Author Archives: Scalper1

Here’s Why Apple Should Be More Like Netflix

Loading the player… Amid slowing iPhone sales, Apple ( AAPL ) should take a page from Netflix’s ( NFLX ) playbook and go with the subscription model, according to a Bernstein report out Wednesday. With the cost of owning and using an iPhone averaging at about $3 a day, Bernstein says Apple could offer its products to customers as a bundled monthly service instead of single purchases of more than $700 every few years. The analyst believes customers could get more services from an Apple subscription bundle at a cheaper cost than their Internet and cable bills. Apple shares closed up 1.2% in above-average volume after testing support at the 10-day line in Tuesday’s session. The stock still has a lot of recovering to do after crumbling to its lowest level in nearly two years just last week, in the wake of the company’s disappointing quarterly earnings report. Apple is 28% below its all-time high reached in April 2015. Meanwhile, Netflix is looking to retake its 10-day line, an area the stock has struggled to stay above in the aftermath of its disappointing Q2 subscriber addition guidance about a month ago. Shares are trading 32% below their all-time high reached last December, but finished 2.1% higher Wednesday. Another big tech company benefiting from the subscription model is Amazon ( AMZN ). The e-commerce giant’s Amazon Prime service costs $99 dollars a year and is growing in popularity. Amazon also recently rolled out a monthly Prime membership for $10.99 a month and a video-only subscription for $8.99 a month. Amazon is looking for support at its 10-day line. The stock tried to climb back above the 700 price level in intraday trade but reversed lower by the afternoon, then ended up 0.3% at 697.45. Shares are 3% below their all-time high reached last week and extended 16% past a cup-with-handle buy point it initially cleared just a few weeks before the company’s latest quarterly report.

Tesla Selling $2 Billion In Stock To Fund Production Ramp-Up

Electric automaker Tesla ( TSLA ) said late Wednesday that it will make a $2 billion secondary stock offering to fund its ambitious production schedule, sending its stock down in after-hours trading. “Because of the overwhelming demand that it has received for Model 3, Tesla intends to use the net proceeds from this offering to accelerate the ramp of Model 3,” said Tesla’s press release. “As noted in the company’s first-quarter shareholder letter , Tesla intends to start volume production and deliveries of Model 3 in late 2017 and to accelerate its 500,000 unit build plan from 2020 to 2018.” The company said $1.4 billion worth of stock will be sold by Tesla for this purpose. The remaining $600 million will be raised by CEO Elon Musk, who is exercising his option to acquire 5.5 million Tesla shares and will use the sale to cover his tax bill, the company said. He’s also donating 1.2 million shares to charity. Tesla stock was down more than 2% in after-hours trading Wednesday. In the regular session in the stock market today , Tesla rose 3.2% to close at 211.17, boosted by Goldman Sachs’ upgrade earlier in the day. Goldman upgraded the stock despite expressing deep skepticism about the 2018 production target, but the investment bank said the stock is attractively priced after falling 23% from early April through Tuesday.

Salesforce.com Q1 Beats, Hikes Revenue Outlook, Stock Rises

Salesforce.com ( CRM )  late Wednesday reported Q1 earnings and revenue that topped expectations and raised its full-year revenue guidance, sending the business software provider’s stock up 6% in after-hours trading. Salesforce, the leading provider of customer relationship software, said Q1 profit jumped 50% to 24 cents per share minus items. Revenue in the three months ended April 30 rose 27% to $1.92 billion, the company said.  Analysts polled by Thomson Reuters had modeled 23 cents and $1.89 billion. In the current quarter, Saleforce forecast earnings ex items of 24 cents to 25 cents per share, up from 19 cents in the year-ago quarter, and revenue of $2.005 billion to $2.015 billion, up 23%. Analysts had estimated 25 cents and $1.98 billion. Salesforce increased its full-year revenue guidance to $8.2 billion from $8.16 billion, “given the strong response to our Customer Success Platform,” Salesforce CEO Marc Benioff said in the earnings release. San Francisco-based Salesforce  garners mainly subscription revenue from on-demand software delivered via the Internet, or cloud. “Salesforce’s  increased penetration of very large organizations and vertical-focused strategy, led by President and COO Keith Block, may mark the beginning of a trend of consistency in enterprise sales execution,” Jefferies analyst John DiFucci said in a pre-earnings research report. Salesforce has a strong IBD Composite Rating of 95, putting it among the top 5% of all stocks on key metrics such as sales and earnings growth. Its Computer Software-Enterprise group, though, ranks just No. 138 out of 197 industry groups tracked by IBD. Salesforce competes with Microsoft ( MSFT ), SAP ( SAP ), Oracle ( ORCL ), ServiceNow ( NOW ) and others. Salesforce last week said it would offer a new “Internet of Things” service using AWS, the cloud computing business of  Amazon.com ( AMZN ). Salesforce’s service, expected to launch this fall, collects data from Web-connected devices. AWS is the No. 1 cloud services provider.