Author Archives: Scalper1

Hewlett Packard Enterprise Still Wrestles With Cisco, Juniper

One day before Hewlett Packard Enterprise ( HPE ) was slated to post fiscal Q1 earnings, the stock of half of the old computing pioneer Hewlett-Packard Co. was up 4% in afternoon trading in the stock market today . The stock was doing what analysts expect it to do, outperforming the other half of the legacy company,   HP Inc. ( HPQ ), whose shares were up a fraction this afternoon. The stocks, of course, reflect the market’s interpretation of the companies’ operational performance since splitting into two from the legacy corporation in November.  HP, which reported earnings last week, kept the PC and printer businesses — and the old HPQ ticker. Hewlett Packard Enterprise kept the server, storage, networking, enterprise-software and cloud-migration businesses, seen as faster-growing endeavors, and kept the CEO, Meg Whitman, who still chairs both companies. Hardware and equipment-product sales comprise about 38% of Hewlett Packard Enterprise revenue, with services generating the rest. For the quarter ended Jan . 31, analysts polled by Thomson Reuters expect HPE to report earnings down 17% to 40 cents per share on revenue down 2.7% to $12.68 billion, vs. a pro forma 48 cents on $13.03 billion in the 2015 Q1. The company reports after the market close. HP Inc.’s Q1 EPS and sales each fell 12%, to 36 cents and $12.2 billion. For its first fiscal year ending in October, Hewlett Packard Enterprise expects EPS minus items of $1.85-$1.95, up from the $1.84 pro forma earned in 2015, on revenue of $50.81 billion, down 2.5% from the pro forma $52.12 billion of 2015. Analysts have modeled $1.87 and $50.73 billion. “We like HPE because decent execution should be sufficient to move the stock higher,” said UBS analyst Steven Milunovich in a February research note.  “We believe growth in servers, networking and storage, stabilization in high-margin technology services and continued improvement in the Enterprise Services margin should help close the gap between the current P/E of 7x and our target of 10x. “Storage head Manish Goel, as well as a few of our industry sources, say that HPE is taking business from Dell/ EMC ( EMC ) during their proposed merge.  Still, we think it’s time for Meg Whitman to provide a vision for the company. IBM ( IBM ) has cognitive computing.  What does hardware-heavy HPE want to be in 3-5 years and what will be its differentiation?” Nomura doesn’t cover HPE, analyst James Chen advised IBD Wednesday, but he and colleague Jeffrey Kvaal are watching closely as HPE competes with companies that Nomura does cover, such as  Cisco Systems ( CSCO ),  Juniper Networks ( JNPR ) and Arista Networks ( ANET ). Nomura said he expects 3% sales growth for HPE’s enterprise group this fiscal year, compared with Cisco and Juniper’s guidance ranges of 3% to 6%. Hewlett Packard Enterprise’s “projected growth rates are not likely to threaten networking incumbents, but don’t imply much share loss either,” the Nomura analysts said in a research note. HPE’s hybrid cloud business competes with IBM, Microsoft ‘s ( MSFT ) Azure, Amazon ( AMZN ) Web Services and Alphabet ‘s ( GOOGL ) Google Cloud Platform services. Big Data startup  Hortonworks ( HDP ), the Hadoop developer, on Tuesday said it would collaborate with HPE on the use of Apache Spark, making use of shared memory in HPE enterprise environments. UBS analyst Mulinovich, in his February note, said that “upon the split we argued in favor of HPE over HPQ stock. . . .  Hewlett Packard Enterprise has momentum with expected slight revenue growth in constant currency and an improving operating margin in fiscal 2016.” Wednesday afternoon, Hewlett Packard Enterprise stock was 13% off its Dec. 1 record high of 15.88, while HP Inc. was 26% off its record high of 14.82, set Nov. 24.

Xiaomi Mi 5 Demand Strong Ahead Of Apple iPhone SE Launch

Sales of Xiaomi’s new Mi 5 popped in China this week, ahead of Apple ’s ( AAPL ) expected launch of the less pricey, 4-inch-screen iPhone SE in the spring. Shares in Qualcomm ( QCOM ), whose Snapdragon 820 processor is built into the Mi 5, lifted more than 1% in the stock market today . Apple stock was down about 0.5% in afternoon trading. Xiaomi said that it had nearly 17 million registrations in hand for the Mi 5 on March 1, the first day of sale in China, though only one-fourth as many devices were reportedly ready for shipment. Xiaomi was the top smartphone seller in China in Q4, with 15% market share, followed closely by Huawei, with Apple in third place. Even though Apple’s December-quarter revenue growth slowed  year-over-year, overall iPhone demand was one reason why Xiaomi missed its 2015 smartphone shipment target, says research firm IHS. While Apple is apparently going small in China and emerging markets, the flagship Mi 5 has a 5.15-in. display that may help Xiaomi promote a new multiperson video chat feature vs. Apple’s FaceTime. At the Mobile World Congress in Barcelona in February, Xiaomi said that it would license U.S.-based  Vidyo’s conferencing technology for an app pre-installed on the Mi 5. The app is also available free on iOS and Android devices. “Scale is crucial for all communications apps, and Xiaomi’s plans to launch the app on Google Play and iOS illustrate this,” said Jack Kent, an IHS analyst, in an email. “Mi Video” supports multipoint videoconferencing, while users of Apple’s FaceTime can video chat with only one other person. While the Mi Video app may give Xiaomi a boost, “there could still be concerns about how much data video calling consumes — users on limited mobile data plans or pay as you go services may not be keen to use such services,” added Kent. At Forrester Research, analysts say that Xiaomi may have challenges. “China’s mobile connectivity has been slow, and videoconferencing can be taxing on a network,” Forrester analysts said in a blog post  on the video app. However, analysts agree that Xiaomi aims to set itself apart with more features aside from pricing its hardware aggressively, especially if it plans to expand globally. “Xiaomi needs to do more with its software ecosystem to significantly grow its business beyond its home market of China,” says an IHS report. That’s where Xiaomi’s partnership with Qualcomm could help. The new Mi 5 is priced  at roughly $300 and $350 with 32 GB or 64 GB of data storage. Xiaomi still garners more than 90% of its sales in China, though demand is growing in India and Indonesia. Xiaomi still doesn’t sell mobile phones in Europe or the U.S. China’s slowing economy is a worry for its local smartphone makers as well as Apple. Apple’s December-quarter sales in China rose only 14% from the year-earlier quarter, down from 99% growth the preceding quarter. The iPhone SE will sell for $400 to $500, said one report. Samsung, meanwhile, was pushed out of the top five smartphone sellers in the December quarter, says Strategy Analytics.

Tech ETFs That Braved The Storm In February

Among other reasons, the month of February 20 16 will be remembered for the broad-based sell-off in the tech space. In any case, a retreat from high-growth stocks kept this space off the radar, but the tension flared up when LinkedIn Corp. (NYSE: LNKD ) issued a lackluster guidance for the first quarter of 20 16 in early February (read: LinkedIn Crashes: Should You Connect with Social Media ETF? ). Along with LinkedIn, the famous FANGs (Facebook (NASDAQ: FB ), Amazon (NASDAQ: AMZN ), Netflix (NASDAQ: NFLX ) and Google (NASDAQ: GOOG ) (NASDAQ: GOOGL ) (i.e. Alphabet) were also hit hard. Notably, the famous four contributed a lot to last year’s tech surge. However, the bloodbath in these stocks dragged down the tech-laden Nasdaq exchange, forcing it to be the worst performing index among the top three U.S. indices. Nasdaq- 100 ETF (NASDAQ: QQQ ) was off over 1.8% in February while Technology Select Sector SPDR ETF (NYSEARCA: XLK ) lost about 1%. Apart from the LinkedIn-induced crash, overvaluation concerns, global growth issues and corporate recession were responsible for last month’s technology tantrum. Almost all ETFs catering to cyber security, the broader Internet, cloud computing and software were the hardest hit in the technology meltdown. Still, there are a few tech ETFs which dared the sell-off to end the month in the green. Below we highlight three such tech ETFs. iShares North American Tech-Multimedia Networking ETF (NYSEARCA: IGN ) – Up 6.8% This ETF provides a concentrated exposure to the domestic multimedia networking securities by tracking the S&P North American Technology-Multimedia Networking Index. Holding 26 securities in its basket, Motorola (NYSE: MSI ) takes the top spot with a 9.5% allocation. This is followed by Qualcomm (NASDAQ: QCOM ) (9.35%) and Cisco Systems (NASDAQ: CSCO ) (8.7%). The product has a definite tilt toward small cap securities that account for 43%, followed by mid caps at 34%. It has accumulated $78.9 million in its asset base while sees a moderate volume of around 7 1,000 shares a day. Expense ratio comes in at 0.48%. The fund has a Zacks ETF Rank of 1 or ‘Strong Buy’ rating with a high risk outlook. PowerShares S&P SmallCap Info Tech ETF (NASDAQ: PSCT ) – Up 3.8% This fund tracks the S&P SmallCap 600 Capped Information Technology Index. It has amassed $377.5 million in its asset base and trades in average daily volume of about 4 1,000 shares. The ETF charges 29 bps in fees per year from investors. Holding 102 securities in its basket, the product is well spread across securities with none holding more than 3.5 1% share (read: 5 Small Cap ETFs & Stocks that Beat Russell 2000 in 20 15 ). From an industry look, about one-fourth of the portfolio is allocated toward electronic equipment, followed by semiconductors ( 19.43%) and software ( 16.29%). The product has a Zacks ETF Rank of 2 or a ‘Buy’ rating with a high risk outlook (read: Top Tech ETFs of 20 15: The Best from a Winner ). First Trust NASDAQ Technology Dividend Index Fund (NASDAQ: TDIV ) – Up 3. 1% This fund provides exposure to the dividend payers in the technology sector by tracking the Nasdaq Technology Dividend Index. The product has amassed about $462.9 million in its asset base and trades in moderate volume of about 98,000 shares per day. The ETF charges 50 bps in annual fees and holds about 96 securities in its basket (read: ETFs to Tap on Cisco’s Upbeat Q4 Results ). Cisco occupies the top position in the fund, making up for roughly 8.23% of the assets followed by IBM (NYSE: IBM ) (8.04%) and Microsoft (NASDAQ: MSFT ) (8.0 1%). In terms of industrial exposure, the fund allocates nearly one-fifth portion in semiconductor and semiconductor equipment, followed by diversified telecom services ( 17%), software ( 15.52%), technology hardware, storage & peripherals ( 15.3%), and communications equipment ( 14.6%). Original Post