Tag Archives: nflx

Facebook Net Neutrality Set Back, Verizon Tests Regulatory Waters

In a closely-watched test case of net neutrality rules in emerging markets, India’s telecom regulators dealt Facebook ( FB ) a blow on Monday, deciding that wireless service providers may not engage in deals that subsidize content as part of free mobile-data programs. The decision from the Telecom Regulatory Authority of India (TRAI) impacts Facebook’s “Free Basics,” which provides mobile users free access to a text-only version of the social network firm’s Web content. India’s wireless firms have six months to phase out data plans that charge different rates for Web access, depending on the content. Facebook said in a statement that it’s “disappointed with the outcome.” In the U.S., the Federal Communications Commission last year extended net neutrality rules to wireless networks for the first time. Internet service providers are challenging the FCC’s rules in federal court. A court decision is expected in April. Net neutrality rules bar ISPs from throttling, blocking or prioritizing Web traffic. Verizon Communications ( VZ ) on Friday said that videos on its new Go90 mobile service will not count against data plans for its postpaid wireless subscribers. Verizon’s move “highlights how mobile video has become the new frontline in wireless competition and could hasten the convergence of the cable and wireless industries,” said UBS analyst John Hodulik in a research report published on Monday. “The FCC will surely look hard at this strategy,” he added. Verizon also recently launched its FreeBee sponsored-data program. Under the FreeBee business model,  companies would pay Verizon a fee so that users of their wireless apps could access Web content without their data consumption counting toward monthly limits. Verizon’s introduction of the FreeBee service follows a  T-Mobile US ( TMUS ) rollout of the “Binge On” video streaming service. Binge On exempts apps such as  Netflix ( NFLX ) and  Time Warner ‘s ( TWX ) HBO from monthly data caps. T-Mobile’s Binge On, however, does not involve payments from content companies to T-Mobile. With FreeBee, content companies pay for their traffic to be exempted from monthly data limits.

Redbox Faces Hit From Accelerating Shift To Streaming Video

Automated retail kiosk operator Outerwall ( OUTR ) late Thursday beat lowered expectations for the December quarter. But shares of the Bellevue, Wash.-based company fell Friday as the firm’s guidance pointed to a rough year ahead for its Redbox DVD rental business. Outerwall stock was down 15% in midday trading, below 28, on the stock market today . It had fallen as much as 24% earning and is at its lowest level in six years. Piper Jaffray analyst Michael Olson on Friday threw in the towel on Outerwall stock, lowering his rating to neutral from overweight and slashing his price target on the stock to 32 from 57. “Redbox faces secular headwinds, and while we do not expect a ‘fall off a cliff’ scenario, we believe the trend is accelerating and will continue to drive year-over-year revenue and EPS decline,” Olson said in a report. Redbox competes with streaming video services like Amazon.com ( AMZN ), Hulu and Netflix ( NFLX ). Olson is modeling for a 26% year-over-year decline in rentals per Redbox kiosk in the first quarter and a 17% decline for all of 2016. Outerwall reported Q4 EPS of $1.43 on sales of $527.2 million, ahead of previously lowered guidance and above the Street view of 64 cents on $512.3 million. But the company’s outlook for 2016 is materially below consensus. Outerwall anticipates 2016 EPS of $5 to $6.30 vs. the Street’s estimate of $7.14. Outerwall CEO Erik Prusch remained upbeat about Redbox, which provided 77% of revenue in Q4, despite acknowledging ongoing secular declines in the market. “Redbox is a compelling business, providing new movie releases to millions of loyal consumers at a great value,” he said in a statement . “We will manage the business for profitability and cash flow, and we will continue our focus on expense management, operational efficiencies and network optimization.” Prusch said he sees a long life for the DVD rental business. “We are confident that millions of consumers will continue renting from Redbox for many years to come, as a majority of our customers use Redbox to complement digital alternatives,” Prusch said. Outerwall also operates Coinstar coin-redemption kiosks and ecoATM used-electronics-purchasing kiosks. Redbox generated 135.8 million rentals in the fourth quarter, down 24% from the same quarter a year earlier. In 2016, Outerwall expects to reduce its number of Redbox kiosks by 1,000-2,000. It ended 2015 with 40,480 Redbox kiosks, compared with 42,280 at the end of 2014. Dougherty analyst Steven Frankel reiterated his neutral rating on Outerwall in a report Thursday. “While share repurchases and other forms of financial engineering are helping the EPS line, the secular decline in DVD demand and execution issues at Redbox are creating significant challenges,” Frankel said. “Until we see signs of stability at Redbox, we view Outerwall as the classic value trap.” However, Wedbush analyst Michael Pachter believes Outerwall can wring more profit out of its operations. In a note Thursday, he maintained his outperform rating on the stock but cut his price target to 40 from 59.

Yahoo Lacks ‘Growth Pulse,’ Stock Down On Latest Turnaround Plan

Yahoo ( YHOO ) outlined a new turnaround strategy late Tuesday along with a Q4 revenue beat, but the beleaguered Web portal’s new plan “sounds a lot like the old plans,” according to Pacific Crest Securities analyst Evan Wilson, who lowered his 2016 revenue and earnings estimates for the company. “Yahoo beat Q4 estimates but is still struggling for organic growth,” wrote Wilson in an industry note. He said that Yahoo’s new  plan “looks more dire than the previous plan.” Yahoo CEO Marissa Mayer said that the plan includes a new round of job cuts and a possible reverse spinoff of the core business. And, she said, “The board will also engage with other qualified strategic proposals.” Analysts say that Yahoo’s latest plan essentially puts the company on the sales block. “After 10 reported layoffs, countless plans and CEO after CEO, it is hard to blame management or the strategy,” wrote Wilson. “The core search and display assets are limited by scale and data, and we do not see a way out of it save for linking with a platform that is not so limited.” Yahoo stock closed down 4.8% at 27.68 on the stock market today . Earlier in the day, Yahoo slid to 26.57, its lowest point since September 2013. Yahoo stock is down 38% over the past 12 months. Yahoo stock got at least six price-target cuts from investment banks Wednesday. Rosenblatt Securities analyst Martin Pyykkonen downgraded it to sell from neutral, saying that he couldn’t find “a growth pulse” on Yahoo stock, as advertising dollars increasingly slip away to rivals. “ Facebook ( FB ), Alphabet ( GOOGL ), Netflix ( NFLX ), etc. are obvious, but there are also a vast number of smaller properties taking usage and traffic away from Yahoo and its properties,” Pyykkonen said. Nomura analyst Anthony DiClemente said that while Yahoo’s core business was “modestly higher” in Q4, the company’s guidance for Q1 and 2016 missed his expectations. “We were discouraged by Q1 guidance, which suggests 13% margins; guidance for Q1 implies net revenue and EBITDA (earnings before interest, taxes, depreciation and amortization) declines of 19% and 53% year over year, respectively,” said DiClemente. Nomura lowered its target price on Yahoo stock to 34 from 40, adjusting for recent changes in the valuation of Yahoo’s holdings in China e-commerce giant Alibaba Group ( BABA ). Yahoo owns a 15% stake in Alibaba, about 385 million shares. After an initial plan to spin off its Alibaba shares, Yahoo reversed course following tax concerns. On Tuesday, Yahoo indicated that a reverse spinoff of its stake in Alibaba still remains a possibility. But Yahoo will close its offices in Dubai, Mexico City, Buenos Aires, Madrid and Milan. Alibaba stock was down 3%, near 63, in midday trading Wednesday, and its shares are down more than 30% in the past 12 months. Along with its Q4 earnings, Yahoo announced that it will cut 15% of its workforce — roughly 1,600 jobs — and look to sell non-core divisions and assets, such as patents and real estate, as part of a strategic plan to return the company to what it forecasts as modest though accelerating growth in 2017 and 2018. The company’s turnaround plan includes continued investment in what the company calls “Mavens,” Mayer said. Mavens refers to Yahoo’s mobile, video, native and social businesses, where its ad revenue is growing. Mayer said that Yahoo’s consumer products division will consist of three global platforms — Search, Mail and Tumblr — and that it will focus on four vertical markets: news, sports, finance and lifestyle. Yahoo said that Q4 earnings excluding items plunged 57% from the year-earlier quarter to 13 cents a share, meeting the views of FactSet and analysts polled by Thomson Reuters. Yahoo said that revenue minus traffic acquisition costs — what the company pays other sites to carry its ads — fell 15% to $1.002 billion. Still, it that beat FactSet’s $948.2 million forecast. Yahoo added that its total revenue in Q4 rose 1.6% to $1.27 billion, where Thomson Reuters had expected $1.19 billion. For Q1, Yahoo is guiding GAAP revenue at $1.005 billion to $1.09 billion, down 17.9% to down 11%.