Category Archives: stocks

Verizon May Now Be Front-Runner For Yahoo, As Comcast, Google Bail

Verizon ( VZ ) is the front-runner for Yahoo ( YHOO ), now that several rumored bidders including Alphabet ( GOOGL ) unit Google and Comcast ( CMCSA ) have dropped out, the Wall Street Journal reported on Sunday . Yahoo reportedly sent a letter to possible buyers last month, asking them to submit preliminary bids, which are said to be due today. Some buyers might be interested in all or part of Yahoo’s core Web business, while others might want Yahoo’s stakes in Alibaba Group ( BABA ) or Yahoo Japan. Some reports estimate that as many as 40 groups have expressed interest in the wilting Sunnyvale, Calif.-based Web portal. Royalties from Yahoo Japan, thousands of patents and plentiful real estate could boost Yahoo’s bids, wrote SunTrust Robinson Humphrey analyst Robert Peck in a recent research report. Minus a “potential upside” from those assets, SunTrust expects Yahoo to fetch bids in the $6 billion-$8 billion range for its core business. Yahoo has not commented. Yahoo rose 1 cent to 36.52 in the stock market today  Yahoo stock has sunk about 20% on growth concerns, compared to where it was trading this time last year. Verizon stock rose 0.7% to 51.73. AT&T ( T ), IAC/InteractiveCorp ( IAC ) and Time ( TIME ) have also decided not to join the bidding for Yahoo and its core assets, the WSJ said. Yahoo’s core assets include a 15% stake in China e-commerce giant Alibaba and holdings in Yahoo Japan. Time concluded it would be too hard to revive Yahoo’s finances, the WSJ said. Most of Yahoo’s value comes from its 15% stake in Alibaba. Yahoo’s market cap is $34.5 billion. Verizon was likely to face competition from private equity companies, including Bain Capital, Advent International and TPG, according to the WSJ report. YP Holdings, formed in 2012 from AT&T’s Yellow Pages, planned to bid for Yahoo, Bloomberg said. PE firm Cerberus Capital Management owns 53% and AT&T 47%. Verizon, with a market cap of $210 billion and about $4.5 billion in cash on its balance sheet, has the means to purchase Yahoo’s declining Web assets and a logical blueprint for folding them into its fledgling digital media business. Those include AOL properties it acquired last year for $4.4 billion, according to the WSJ report. Verizon has identified video services and online advertising to be the company’s next avenue for growth. It plans to combine customer data from smartphones with advertising inventory on AOL — and possibly Yahoo — to create an online advertising technology platform that can compete with Web giants such as Facebook ( FB ) and Alphabet-owned Google. “Verizon is trying to pivot its business from analog to digital,” Craig Moffett, senior analyst at telecommunications-research firm MoffettNathanson, told the WSJ. “Verizon believes that a combined AOL/Yahoo would provide the digital advertising platform they need to execute their video reinvention strategy.” Either way, news site Re/Code said that documents Yahoo provided to potential bidders predict that Yahoo’s 2016 revenue will drop by close to 15% and its earnings by more than 20%. Yahoo CEO Marissa Mayer has been unable to spark significant earnings and revenue growth since she came aboard in 2012, as Yahoo has struggled to build online- and mobile-ad revenue vs. rivals Google , Facebook and others. Yahoo is set to report Q1 earnings after the close Tuesday. Analysts polled by Thomson Reuters expect Yahoo’s Q1 revenue to fall 12% year over year to $1.08 billion. Yahoo is guiding Q1 revenue at $1.05 billion to $1.09 billion, down 14% to 11%. FactSet expects Yahoo to report revenue ex-TAC of $847 million, down 18%. TAC, or traffic acquisition costs, refer to fees Yahoo pays other sites to carry its ads. Yahoo TAC spending has climbed during each quarter of 2015. The analyst consensus calls for Yahoo’s EPS ex items to plunge 53% to 7 cents.

Netflix, Delta Air Follow Apple In Undercutting This Key Support Area

Netflix ( NFLX ) and Delta Air Lines ( DAL ) are among the big-name companies that undercut their 200-day moving averages Monday, following on the heels of  Apple ( AAPL ). Los Gatos, Calif.-based Netflix fell 2.8% to 108.40 on the stock market today , closing above its 200-day line after falling as low as 106.02 intraday. Netflix moved above the support/resistance level last week. But shares crashed late Monday after Netflix beat Q1 earnings estimates but gave weak Q2 subscriber growth targets. The streaming video giant  faces stepped-up competition with Amazon.com ( AMZN ), which is now offering its Amazon Prime Video as a stand-alone service for $8.99 per month, $1 cheaper than Netflix’s standard streaming plan. Amazon, which reports Q1 results on April 28, broke out of a cup-with-handle formation last week, rising more than 6% in the process. Amazon rose 1.5% Monday. Delta Air Lines fell below its 50- and 200-day moving lines Monday, losing 2%, while most other carriers’ stocks were little changed. The Atlanta-based airline last week reported strong Q1 earnings, boosted by cheaper jet fuel, but revenue slipped 1% as passengers paid slightly less for each mile they flew. Meanwhile, Apple stock fell 2.2%, falling further below its 200-day line after falling below that area on Friday. A research note from Pacific Crest Securities found that consumers prefer data-collecting gadgets such as Fitbit ( FIT ) opposed to more complex wearables such as the Apple Watch. Fitbit sold 21 million units last year compared to the 10 million Apple Watches sold, Pacific Crest Securities said. IBD’s Take: How does Apple stock rate? Objective analysis at IBD Stock Checkup Finally, keep an eye on social networking giant Facebook ( FB ). Facebook stock rose fractionally Monday as continues to find support at its 50-day moving average. Facebook is well above its 200-day line but has lost sight of a buy point at 117.09.

Netflix Seen Posting Worst Earnings In Over 3 Years

With Netflix ( NFLX ) investing heavily in its global expansion, Wall Street is expecting the Internet TV service to report its lowest earnings per share in over three years when it posts first-quarter results after the close Monday. Analysts polled by Thomson Reuters expect Netflix to earn 3 cents a share in Q1, down 40% from the year-earlier quarter. That would be the company’s lowest EPS total since the fourth quarter of 2012, when it reported 2 cents in earnings per share. Netflix sales are seen rising 25% to $1.965 billion in the March quarter when it completed its international expansion, excluding China. Analysts don’t see EPS growth returning at Netflix until the fourth quarter. For the next several quarters, the focus of investors will be on subscriber growth and whether Netflix can continue to add new customers at a quick pace. In the December quarter, Netflix added 5.59 million new streaming subscribers, bringing its total to 74.76 million subscribers worldwide. Netflix added 1.56 million U.S. streaming subscribers and 4.04 million international subscribers in Q4. For the March quarter, Netflix forecast 6.1 million new streaming subscribers for a global total of 80.86 million. The Los Gatos, Calif.-based company is targeting 1.75 million new U.S. streaming subscribers and 4.35 million new international subscribers. RBC Capital Markets analyst Mark Mahaney on Friday reiterated his outperform rating on Netflix stock with a price target of 140. “Based on intra-quarter data points, our proprietary survey work, and our model sensitivity work, we believe Street revenue/EPS estimates for Q1 are reasonable,” Mahaney said in a research report. “For the Q2 guide, we believe the Street’s outlook for roughly 600,000 domestic subscriber adds may be slightly aggressive, given uncertainty over pending price increases. But we view the Street’s international subscriber adds outlook of 2.9 million for Q2 as realistic.” Netflix stock tumbled to as low as 106.02 on the stock market today , briefly undercutting its 200-day moving average . Ahead of the closing bell shares were down more than 2% near 109. On Sunday, Amazon ( AMZN ) began offering Amazon Prime Video as a standalone service, for $8.99 a month, a dollar less than Netflix’s basic streaming offering. Amazon stock rose 1.5%, extending its recent breakout. Some Analysts Skeptical Of Netflix’s Prospects Other analysts are more cautious ahead of Netflix’s Q1 earnings release. In a report Friday, Mizuho Securities analyst Neil Doshi maintained his neutral rating on Netflix with price target of 120. While expectations are generally positive ahead of Netflix’s Q1 report, Doshi is concerned about the company’s continued free cash flow losses and whether it can successfully scale local original content in new international markets. FBR analyst Barton Crockett maintained his market perform rating and price target of 100. Netflix’s Q1 report “is likely to feature healthy but decelerating subscriber growth in the U.S. and a record level of growth internationally, powered by new country launches and very robust growth in Latin America,” Crockett said in a report Friday. However, Netflix’s growth appears to be plateauing in developed markets where Netflix has been available for some time, such as the U.S., U.K. and Canada, he said. “We suspect that similar maturity will arrive over the next couple of years in other developed country markets,” Crockett said. “We also believe that some investors may be overly optimistic about the degree of flow-through in second-half 2016 from U.S. price hikes.” RELATED: Netflix Stock Surges Ahead Of Q1 Earnings Report Next Week Netflix Rate Hike To Be Key Test Of Its Pricing Power