Author Archives: Scalper1

Dish Q1 Profit Beats, Viacom Dispute May Fuel Subscriber Losses

Dish Network ’s ( DISH ) Q1 profit topped views, sending the satellite TV broadcaster’s stock up, as shares in Viacom ( VIA ) fell again amid stalled negotiations with Dish over a programming contract renewal. Englewood, Colo.-based Dish, which normally reports Q1 earnings in May, said that profit rose 11% from the year-earlier period to 84 cents a share. Revenue rose 2% to $3.79 billion, Dish said. Analysts had modeled EPS of 62 cents and revenue of $3.8 billion. Dish stock was up nearly 2% in afternoon trading in the stock market today , near 48. The satellite TV broadcaster’s stock is down 15% in 2016. Dish has been unable to find a buyer for its wireless radio spectrum or a wireless partner to offer mobile video services. Viacom stock, which fell 7% on Tuesday, was down about 2% late Wednesday morning, near 38. Dish said that it lost 23,000 net pay-TV customers in Q1. The company combines satellite TV customers with subscribers to its new online video service branded “Sling,” but it does not break out results. Dish lost 158,0000 satellite TV customers in Q1 but gained 135,000 Sling customers, estimated Craig Moffett, an analyst at MoffettNathanson. While Dish aims to stabilize rising programming costs, its dispute with Viacom could increase subscriber losses, says Moffett. John Hodulik, a UBS analyst, agreed in a report. “DirecTV faced a similar dispute in July 2012, which kept Viacom networks off the air for 10 days, contributing to an 80% year-over-year drop in net adds in Q3 2012. While this is likely a negotiating tactic by Dish, since 2014 smaller cable operators, including Cable One and Suddenlink, have dropped Viacom’s networks entirely to save cost,” wrote Hodulik. Vijay Jayant, an analyst at Evercore ISI, said in a report: “We estimate that DISH pays Viacom between $350M and $400M in programming costs. While Dish will save these costs in case there is no agreement, it will also lose subscribers at a higher pace initially than in a scenario where there is a deal.  Dish also has an ongoing dispute with ( Comcast ( CMCSA )-owned) NBCU.” Viacom’s 24 cable networks include MTV, Nickelodeon and Comedy Central. Viacom lacks sports content, a strength of Walt Disney ( DIS ) and 21st Century Fox ( FOXA ). Dish has had disputes with CBS ( CBS ), 21st Century Fox and Time Warner’s Turner Broadcasting unit. Viacom rose more than 1% near 36 Wednesday afternoon after tumbling 8.3% on Tuesday.

VMware Cloud Business Lifts Q2 Outlook Above Expectations; Stock Up

Investors rushed to buy VMware ( VMW ) shares early in the stock market today , driving the price up 14% to a four-month high above 59, after the virtualization software leader raised its guidance late Tuesday. The company increased adjusted earnings guidance for the year by 2 cents to a range of $4.09 to $4.18 vs. the $4.11 modeled by Wall Street. It also announced plans to buy back $1.2 billion worth of shares in fiscal 2016, “in light of the depressed valuation” of the stock, reported William Blair analyst Jason Ader in a Wednesday research note. Shares had fallen 32% for the past 12 months as of Tuesday’s close. Majority owner EMC ( EMC ), meanwhile, was up nearly 3% in midday trading Wednesday after it reported Q1 revenue grew 5% to $1.59 billion, ahead of Wall Street consensus by $14 million, while non-GAAP EPS flattened to 86 cents, 2 cents better than analysts had expected. EMC is in the process of being acquired by privately held Dell. VMware’s virtualization software lets users see and manipulate multiple operating systems simultaneously from one computer. William Blair’s Ader noted that VMware’s traditional license revenue of $572 million in Q1 was up 1% in constant currency, although it fell 1% after foreign-exchange effects. VMWare’s growth was in the cloud, its multiyear strategic destination. “Q1 was a good start to 2016,” VMware CEO Pat Gelsinger said in the company’s earnings release. “We made solid progress with our strategic goal of building momentum for our new growth businesses and in the cloud. We continue to see momentum across our portfolio of growth products and businesses, including NSX, Virtual SAN and End-User Computing.” In February, VMware partnered with IBM ( IBM ) to allow enterprise customers to extend their workloads to the cloud from on-premise software-defined data centers. For the current Q2, VMware guided non-GAAP EPS to 94 cents to 97 cents. It guided Q2 total revenue up 4% to 7% to $1.66 billion to $1.71 billion. Analysts polled by Thomson Reuters expect 94 cents per share minus items on $1.66 billion. William Blair reiterated its market perform rating on VMware stock but doesn’t have a price target. Summit Research Partners analyst Srini Nandury maintained a hold rating, but he raised his price target on the name to 45 from 40 “to reflect solid execution and the recent multiple expansion experienced across the tech landscape following the January/February sell-off. “Despite a slew of executive departures … we believe the company needs to execute well on its growth areas.” FBN Securities analyst Shebly Seyrafi reiterated an outperform rating and raised his VMware price target to 70 from 60. “We continue to like the company’s strong (free cash flow) yield,” he said in a research note.

Intuitive Surgical Q1 Impresses Wall Street, As Stock Hits New High

Surgical-robot maker Intuitive Surgical ( ISRG ) received multiple price target hikes from Wall Street, as its stock hit a new high Wednesday, following its Q1 earnings report late Tuesday. As IBD reported, Intuitive Surgical’s Q1 earnings beat estimates , but what really interested analysts was the quarter’s 17% procedure growth. Intuitive Surgical normally sells only about 100 of its pricey da Vinci robotic systems per quarter, so surgical procedures using the company’s consumable accessories and services are key to steady revenue. Management raised procedure-growth guidance for the year to 12% to 14%, from the previous 9% to 12%. Operating expenses increased, and Intuitive Surgical’s management also raised its opex guidance for the year to 12% to 15% of revenue, up from 9% to 13% previously. However, it likewise raised its gross-margin guidance to 69% to 70%, from 68% to 69.5%. Intuitive Surgical is on IBD’s Big Cap 20. Who else makes the grade? “Intuitive Surgical’s impressive Q1 procedure growth is consistent with our recent positive general surgeon checks,” wrote RBC Capital Markets analyst Brandon Henry as he raised his price target to 640 from 610 while maintaining a sector perform rating. “While Intuitive Surgical is accelerating operating expense spend, we believe these investments should drive increased future robotics adoption and help the company maintain its superior position in the robotics market, despite upcoming competition.” The company has no competitors at present, but Medtronic ( MDT ), TransEnterix ( TRXC ) and Johnson & Johnson ( JNJ ) partnering with Alphabet ‘s ( GOOGL ) Verily division are all developing their own robotic surgery systems. Leerink analyst Richard Newitter lifted his Intuitive Surgical price target to 710 from 700 while maintaining an outperform rating. “A now stronger outlook for Urology/GYN and general surgery gave management confidence to raise ’16 procedure guidance,” Newitter wrote in his research note. “Also, management seems to be talking more aggressively about da Vinci use in thoracic, a procedure area we think may be around the corner as an emerging growth driver.” Piper Jaffray analyst Matt O’Brien raised his price target to 610 from 550. He rates the stock neutral. Intuitive Surgical stock hit a record high of 654.88 early on the stock market today , pushing it up 20% for the year. In morning trading, shares were up 4.5% near 652.