three to four quarters will reflect the company’s transition away from the Symbian OS and show a marked drop in quarterly units for Nokia, we remain positive on the longer-term outlook for Nokia given the Microsoft partnership,” writes Blair. “It is our view that Nokia Window’s smartphones will become the fourth major player in the smartphone space, following [Google (GOOG)] Android, Apple’s (AAPL) iOS and RIM’s Blackberry OS.”

As for RIM, Blair was at the company’s “BlackBerry World” event in Orland, Florida this week and came away impressed with the “9900” version of the BlackBerry Bold that was introduced.

The device has a 1.2 GHz Qualcomm (QCOM) Snapdragon chip that is incredibly fast. The price of this chip is likely 2x that of Marvell’s however and is likely to create gross margin concerns. We moved through every application in our test and there was no lag, no hourglass icon telling us to wait, it was speedy in every way. Leaving Marvell [Technology Group] (MRVL) behind is good news for users. The company’s use of the term “liquid graphics” is legitimate. The transition between apps and opening apps and just generally navigating around the device is smooth in an iPhone-like manner.

Nokia shares today are down 9 cents, or 1%, at $8.52. RIM shares are up 71 cents, or 1.5%, at $48.08.

Article courtesy of Tech Trader Daily

Netflix: Google’s YouTube A ‘Substantial’ Threat, Says Wedge

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Following Google’s (GOOG) announcement this morning it will integrate “live streaming” capabilities into its YouTube video service, Wedge Partners analyst Martin Pyykkonen today writes that professional content partnerships for YouTube could be a threat to Netflix (NFLX), in fact a “substantial” threat, in his view.

While original content produced for the Web still has to prove its appeal, writes Pyykkonen, “we think the primary opportunity for GOOG is to license professional content which can be monetized through streaming subscriptions and/or advertising supported online distribution.”

Pyykkonen thinks YouTube could “acquire the streaming rights (even if non-exclusive) to a substantial portion of recent film/TV programming assets.”

With 144 million unique visitors at YouTube in the US, as of February, writes Pyykkonen, YouTube’s biggest immediate advantage over Netflix is broad distribution across not only PCs but also mobile phones, tablets, IP-enabled TVs, and other devices.

“Unlike other streaming video competitors, YouTube is on nearly every device platform on which NFLX is running today,” observes Pyykkonen. “We believe that it is this platform distribution in particular that gives GOOG a significant leg up on the competition vs. NFLX. Time will tell how aggressive GOOG will be in competing with NFLX, but we think the threat is substantial.”

Netflix shares today are up $2.28, or 1%, at $236.24.

Article courtesy of Tech Trader Daily

RIM: Time To Tabulate PlayBook Estimates (Update)

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First response from the Street is trickling out regarding Research in Motion’s (RIMM) announcement this morning that its “PlayBook” tablet computer will go on sale on April 19th.

Abhey Lamba with ISI Group writes that he expects RIM to ship 150,000 PlayBook units through the end of May, for $71 million in revenue in the fiscal Q1 ending that month.

The PlayBook’s price, starting at $499, is likely to result in a hit to RIM’s gross profit margin, he estimates, with the device likely having gross profit of just 10% of sales.

But any hit to RIM’s overall profitability is minor, as the number of units is low. For every 100,000 units shipped, Lamba estimates at fifth of a percentage point (20 basis points) reduction in gross profit for the company overall.

Things may turn out better, he believes, if RIM is able to increase the mix of units sold toward the higher-end $699 model. (There will also be additional, cellular models of PlayBook, assumedly at higher prices, coming later this summer, I would add.) And Lamba expects RIM’s own cost to manufacture will become more favorable over time.

Lamba writes that RIM’s fiscal Q4 report this Thursday may disappoint: He’s modeling for $5.5 billion in revenue and $1.80 in EPS, below the average $5.6 billion and $1.75, as he thinks the company’s unit sales of BlackBerries may have been toward the low end of the company’s forecast for 14.5 million to 15 million units. That’s in contrast to several reports out in the last week that seem to be raising expectations for the quarter, including some bears on the stock.

Lamba reiterated a Hold rating and a $65 price target.

Meantime, Caris & Co.’s Robert Cihra this morning reiterated a Buy rating on RIM shares and a $75 price target, offering up a totally different set of profit metrics: he sees the PlayBook turning in 20% to 25% gross margin, and cutting overall corporate gross margin by half a percentage point.

Moreover, while the PlayBook will be dilutive to margin, it will “certainly add to EPS,” he believes, and he models $7.01 per share this fiscal year in EPS, above the average $6.79 estimate.

Cihra sees the company selling 1.7 million units this calendar year, focusing the sale of PlayBook on its “tight security, initial handset tethering and multiple [BlackBerry Enterprise Server] hooks.” Even if the company sells no units outside its base of 60 million BlackBerry accounts, “we nevertheless see that base affording RIMM a unique pool to target for incremental revs/profits, something most Android wannabes can’t say.”

Ah, but Brian Blair with Wedge Partners is the spoiler this morning, writing, “We continue to expect tepid sales for the 7 inch tablet and believe the company will sell less than 2 million units this calendar year vs. our expectations for Apple’s iPad at 40+ million units.”

Blair thinks Wall Street is overestimating the device’s potential, modeling between 5 million and 6 million units this year.

Blair lists as his reason for his regard a general skepticism about the seven-inch form factor; skepticism about developer support for the PlayBook’s “QNX” operating system; the lack of appeal for the “tethered” approach to the PlayBook’s calendar and email support; and the belief that the “overall value proposition” is low versus Apple’s (AAPL) iPad and the fact that there will be “a sea of competitors over the next few months.”

RIM shares today are up 25 cents, or 0.4%, at $62.42.

Update:  Credit Suisse’s Kulbinder Garcha today writes that he has not yet included PlayBook estimates in his numbers for RIM. However, he believes every 1 million units of the PlayBook could increase EPS by 1% to 2%. As for the Thursday’s report, Garcha is modeling units slightly below consensus, at 14.6 million, and argues RIM is making gains in most international markets, largely at Nokia’s (NOK) expense. Garcha rates RIM shares Outperform, with an $85 price target.

Article courtesy of Tech Trader Daily

RIM: Playbook ‘An Expensive Web Browser,’ Says Wedge

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Wedge Partners analyst Brian Blair today writes that Research in Motion’s (RIMM) forthcoming Playbook computer “will be poorly received by the market at launch,” citing rising competition, and factors that will make the corporate world think twice about the device, he believes.
It is, overall, the most negative write-up I’ve yet [...]

Article courtesy of BARRONS.com: Tech Trader Daily

Akamai: ‘Exceptional’ Q4, Predicts Wedge

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Wedge Partners analyst Ryan Hunter today speculates that Akamai Technologies (AKAM) had an “exceptional” Q4, given that ComScore last week reported a record 12% growth in U.S. online shopping, and given that Akamai helps improve performance of all of the top 20 e-commerce sites.
That could help Akamai hit the top [...]

Article courtesy of BARRONS.com: Tech Trader Daily

Apple: Laptops To Follow MacBook Into Flash; Junky Tablets

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In a preview today of the Consumer Electronics Show, Brian Blair with Wedge Partners observes that flash memory chips will be coming to lots more notebook computers this year, following the success by Apple (AAPL) with its MacBook Air line of notebooks, which use flash memory in varying capacities and [...]

Article courtesy of BARRONS.com: Tech Trader Daily

Qualcomm: Report Q3 Gets Boost From CDMA iPhone Orders

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Qualcomm (QCOM) saw “meaningful order strength” late in the third quarter due to orders related to the coming CDMA Apple (AAPL) iPhone, according to Wedge Partners analyst Brian Blair.
“We understand solid order trends for Qualcomm continue into Q4 and are considered to be well above average right now,” he writes [...]

Article courtesy of BARRONS.com: Tech Trader Daily

Apple: iPads May Soon Outsell Macs; Will CY ‘10 Units Hit 10M?

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Here’s another bit of evidence illustrating the startling early success of the Apple (AAPL) iPad.
Wedge Partners analyst Brian Blair says he now expects the company to produce about more than 10 million iPads in calendar 2010, up from a previous forecast of around 7 million units. Wedge had originally expected [...]

Article courtesy of BARRONS.com: Tech Trader Daily

Apple: Low-Balling iPad Sales?

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Here’s an interesting theory: is Apple (AAPL) low-balling the true number of iPads sold to date?

This morning, Apple said that it sold over 300,000 iPads as of midnight Saturday. That includes pre-ordered iPads delivered to customers, deliveries to channel partners and sales at Apple retail stores.

Wedge Partners analyst Brian Blair points out in a research note that Apple’s number does not include:

  • Any 3G iPads ordered to date (since they won’t be delivered until later this month)
  • Nor any iPads that have been ordered but not delivered; he notes that it has been more than a week since the expected delivery date for online orders shifted to April 12 from April 3.
  • Nor any retail store sales on Sunday (though most Apple and Best Buy stores were closed for Easter)
  • Nor any orders placed online yesterday or today, nor any iPads sold in retail stores today.

Ergo, Blair thinks the true number of units sold to date is more like 600,000.

We could get an update from Apple on Thursday, when the company provides a “sneak peak” at iPhone 0S 4.0; after that, attention turns to the company’s March quarter earnings report, which is coming April 20.

Article courtesy of BARRONS.com: Tech Trader Daily