Author Archives: Scalper1

Micron Expected To Unveil Q2 Loss Amid Samsung-Driven Memory Glut

Samsung and SK Hynix’s relentless mobile DRAM push is slamming American rival Micron Technology ( MU ), which is expected to report a fiscal-second-quarter loss Wednesday for the first time in three years. A Nomura analyst reiterated his reduce rating — equivalent to a sell rating — and 8 price target Thursday on Micron stock. Micron stock fell 1.4% Thursday, to 10.50. Shares crashed 60% over 2015, and they are down another 26% year to date. The consensus of 33 analysts polled by Thomson Reuters for Micron’s fiscal Q2 results, slated for Wednesday afternoon, models $3.05 billion in sales, down 27%, and an 8-cent per-share loss ex items vs. 81 cents earnings per share in the year-earlier quarter. Three months ago, Micron guided to $2.9 billion to $3.2 billion and a loss of 5-12 cents per share ex items. Nomura’s Romit Shah expects Micron to issue Q3 guidance below the consensus model for the sixth consecutive quarter. For Q3, the consensus projects $3.2 billion in sales and 5 cents EPS minus items, down 17% and 91%, respectively. The DRAM (dynamic random-access memory) market “hit a downturn in 2015” amid weakening PC sales and a Samsung-driven oversupply. DRAM sales contracted by 2.4% for the year vs. 32% growth in 2014, Gartner analyst Viveca Woods wrote in a January report. Micron leads the American DRAM market, rivaling South Korean competitors Samsung and SK Hynix. The waning PC market — also slugging No. 1 chipmaker Intel ( INTC ) — forced Micron to shift gears, taking a mobile-centric approach. But mobile might not be Micron’s saving grace. In Q1, Micron posted a 13% year-over-year decline in mobile sales to $834 million. So, even if the DRAM in smartphones is increasing, it doesn’t mean Micron will seize the biggest chunk of that market. As DRAM oversupplies the market, pricing will remain competitive for another one to two months, Shah wrote. Then, prices will likely topple as DRAM-makers try to undercut one another. “Until supply cuts transpire (with Samsung being the key), the market will remain vastly oversupplied as average sales-price erosion is setting up to be greater in 2016,” he wrote in a research report. Like Samsung and SK Hynix, Micron is prepping for better technology with its 20-nanometer ramp. But Micron’s pace of cost declines, dependent on that ramp, won’t be sufficient to offset the pricing plunge, Shah wrote.

Hiring Amazon Vet As CEO Signals Shutterfly Not For Sale

The March 17 appointment of Christopher North as CEO of digital photo firm Shutterfly ( SFLY ) signals the company’s intent to remain independent, despite rumors of buyout offers, says RBC Capital Markets. In a research note sent to investors late Wednesday, RBC analyst Rohit Kulkarni said North’s appointment signals the firm’s likely intent to rebuff takeover offers from bidders such as private equity firm Thomas H. Lee Partners. Shutterfly stock is down 2% since the CEO announcement, though shares were up 1.5% in late-afternoon trading on the stock market today , near 46.The company has a weak IBD Composite Rating of 58, where 99 is the highest. Kulkarni rates Shutterfly stock to outperform, and has a price target of 48. The analyst said the firm’s Q4 results were “nothing to get excited about,” but he said he is willing to “remain patient” to give the new management team time to jell. He sees the possibility of profit margins rising and sales accelerating. North, a 10-year veteran of  Amazon.com ( AMZN ), has a “resume and impressive track record,” Kulkarni wrote in his research note. North was one of the executives at Amazon’s U.K. operation, Shutterfly said in its press release announcing the hiring. Before Amazon, North held leadership rolls with Phaidon Press and HarpersCollins Publishers, and was once a media and entertainment consultant for Booz Allen Hamilton, according to the RBC research note. “We believe Mr. North’s appointment will help Shutterfly reinvigorate such core metrics,” Kulkarni said. “And given his experience, Mr. North at the helm could open up international possibilities for Shutterfly.” North’s appointment is effective May 31. Company Chairman Philip Marineau is its temporary CEO. On Dec. 1, Shutterfly announced that 11-year CEO Jeffrey Housenbold was resigning as of February “to pursue other opportunities.” He also resigned as president and board member.

Google Cloud Faces Amazon, Microsoft Over $25 Billion ‘Jump Ball’

With Alphabet ( GOOGL )-owned Google Cloud Platform snaring more major customers, there’s a three-company race between it,  Amazon ( AMZN ) Web Services and  Microsoft ( MSFT ) Azure that will only intensify. Cowen & Co. analyst John Blackledge wrote in a report on Thursday, after the first day of the Google Cloud Platform Next Conference in San Francisco, that “our sense from talking to potential customers at the event is that they are giving Google Cloud Platform another look.” Blackledge said press reports have highlighted “recent wins” for Google’s cloud business, including Spotify, Coca-Cola Enterprises ( CCE ) and Snapchat, which “were featured prominently in customer use-case discussions. Other customers include Home Depot ( HD ), Electronic Arts ( EA ), Zulily, Sony ( SNE ) Music, HTC, Best Buy ( BBY ), TiVo ( TIVO ), Wix ( WIX ), Philips ( PHG ), Volkswagen ‘s ( VLKAY ) Audi, (and Tata Group’s) Jaguar and Range Rover,” Blackledge said. Public clouds “are likely to be a highly competitive market where customer stickiness will be challenged by new technologies that make it easier to move workloads between public cloud vendors,” Macquarie Research analyst Ben Schachter wrote in industry research note on Wednesday. “It clearly has become a major focus area for Google and one in which it intends to compete directly against Amazon and Microsoft.” Competition between the three groups will rise “particularly as enterprises become increasingly comfortable migrating select workloads to public cloud environments,” according to Cloud Computing Today . Cloud services is “a $25 billion jump ball” that will likely be captured by the big three competitors: Alphabet’s Google Cloud Platform, Amazon’s AWS and Microsoft’s Azure, Pacific Crest Securities analyst Evan Wilson said in a Wednesday industry research note. “With it being early in this opportunity, we think there will be wins and losses along the way, but we believe (Google) will be a significant competitor in the years to come, and it could help drive growth.” Apple recently signed a contract worth between $400 million and $600 million to use Google’s Cloud Platform, according to CRN . Apple now uses cloud services from Amazon and Microsoft, but it intends to end its reliance on all its rivals in the next few years as it builds its own data centers, according to Re/Code. In February, music service Spotify, a high-profile customer of Amazon’s Amazon Web Services, said it would use  Google’s cloud for some computing infrastructure. Google’s cloud business generated about $500 million in revenues last year, according to analysts at Goldman Sachs, as cited by Reuters . That compares with $74.5 billion overall for parent company Alphabet, but the cloud business is one of its fastest-growing business areas. Overall, Reuters said Google ranks as the No. 4 player in the cloud infrastructure industry, with 4% of the market last year, according to Synergy Research. Amazon’s Amazon Web Services had a 31% share, Microsoft’s Azure had a 9% share, and IBM ( IBM ) had 7%, according to the group. Google is also building up its data centers across the world, launching two new regional centers in Japan and Oregon to bring the number of regions it serves to five. Cloud computing is an increasingly popular way for companies to run their IT operations, and the $20-billion-a-year business is forecast to grow 35% over the next year, according to Gartner Inc. Alphabet stock was down a fraction in late afternoon trading in the stock market today , near 755. Microsoft stock was up a fraction, near 54. Apple stock was down marginally, near 106, and Amazon stock was up more than 2%, near 581.