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Chicago, IL - January 19, 2016 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Intel ( INTC ), Apple ( AAPL ), Netflix ( NFLX ), Facebook ( FB ) and Google ( GOOGL ).
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Here are highlights from Monday's Analyst Blog:
Technology Stock Roundup: Intel Kicks Off Earnings Season
The doom and gloom seems never-ending as free-falling oil prices , the China market's bear run and the stronger dollar punch the air out of U.S. stock markets. Technology stocks, which did well holding their own in 2015, are now succumbing to the pressure. So while good news doesn't seem good enough, bad news is punished severely.
Here are the top stories-
Intel ( INTC ) Reports
Intel's numbers weren't too bad and don't explain the plunging share prices. On the face of it, guidance was weak. But the company is going to be amortizing some acquisition-related expenses, and it's customary to take those out before arriving at margins.
New product startup costs will exert some pressure this year, but since when has the investment community viewed these negatively? On the other hand, there remains plenty to cheer about, including the fact that its focus areas (data center/IoT/NAND) grew revenue 40% and contributed 60% of operating profit. Also, 3D NAND and 3D XPointwill enter production this year.
Apple ( AAPL ) Shines as PC Market Slumps
Last week saw yet another announcement about the weak PC market, which shrank 10.6% and 8.3% in the fourth quarter, according to IDC and Gartner, respectively (their numbers differ somewhat because they use slightly different parameters). But both say that the top five vendors did better than the overall market, meaning that they took share.
Leading the pack was Apple, which grew shipments 2.8% (according to both research firms) for just under a 7% share. IDC estimates that ASUS also grew by less than a percentage point, but Gartner says all the other top five finished in the red. Apple's brand value and strategic relationships with companies like IBM and Cisco are the very likely reasons it was able to grow in these market conditions.
Netflix ( NFLX ) Implements Geographic Restrictions
Simply getting yourself a Netflix account is not enough to access all Netflix content. The company is still far from being able to offer a consistent service across countries because it doesn't have the required licenses. Users have, however, circumvented this disability, accessing content not available in their countries through VPNs and proxies -- something that Netflix, which earlier appeared oblivious to these practices, is now going to block.
But the move doesn't appear to have an economic benefit for Netflix, as the limited choice could drive away users. Unless it plans to bring in a tiered pricing model for countries with lower purchasing power. It could also be an initiative to help it push its own originals. But if we consider history, Hulu tried to do the same thing and failed. Netflix also likely won't succeed because people providing these proxy services will soon devise workarounds. So why is Netflix doing this? A bit of head-scratcher.
Other stories you might have missed -
Corporate
Facebook ( FB ) Buys Menlo Park Campus : Facebook's 15-year lease agreement with the State of Wisconsin Investment Board came to an end as the company exercised its option to purchase its Menlo Park campus. The San Francisco Business Times said the company paid $202 million for the property but Facebook didn't confirm the figure. The former Sun Microsystems property comprises 11 buildings and accommodates 3,600 people.
Caroline Atkinson Joins Google : In an obvious bid to get more influential people on board to deal with persistent regulatory scrutiny, Google appointed a new head of global public policy. Caroline Atkinson, who has been attached to the White House as its economics and security policy expert, has considerable experience in framing economic policy both in the U.S. and abroad. Her prior experience includes a position as senior executive with the IMF and deputy assistant secretary for international monetary and financial policy at the U.S. Treasury.
Google (GOOGL) Has New VR Arm : Google is slightly adjusting some key executive positions to increase focus on VR. Accordingly, Clay Bavor is moving from the position of VP product management (which includes Gmail, Google Drive, Google Docs and Cardboard) to head of a newly-formed VR computing division. Dianne Green takes his former position. Bavor's task is to take Google's VR effort (Cardboard) forward. Given its barebones getup and low price, some may have discounted Cardboard, but it is quite a remarkable effort to convert any smartphone into a VR device when desired. So the decision to create a new division builds on its GoPro deal (to create VR content) and YouTube support for VR.
Legal/Regulatory
Apple Tax in Europe : Matt Larson of Bloomberg Intelligence believes that Apple may have to pay as much as $8 billion in EU back taxes. Apple is one of the companies that have been accused by European authorities of using Irish subsidiaries to avoid paying taxes in Europe. Last year, Amazon agreed to comply with European methods on taxes. Google still remains on the block.
New YorkTaking Action on Encryption : As the fear of terror spreads across the world, some governments are looking for counter-measures. New York lawmakers for instance are seeking to pass a bill proposed by New York assembly man Matthew Titone that forbids retailers to sell devices if the operating system provider or device manufacturer is unable to decrypt data on them upon government request.
Failing this, OS makers like Apple, Google and Microsoft may be required to pay fines of $2,500 per device. The technology companies fear that this kind of requirement (also being sought by the UK government) would necessitate the creation of backdoors (weaknesses in the OSs) that can be exploited by hackers, thereby undermining the security of the device. As of now, New Yorkers have the option of expressing their opinion on the proposal through a widget on the New York State Senate's page for the bill.
German CourtRules on Facebook Friend Finder : A panel of the Federal Court of Justice upheld the decisions of two lower courts in Berlin that Facebook's Friend Finder promotional feature (a permission required by the app) was an advertising harassment to a user's contacts and constitutes a deceptive marketing practice. The feature allows Facebook to collect the details of a user's contacts to send non-Facebook users invitations to join the social network. The case was filed in 2010 by the Federation of German Consumer Organizations (VZBV).
Facebook May Have Overstated Free Basics Support in India : Despite huge marketing efforts (under the banner of "digital equality") to promote its Free Basics (Internet.org) initiative in India, Facebook's effort hasn't gained a whole lot of public support. According to the Telecom Regulatory Authority of India (TRAI), Facebook may have overstated the numbers by 5.8X or 9.1 million people when it said that 11 million people had responded in its favor.
The bone of contention is well-known: Indian companies want net neutrality so that no individual company can pay telecom providers (like Reliance Communications in this case) to create fast lanes because it negatively impacts companies that are often much smaller and with limited resources). Facebook says the more pressing need for countries like India is to get more people online so they can avail basic services like news, travel, jobs, sports, health and local government information.
M&A and Collaborations
Microsoft Windows Phone Partners : Microsoft isn't disheartened by its sagging smartphone market share since the company has never made it big in smartphones at all. But despite its rather confusing phone strategy involving the separate targeting of business, enthusiast and minimalist users, decision to make a few devices itself and the Nokia write-down, Microsoft still has a few believers.
Two of these, Acer and Alcatel, have decided to a launch smartphones based on Windows 10. In Acer's case, it's a high-end number called Liquid Jade Primo with 5.5-inch screen and continuum support that Acer will start selling in some international markets this year. In Alcatel's case, it's a typically low-end Windows 10-powered device called OneTouch Fierce XL to sell exclusively from T-Mobile. It doesn't support Continuum.
Amazon Speaker to Get Portable : Amazon's Echo speaker, which thus far had to be harnessed to a power source to answer questions, create shopping lists, play music and work with connected devices is now getting even more handy. Amazon intends to launch a smaller, portable version currently being referred to as Fox. It may well be that the device will be manufactured by an outside party because Amazon recently extended Alexa to other device makers in order to get its personal assistant into as many devices as possible and better compete with Apple, Google and Microsoft, all of which are trying to get into the space.
HPE Wants to Sell Mphasis : Ever since its split from the consumer-facing side of Hewlett-Packard, Hewlett Packard Enterprise has been streamlining operations and laying off workers. The company announced last week its intention to sell off Mphasis, an Indian company it inherited through its acquisition of Electronic Data Systems. HPE holds 60.5% of Mphasis for which it is seeking a billion dollars. No buyers were mentioned in the news report but it's well known that Japanese company NEC and Indian companies Tech Mahindra and L&T Infotech have earlier expressed interest. Citigroup has reportedly been appointed to oversee the auction process.
Some Numbers
Apple Smartwatch Gains Ground : Research firm Juniper estimates that the Apple Watch took 52% of the market in 2015 despite its late entry into the space. Android Wear vendors are estimated to have come in at less than a 1% share with the balance coming from much smaller vendors like Martian, X and Razor. IDC numbers are similar with Apple Watch at over 50% and Pebble a distant second at 8%. In the absence of a compelling use case for a smartwatch, Apple's strong brand and loyal user base appears to have done the trick for the company.
Cloud Email Market Leaders : The WSJ quoted data from Gartner that places Microsoft and Google in the lead as far as corporate email is concerned. Microsoft, through its Office 365 has acquired an 8.5% share of the 40K companies analyzed while Google Apps for Work has enabled it to acquire a 5% stake. Importantly, Microsoft has 80% of the big clients (revenue over $10 billion and more concentrated in highly-regulated sectors like utilities, energy and aerospace).
Firms with under $50 million in revenues had more Google accounts (software, media, consumer products, less regulated).But considering the market shares of the leading players, its apparent that there's still a hige market to tap and that's likely what Amazon's AWS will do with its Workmail email and calendar service that became broadly available last week. There is very tough pricing competition going on between these players and just last week, Microsoft announced a price cut.
Amazon Retail Stats : Cowen's survey of 2.5K U.S. households revealed that Amazon Prime had made its way into 38% of them through Prime, which saw memberships rise 32% in December. Cowen also said that Amazon saw apparel sales rise 25% while Wal-Mart and Target saw declines of 7% and 6%, respectively.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
