Category Archives: oud

Game On! Virtual Reality Race Starts As Facebook Oculus Rift Ships

Virtual reality will get its close-up on Monday when Facebook ( FB ) starts shipping its hot Oculus Rift headsets. Facebook sees Oculus Rift as a big game changer that starts with games and later moves to virtual front-row seats at sports games, as users slap on the Rift goggles for deep-seated immersion. Preorders for the $599 Oculus Rift headsets began in January. Facebook has not said how many Rift orders it received but did say they span 20 countries. When it ships, 30 games will be available, with more than 100 games expected by the end of this year. Game prices range from $9.99 to $59.99. High-performance PCs will be needed to power the Rift system. Oculus-ready PCs and Rift bundles are available from Dell, Dell’s Alienware unit, and Asus, which start at around $1,499. They’re available through Amazon ( AMZN ), Best Buy ( BBY ) and the Microsoft ( MSFT ) Store. Research firm CCS Insight estimates that virtual reality devices, including the related augmented reality field, will exceed $4 billion in sales in three years. It projects 2.5 million virtual reality and augmented reality devices will sell this year, growing to 12 million devices next year, and more than 24 million in 2018. Later this year, Facebook will also ship its Oculus Touch controllers that allow people to interact more naturally in VR through hand movements and gestures. Facebook says it’s working with thousands of developers on entirely new VR experiences. Facebook acquired Oculus for $1.9 billion two years ago. Facebook CEO Mark Zuckerberg announced the Oculus acquisition with a Facebook post , saying the technology goes far beyond being a system for gaming. “After games, we’re going to make Oculus a platform for many other experiences. Imagine enjoying a court-side seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face, just by putting on goggles in your home,” he wrote in the post. In a conference call when Facebook announced fourth-quarter earnings on Jan. 27, he said: “This Oculus launch is shaping up to be a big moment for the gaming community. Over the long-term, VR has the potential to change the way that we live, work and communicate as well.” As to the revenue contribution Oculus will make to Facebook’s bottom line, the company is downplaying that for now. “With Rift, it’s early in the evolution of VR,” Facebook CFO David Wehner said on the conference call. “It’s early to be talking about large volumes. So, at this point, I don’t think we’re giving a lot of color around supply chain and that sort of thing. It’s not going to be material to our financials this year.” The arrival of Rift could have a big benefit for chipmaker and computer game-card maker Nvidia ( NVDA ), as the demand for virtual reality accelerates. Nvidia provides the graphic processors needed in computers for Oculus Rift performance and that of other VR systems. The virtual reality field is expected to be intensely competitive, with a host of companies jumping into the game. Samsung has already shipped its Gear VR. Sony ( SNE ) is releasing a PlayStation VR system later this year, which will have a $400 price tag. Sony VR will have the benefit of leveraging its installed base of 30 million PlayStation 4 users. Also coming is the Vive VR system from Taiwan-based HTC, in joint development with U.S. game developer Valve. The HTC VR headset will begin shipping on April 5. Likewise, Microsoft is working on its “HoloLens” technology.

Accenture Rides Clients’ Disruption Avoidance; Stock Rides New High

Shares of Accenture, the tech outsourcing and consulting company, jumped to a record high Thursday after the company reported a 24% improvement in fiscal second-quarter earnings, well beyond what Wall Street expected. It also beat revenue estimates. The company also raised its earnings guidance for the fiscal year ending in August. The improvements are driven by the digital transformation of Accenture’s customers and their fear of disruption, according to the CEO. Accenture ( ACN ) stock was up 5.5% in afternoon trading in the stock market today , above 113 and up more than 20% from a seven-month low of 93.35 hit on Feb. 9, in the depths of the infamous Software Sag of 2016. Rivals IBM ( IBM ) and Cognizant Technology Solutions ( CTSH ) were each up more than 1.7% Thursday afternoon, and India tech outsourcer Infosys ( INFY ) was up nearly 1%. Dublin-based Accenture said adjusted EPS reached $1.34 after removing income taxes and the gain on the sale of Navitaire, vs. $1.08 a year ago, on revenue up 6% to $7.9 billion. Analysts polled by Thomson Reuters expected EPS of $1.18 minus items for the quarter ended Feb. 29 on revenue of $7.72 billion. “We are benefiting from the focused investments we are making to rotate our business to new, high-growth areas where our capabilities are clearly resonating with the needs of our clients and differentiating us in the marketplace,” said Accenture CEO Pierre Nanterme in the earnings release. “At the same time, we continue to manage Accenture with discipline to further enhance our competitiveness. We remain very well-positioned to continue driving profitable growth and delivering value for our clients and shareholders.” Accenture CEO: Economic Environment Sluggish In the company’s earnings conference call with analysts, Nanterme, echoing his remarks in October, said, “The overall economic environment is sluggish, to say the least … unstable, risky, extraordinarily complex.” He said he is “not noticing” much change in the sources of revenue from his customers, but “it’s all about digitalization. … All the leaders in all the industries are subject to disruption. That’s the new factor in town. It’s about not being disrupted … . I see this cycle is here for quite a while. They have to invest (into) rationalization of the operations, IT efficiency … across the board … (which) is driving our business.” The company guided the current Q3 revenue to $8.1 billion to $8.35 billion, up 7% to 10% in local currency after assuming a 2.5% foreign exchange impact, compared with $8.275 billion a year ago. The midpoint is slightly above analyst views. The company didn’t project Q3 earnings, but analysts expect EPS ex items of $1.42, up 9%. Accenture raised its fiscal year earnings guidance to $5.21 to $5.32 per share excluding the after-tax impact of the gain on the sale of Navitaire vs. its earlier guidance of $5.09 to $5.24. Analysts were modeling $5.22, up 8.3% from $4.82 in fiscal 2015. At the new $5.265 midpoint, the fresh guidance represents a 9.2% gain for adjusted EPS. Accenture said sales for its communications, media and technology unit rose 6% to $1.61 billion; financial services also rose 6%, to $1.59 billion; health and public services rose 12% to $1.48 billion; and products rose 8% to $1.85 billion. But resources, which include the struggling energy industry, fell 3% to $1.21 billion. North America sales rose 11% to $3.41 billion, while Europe rose 5% growth to $2.78 billion and growth markets slowed 4% to $1.37 billion. The company declared a semiannual cash dividend of $1.10 per share. In Q2 it repurchased or redeemed 8.1 million shares for $829 million, bringing the total spent on repurchases to $1.49 billion for the year. With an IBD Composite Rating of 82, Accenture is one of the better performers in IBD’s Computer-Tech Services industry group, among the top 18% of all stocks on a variety of metrics, including earnings and sales growth and stock performance. The biggest company in the group, IBM, rates a 55 CR. Infosys has an 87 CR and Cognizant an 84. Image provided by Shutterstock .

The Dynamic Duo Of Risk Factors: Part I

The value and momentum factors have earned high praise in recent years as complementary sources of risk premia for designing and managing equity portfolios. AQR’s widely cited paper “Value and Momentum Everywhere” a few years back helped popularize the idea, pointing to applications in equities and beyond. There’s no shortage of support from the wider world of investment management. Earlier this week, for instance, Jack Vogel at Alpha Architect outlined “Why Investors Should Combine Value and Momentum.” Not surprisingly, there are several investment funds focused on the strategy, including the recently launched Cambria Value and Momentum ETF ( VAMO ). The rationale for a value-momentum mix can be summarized by reviewing the historical results. Consider rolling five-year annualized returns (a time window used in AQR’s paper), which captures a fair amount of mean reversion. The chart below hints at the possibilities from a portfolio-design perspective. Using the risk premia numbers via Professor Ken French’s data library suggests that value and momentum do in fact exhibit a fair amount zigging when the other factor’s zagging. The correlation between the two sets of rolling 5-year returns since the early 1930s is moderately negative – roughly -0.24 (based on monthly returns). That tells us that no one will confuse one risk premium for the other. But how does correlation stack up over shorter periods? From a practical perspective, the results over, say, five years offer more insight into the potential for tapping into the value-momentum dynamic. As the next chart shows, the relationship is far from static. Indeed, the rolling five-year correlations ebb and flow through time by more than a trivial degree. The implication: a dynamic system for managing risk with these factors may be superior to buying and holding. Sometimes, and perhaps for several years at a stretch, these two risk factors generate similar returns. During those times, you’ll probably read stories proclaiming the “Death of Diversification For Value and Momentum Strategies.” But if history’s a guide, the tight correlation will only be temporary. There’s nothing magical about rolling five-year windows, of course. A serious research project would review multiple rolling periods by running the numbers through a battery of risk analytics. But the preliminary, if inconclusive, profile above implies that looking at the equity market (and other asset classes) through a value-momentum prism has intriguing possibilities. One question that comes to mind: How does a value-momentum strategy fare as a buy-and-hold proposition (with naïve year-end rebalancing) vs. a tactical asset allocation application? How much improvement, if any, should we expect with a dynamic system? In an upcoming post, I’ll explore this question with a back-test and review the results by adjusting for risk. Several researchers have already run similar tests and produced encouraging results. Let’s see if we can replicate the data. The literature suggests that’s likely. But the devil’s in the details. There are several ways to define “value” and “momentum” and there’s a rainbow of possibilities for implementing tactical strategies. Therein lies the potential for success… or failure. But it’s always best to start with a simple model. If there’s truly an opportunity for enhancing a buy-and-hold version of a value-momentum strategy, the evidence should be clear in a basic tactical model.