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CyrusOne Hits All-Time High As Data Center Stocks Advance

CyrusOne ( CONE ) stock hit an all-time high on the heels of Tuesday’s investor day, where the data center operator outlined goals to double the company’s revenue by 2020. Cloud computing and corporate outsourcing of IT infrastructure has increased demand for data center space. Data center operators — including DuPont Fabros Technology ( DFT ), Digital Realty Trust ( DLR ) and CoreSite Realty ( COR ) — are among the top performers in IBD’s Finance-Property REIT group. It’s ranked No. 46 out of 197 industry groups that IBD tracks. Many data center operators are real estate investment trusts. Apple ( AAPL ), Microsoft ( MSFT ), Facebook ( FB ) and Salesforce.com ( CRM ) are among tech companies expanding data centers. Data center operators provide space, power and cooling. Customers pack the warehouse-sized data centers with their own computer servers and other gear. The data center market has been divided among wholesale providers — such as Digital Realty   and DuPont Fabros — and retail operators such as Equinix ( EQIX ), though some lines are blurring. CyrusOne stock was up a fraction in midday trading in the stock market today , above 42, but earlier rose nearly 5% to 43.42, its record high. Shares have gained nearly 13% in 2016. At its investor day event, CyrusOne said that it aims to double its enterprise value from around $4 billion to $8 billion by 2020, said Colby Synesael, an analyst at Cowen & Co., in a research report. “The company plans to achieve this goal by doubling its revenue, EBITDA and normalized FFO from 2016 to 2020 while being prudent to maintain (debt) leverage at 4.5 times or less, so that it can achieve an investment grade credit rating over that period,” added Synesael. REITs use a cash flow metric called funds from operations, or FFO. DuPont Fabros stock has shot up more than 25% this year, while CoreSite has gained about 20%. Digital Realty is up 15%. Equinix, part of IBD’s Internet-Infrastructure Solutions group, has gained 5%. Capital spending has been rising at data center operators. DuPont Fabros, aiming to raise $275 million, announced a stock offering on March 17. “New leasing volume suggests that demand remains robust and should support DFT’s growth plans with low leverage,” said Barclays analyst Ross Smotrich in a report. “However, the trade-off is that DFT had made it abundantly clear at their November 2015 investor day that their growth strategy would not include new equity. When future capital needs arise, therefore, investors may anticipate an equity raise.” Image provided by Shutterstock .

Yahoo Digital Ad Dollars To Drop In 2016, As Facebook, Google Grow

Yahoo ( YHOO ) will see a major drop in its digital ad revenue this year, even as rivals Facebook ( FB ) and Alphabet ( GOOGL ) unit Google watch their share grow, according to eMarketer’s latest ad spending forecast, released Wednesday. Yahoo’s worldwide net digital ad revenues will fall nearly 14% to $2.83 billion this year. That will cut Yahoo’s share of the overall digital ad market to 1.5% from 2.1% last year, eMarketer said. Both search and display ad revenue for Yahoo will drop by double-digit percentages in 2016, says the forecast. The Web portal’s display business will shrink to $1.41 billion, down 15.1% year over year, while its search business will decline 12.7% to $1.41 billion. Google, which dominates the global digital ad market, will see its net ad revenue rise 9% this year, while Facebook’s net ad revenue will jump 31%, says the report. “As Yahoo trims down its legacy business to focus on its so-called ‘Mavens’ (mobile, video, native ads and social businesses), we expect the company to shrink in size relative to its competitors,” said eMarketer analyst Martin Utreras. “A leaner Yahoo, more focused on its core growing segments, will still face stiff competition in an ever more crowded and sophisticated market.” The one area of growth for Yahoo is mobile, said eMarketer. Worldwide, Yahoo’s mobile ad business will grow 24.5% this year to $1.31 billion. Yet with rivals Google and Facebook poised to grow by even larger percentages, Yahoo’s share of the mobile market will shrink to 1.3% from 1.5%. Besides Facebook and Alphabet, Sunnyvale, Calif.-based Yahoo faced ad competition from companies such as  Netflix ( NFLX ), Snapchat and Pinterest. Yahoo CEO Marissa Mayer is under fire from investors who are inpatient for profits and want to oust her from her job. The company has hired three investment banking firms to evaluate potential bids for the sale of its core Internet operations. The company has said it is looking at its strategic options and has been cutting costs, including laying off 15% of its staff and closing several offices overseas. Mayer’s turnaround plan for the company includes continued investment in “Mavens.” Rosenblatt Securities said on Monday that Yahoo could be facing a “take-under” — a buyout price lower than market value — from any of a number of private equity firms that might then dismantle the company. Much of Yahoo’s value comes from its holdings in China e-commerce giant Alibaba Group ( BABA ). Yahoo stock has fallen nearly 25% over the past year amid concerns about the company’s poor financial showing and its future prospects for growth. Yahoo stock, which touched a three-month high above 36 on Tuesday, was down 1.5% in midday trading in the stock market today , below 35.

‘India The Next China’ For Apple, Says UBS, And iPhone SE Will Help

“India is the next China for Apple ( AAPL ),” says a UBS analyst, who forecasts that the new iPhone SE will help Apple gain market share, albeit still at the high end, in India. Apple has priced the 4-inch iPhone SE starting at $399, about $100 less than expected. But that’s still a high price-tag for most consumers in India, says UBS analyst  Steven Milunovich in a research report. “Some people in developed countries prefer the one-handed 4-inch format, while the lower price attracts emerging-market owners,” wrote Milunovich. “India is the next China for Apple — while the SE price point is high for India, at least it buys new technology now.” The iPhone SE is an update to the 2.5-year-old iPhone 5S. It features upgraded internal components such as an A9 processor and a 12-megapixel camera. Citigroup analyst Jim Suva also says the iPhone SE will boost Apple’s share in India. “Apple currently has 2% share in India for calendar year 2015, and we believe if the company were to increase its market share to be similar to that in China (around 13%) this would increase iPhone units by 15-20 million units,” Suva said in a report. Apple has been investing in India throughout 2015, with a development center in Hyderabad and licenses to launch its own stores in the country. “With the iPhone SE, Apple will not really disrupt the Indian smartphone market but rather try to dominate high-end sales — 77% of smartphone sales in India in 2016 will be below $200,” said Ronan de Renesse, an analyst at U.K.-based Ovum, in a report. China’s slowing economy is a worry for its local smartphone makers as well as Apple. Apple’s December-quarter sales in China rose only 14% from the year-earlier quarter, down from 99% growth the preceding quarter. Xiaomi was the top smartphone seller in China in Q4, with 15% market share, followed closely by Huawei, with Apple in third place.