Tag Archives: apple

Google Has Plenty Of Cash, Even If It Loses Android Battle To Oracle

The Oracle ( ORCL ) vs. Google copyright battle over the Android mobile operating system is slated to resume with a second trial on Monday. Oracle is seeking $8.8 billion in damages. But even if Alphabet ( GOOGL )-owned Google loses, it has deep pockets. Google reported $75.3 billion in cash , cash equivalents and marketable securities in its Q1 earnings release. Oracle claims Google violated its copyright on parts of the Java programming language when it created the Android OS, now used in mobile phones worldwide. Android’s chief competition is Apple’s iOS software, used in iPhones and other Apple devices. Unlike Apple ( AAPL ), Google has made Android open source and widely available to mobile phone makers, such as Samsung. Google says it should be able to use Java without paying a fee under the fair-use provision of copyright law. Oracle acquired Java when it purchased Java developer Sun Microsystems in 2010. The case previously went to trial in 2012, but a jury deadlocked. In the new trial, U.S. District Judge William Alsup has set time limits and has ruled on what evidence will be introduced . Oracle is also seeking an injunction against Google’s future use of Java in Android, which would give Oracle more leverage to negotiate an ongoing royalty, according to a Reuters report .

Drone Delay Bad Karma For GoPro; Stock Skids On Q1 Report

Action-camera maker GoPro ( GPRO ) took an ugly spill on Friday, a day after it reported mixed Q1 earnings results and postponed the launch of its flying-camera drone. GoPro shares tumbled more than 7%, below 10, in morning trading on the stock market today . GoPro stock started the year near 18. Investors have dumped GoPro shares in recent months on concerns that the company is a one-hit wonder that has largely saturated the market for its wearable cameras. In the March quarter, San Mateo, Calif.-based GoPro lost 63 cents a share, compared with earnings per share of 24 cents in the year-earlier period. Sales fell 49%, $183.5 million. Analysts polled by Thomson Reuters expected GoPro to lose 60 cents a share on sales of $169.1 million. GoPro pushed back the launch of its Karma drone by about six months to the holiday season from the end of Q2. GoPro needs Karma to be a hit, Dougherty analyst Charles Anderson said in a research report Friday. “It is incumbent upon GoPro to release a great drone, not merely a good one, considering how strong the competition is,” Anderson said. “So if they need more time to work on it, we endorse the idea.” Anderson rates GoPro stock as neutral. “Until investors can judge the commercial appeal of Karma and the forthcoming Hero 5 camera, we don’t see any upside or downside catalysts for the stock,” he said. GoPro is preparing to launch a consumer drone at a time when current vendors, such as DJI, Parrot and 3DR, are cutting prices, Piper Jaffray analyst Erinn Murphy said in a report Friday. She rates GoPro stock as underweight. “Pricing has slipped from the $700-$900 range to the $400-$600 range, and we are continuing to see promotional activity accelerate in the space,” Murphy said. “GoPro will be releasing its drone at a time where the consumer has not only seen growing options of drones, but following what amounted to be an increasing promotional environment for the category since last holiday.” GoPro Promises Drone With ‘Revolutionary Features’ On the company’s earnings conference call with analysts late Thursday, GoPro CEO Nick Woodman said Karma will have “revolutionary features” not found on other drones currently on the market. “Karma includes revolutionary features that differentiate it from other drones — features that make it much more than a drone and deliver the versatility, value and performance that consumers expect from GoPro,” Woodman said. “To give ourselves more time to fine-tune these features, we have made the difficult decision to push Karma’s launch to the holidays.” Wedbush analyst Michael Pachter remained positive on GoPro’s longer-term prospects. He reiterated his outperform rating on GoPro stock, with a 12-month price target of 13. “After a series of high-profile missteps, including the disastrous Hero 4 Session launch, the lack of new Hero cameras at year-end, and a negative pre-announcement in January, 2016 presents an inflection point for GoPro stock,” Pachter said. “Given its history of innovation, we are willing to give GoPro the benefit of the doubt for the time being, and see upside if the Karma drone and the Hero 5 are well-received. “However, the delay of the Karma launch suggests delayed gratification for investors, and we do not expect investors to return to GoPro stock until there is greater visibility into the company’s product launches.” GoPro maintained its full-year revenue guidance, but might be too optimistic, Pachter said. “In order to hit the high end of its guidance, GoPro would have to have wild success with its next motion-capture devices, and the Q4 Karma launch would have to drive all-time record quarterly sales,” Pachter said. “While we think that these outcomes are possible, we are reluctant to remain Pollyannaish about GoPro’s prospects.” GoPro expects full-year sales of $1.35 billion to $1.5 billion, or $1.43 billion at the midpoint. Wall Street had been modeling full-year sales at $1.37 billion. In 2015, GoPro posted sales of $1.62 billion. Shares of Ambarella ( AMBA ), which makes image processing chips for GoPro cameras, were flat, near 38, in morning trading Friday. RELATED: GoPro Adds Developer Program After Snatching Apple Designer

Google Mobile Search A Moneymaker, But Ad-Cost Hurdles Remain

Google is making more money from mobile search, as Yahoo ( YHOO ) and Microsoft ( MSFT ) ad platforms falter. But it’s not all gravy, as parent Alphabet ’s ( GOOGL ) Q1 earnings attest. The good news is that clicks on Google’s mobile search ads are rising fast. Mobile rose from 44% of all Google clicks in Q2 2015 to 57% in Q1 2016, says digital marketing firm Merkle. But mobile ad clicks continue to pay less than desktop ad clicks because consumers buy less often on smartphones. Google’s average cost of a click on one of its ads fell 9% in Q1 vs. Q1 2015. Lower-priced mobile clicks were a big factor. Google aims to drive mobile cost-per-clicks (CPCs) higher with new ad technology. There’s also the matter of traffic acquisition costs (TAC). That’s where Apple ( AAPL ) may or may not come in. Google’s overall TAC — what it pays partner websites, both desktop and mobile, in fees for carrying its ads — rose 13% in Q1, to $3.8 billion. Higher TAC shrunk Alphabet’s earnings, which missed Wall Street estimates. More alarming to analysts was that TAC paid to “distribution partners” jumped 33% to $1.22 billion. Google’s search engine is the default on most mobile devices, and it’s the default search engine for Apple’s Safari browser. There’s been speculation over whether Apple and Google will renew the Safari contract. To some analysts, the 33% jump in “distribution partner” TAC was a red flag. On the company’s Q1 earnings call last month, Alphabet CFO Ruth Porat attributed the TAC hike to general mobile trends and new advertising technology — and not to any one major contract renewal. Mobile TAC is higher than desktop TAC, Porat said. But analysts wonder. “I certainly can’t rule out a higher Safari TAC rate tied to a renewal,” Mark Ballard, senior research director at Merkle, told IBD. “There are so many moving pieces here, and Google and Apple have been very tight-lipped about their dealings over the years. “It very well could be a combination of higher Safari traffic share and TAC rate. (But) Google has made some moves in the past few quarters to significantly ramp up the monetization of its mobile results. This additional revenue may be coming at a higher TAC.” Google Ad Contracts ‘Have Potentially Changed’ Ballard notes that Google in late 2015 added a third ad atop mobile-search results. Growing use of product listing ads (PLAs) in mobile phone search results may be another factor. Google’s Q2 earnings in July could provide more evidence either way. “We think the terms of (Google’s) contracts have potentially changed and could be another driving factor of the growing TAC,” Evan Wilson, a Pacific Crest analyst, said in a research report. “At this point, we’ve modeled (TAC) increases to be gradual and not a significant new headwind. “We’re going to keep a close eye on news of a potential new Apple deal, as this would be a primary suspect to further fuel this dynamic.” The big picture, though, is that if TAC rises sharply, it would be a problem for Google’s profitability, whether or not Apple is directly involved. At RBC Capital, analyst Mark Mahaney wrote in a research note: “We view the Q1 TAC trends as one of the clear negatives of the quarter. That 8.5% TAC rate for Google Sites is a material step up. We wonder whether a renegotiated Apple contract had anything to do with this. (But) we are modeling modest growth in TAC going forward.” Documents released in January in the ongoing Google- Oracle ( ORCL ) court battle revealed that Google paid Apple $1 billion in 2014 to make its search engine No. 1 on Safari. TAC payments, though, are separate, analysts say. Goldman Sachs, in a 2015 research report, estimated that 75% of Google’s mobile search revenue came from iOS users (iPhone and tablet), and half of that was related to Safari. Goldman Sachs estimated that 65% of ad revenue went to Apple, while Google kept 35%.