Category Archives: oud

Amazon Goes Head-To-Head With Netflix In Streaming Video

After amassing a portfolio of critically acclaimed original TV series, Amazon.com ( AMZN ) has decided the time is right for its subscription streaming video service to go head-to-head with industry leader Netflix ( NFLX ). The Seattle-based e-commerce giant late Sunday revealed that it will offer its Amazon Prime Video as a stand-alone service for $8.99 a month, a dollar less than Netflix’s standard streaming plan. Amazon Prime Video was launched five years ago as an extra for subscribers of Amazon Prime, a program that offers free two-day shipping on millions of items. Amazon Prime costs $99 a year. In addition to the stand-alone video service, Amazon also is offering full Prime membership on a monthly basis. Customers can pay $10.99 a month with no annual commitment or save 25% by paying for the full-year plan. Like Netflix, Amazon has been investing in original content as well as signing exclusive licensing deals for cable and broadcast shows. Amazon original series include “Transparent,” “Mozart in the Jungle,” “Catastrophe,” “Bosch,” “The Man in the High Castle” and “Red Oaks.” Other competitors in the Internet video sector include Hulu and Time Warner ‘s ( TWX ) HBO. Hulu is co-owned by Comcast ( CMCSA ), Disney ( DIS ) and Fox ( FOXA ). Amazon’s move comes as many long-time Netflix customers will see the price of their service jump from $7.99 to $9.99 a month starting next month. Netflix boosted its pricing starting two years ago, but it provided grace periods for existing customers. Netflix stock was down about 3% to near 108 in afternoon trading on the stock market today . The Los Gatos, Calif.-based company is scheduled to report first-quarter earnings after the market close today. Amazon stock was up almost 1% to about 631. Amazon gets an IBD Composite Rating of 84 out of a possible 99, and Netflix a 51. For when to buy, hold or sell off Amazon and other top stocks, sign up for a free trial of IBD Leaderboard Amazon is offering the stand-alone video service only in the U.S. for now, but it is likely to take it to international markets soon, CCS Insight analyst Paolo Pescatore said in a research note Monday. Amazon’s new video offer will limit Netflix’s ability to grow its domestic subscriber base, Wedbush analyst Michael Pachter said in a research note Sunday. “The monthly video offering reflects Amazon’s determination to capture an increased share of Netflix’s addressable market,” he said. “While we don’t expect a significant number of current Netflix customers to defect to Amazon Instant Video, it is likely that Amazon and Netflix will divide the remaining uncommitted market on a roughly equal basis, severely impacting Netflix’s continued domestic growth.” Subscriber Fees Hiked Pachter believes Amazon timed the offer to take advantage of the impending price increase at Netflix. An estimated 30 million domestic Netflix subscribers will see their monthly subscription fees go up starting May 9, he said. Pachter rates Amazon stock as outperform with a price target of 700 and Netflix as underperform with a price target of 45. RBC Capital Markets analyst Mark Mahaney said Monday that the Amazon offer “creates a negative headwind for Netflix.” However, Mahaney reiterated his outperform rating on Netflix with a price target of 140. “We view this move by Amazon as a significant negative development for Netflix,” he said in a report. “Amazon certainly has the brand name, the customer relationships and the focus on high-quality consumer experiences to impact the growth in Netflix’s U.S. subscriber base, and perhaps eventually its global subscriber base.” Netflix is facing growth challenges in the U.S. market. In the fourth quarter last year, it missed its own target for new domestic subscribers. But its international growth easily beat expectations and offset U.S. weakness. Netflix Original Shows Rank Tops In a survey released last week, consumers ranked Netflix as No. 1 for original programming. It topped HBO for the first time in the six years that Morgan Stanley has tracked consumer preferences in premium video services. Some 29% of survey respondents said Netflix was best in original programming, up from 23% last year, while HBO came in second place at 18% (compared with 31% last year), Morgan Stanley said. Amazon.com, Hulu and CBS (CBS)-owned Showtime were each near 5%. Netflix original shows include “House of Cards,” “Orange Is the New Black,” “Unbreakable Kimmy Schmidt,” “Narcos” and Marvel comic-book hero shows “Daredevil” and “Jessica Jones.”

Alphabet Seen Riding Strong Mobile Ad Sales To ‘Stellar’ Q1

When Google parent firm Alphabet ( GOOGL ) reports Q1 earnings on Thursday, analysts are expecting the search giant to deliver what one of them terms “stellar” top-line results, riding strong mobile advertising sales. But Wall Street also wants to see that the sultan of search is serious about monetizing its various so-called “moonshot” initiatives. The diverse group that Alphabet calls its “Other Bets” range from self-driving cars to smart home device maker Nest to a life sciences division that developed a glucose-monitoring contact lens for diabetics. Capital expenditures for the “Other Bets” segment are expected to increase this year, although no details have been offered yet. When Alphabet released Q4 earnings in February , the tech giant revealed that it logged an operating loss of $3.6 billion on such moonshot projects in 2015. The company broke out its spending on its search core and “Other Bets” for the first time in Q4 2015. Far-out innovations aside, “it will be interesting to see if they can continue growing their business-oriented solutions, such as Google Drive and Google Docs, which also have correlation with their monetization capabilities,” Hannu Verkasalo, CEO of Verto Analytics, told IBD via email. For Q1, analysts polled by Thomson Reuters expect Alphabet to see total sales — including TAC (“traffic acquisition costs” or fees paid to bring traffic to its site) — rise 18% year over year to $20.36 billion. They are modeling EPS ex items of $7.97, compared with EPS ex items of $6.47 in Q1 2015. Subtracting out TAC, revenue will rise to $16.54 billion, up nearly 19% year over year, according to FactSet. Alphabet subsidiary Google saw a double-digit increase in ad spending on its site last year, led by mobile gains and new offerings that let shoppers buy directly by clicking ads, according to a research report from Cowen analyst John Blackledge in January. “Overall, Google’s core search business appears strong, with room for further innovation,” Blackledge wrote. Google, which dominates the global digital ad market, will see its net ad revenue rise 9% this year, while No. 2 Facebook ‘s ( FB ) net ad revenue will jump 31%, says eMarketer’s latest ad spending forecast , released in March. Google CEO Sundar Pichai said in February that seven of the company’s products, including YouTube and Gmail, each have more than 1 billion monthly active users around the globe. In March, 243.1 million users accessed one of Google’s online services in the U.S. at least once, which puts Google’s net reach in the U.S. at 98.2%, Verto Analytics said. The company is looking to make headway into the $27.4 billion cloud computing market with Google’s Cloud Platform, which now trails Amazon.com ( AMZN ) unit Amazon Web Services, with approximately 37% market share, and Microsoft ‘s ( MSFT ) Azure. But Google’s cloud service may get a boost from Apple ( AAPL ), which in March  signed a deal worth between $400 million and $600 million to use Google’s Cloud Platform for its iCloud service. The Google unit of Alphabet also sells high-speed Internet and TV services in four markets and has trumpeted expansion plans. Google Fiber bundles video and gigabit-per-second broadband service for $130 monthly and also sells stand-alone Internet for $70 monthly. “Foreign-exchange headwinds should continue to damper the company’s otherwise stellar top-line results, but to a lesser degree than in recent quarters,” said Pivotal Research analyst Brian Wieser in a pre-earnings research note on April 11. “Current-quarter results for Alphabet and core Google business trends should be positive overall.” Wieser said he estimates the company will show 16% revenue growth and 18% revenue ex-TAC growth year-over-year. “The company’s hegemonic position in digital advertising alongside Facebook is fundamentally unchanged, and we continue to expect Google to sustain double digit growth rates in advertising on an ongoing basis,” said Wieser. “The factors which were cited as supporting growth last quarter — including YouTube and programmatic display-related revenues associated with Google Display Network (collection of Google-run websites) will undoubtedly continue.” Alphabet stock was up 1%  in afternoon trading in the stock market today , near 787. Alphabet stock has risen 45% compared to this time last year. The company’s stock is trading 3% below its all-time high of 810.35, brushed on Feb. 2.

No Slouch, But Manhattan Associates’ EPS Growth May Have Eased To 15%

Investors are hoping fast-growing supply-chain software developer Manhattan Associates ( MANH ) will say something Tuesday to help re-accelerate growth. Not that Manhattan is any slouch, but the 15% improvement in first-quarter earnings that it’s expected to disclose after Tuesday’s market close would be its slowest year-to-year growth rate in 15 quarters. Six of those 15 quarters have topped 30% earnings growth, including Q3 and Q4 2015, and all but two of the last 15 topped 20%. While still 25% off a record high 77.75 set Dec. 7, Manhattan Associates stock was up more than 1.5% in afternoon trading in the stock market today , near 58 and 31% above its 44.27 nadir hit Feb. 8 during this year’s software slump. Most of its bigger enterprise-software rivals have been faring better, with the biggest, Oracle ( ORCL ) up fractionally, 9% off recent highs. Enterprise software maker SAP ( SAP ) was also up fractionally and just 2% off a recent high, while Salesforce.com ( CRM ) was up more than 1%, just 7% off its recent high. The entire IBD Computer Software-Enterprise industry group, which does not include Oracle as a member, is about 9% off its Nov. 9 high. Oracle is a member of IBD’s Computer Software-Database group, which is 22% off an August high. Among the re-accelerants that management might discuss Tuesday is just how much its new distribution management (DM) tools announced last week might contribute to revenue. Its new DM Mobile platform gives users “the ability to address any operational issues, including inventory issues, directly from the floor via their tablet devices, increasing mobility and driving productivity and efficiency,” the company announced at the MODEX supply-chain management show in Atlanta. On Feb. 3, just before Manhattan stock tanked more than 20% in three trading sessions, William Blair analyst Matthew Pfau said in a research note that “the 2016 EPS guidance that management provided is conservative, and through a combination of revenue growth, operating expense leverage and share repurchases we expect Manhattan to continue to increase its EPS in excess of 15% over the next several years. “We recommend shares to long-term investors looking for a midcap software company with a strong record of execution and sustainable earnings growth opportunity.” By consensus, Pfau and four other Wall Street analysts polled by Thomson Reuters expect Manhattan to deliver Q1 earnings up 15% to 39 cents per share minus items, on revenue up 8.9% to $145.5 million. That would be a record quarter in hard dollars, but the year-over-year rate would be only slightly better than Q4’s 8% growth to $141 million and only the third time in 15 quarters that its sales growth had slipped into single digits. Over the past five years, it’s averaged 14% sales growth annually and 15% earnings growth. Manhattan guided full 2016 non-GAAP EPS to a range of $1.69 to $1.72, the midpoint slightly below analysts’ $1.71 consensus, or up 12.5% from 2015. It guided 2016 sales to a range of $609 million to $615 million, its midpoint coinciding with analysts’ $612 million consensus, up 10% from 2015. “Although the retail environment remains challenging, Manhattan has not seen a material change in IT purchasing trends from retails and the pipeline is still strong,” Pfau said. “However, we believe that management’s guidance takes into account a cautious retail IT spending environment for 2016.” While Manhattan’s core software manages warehouse inventory, its visualization tools allow users to see everything from the manufacturer’s supplies to the consumer’s purchase at the checkout counter. Pfau noted that 70% of its total license revenue comes from its basic warehouse management systems (WMS) license revenue, so WMS is a “leading indicator for sales of Manhattan’s other solutions.” License revenue, however, amounts to only 14% of its total revenue. Most of its sales, 77%, come from services related to its software licenses. “We will continue to be a serial investor in innovation,” Manhattan CEO Eddie Capel said in February.