Tag Archives: technology

Fortinet Crushes Q1 Model; Faces Palo Alto, Cisco With Platform Bet

Fortinet ( FTNT ) topped Wall Street’s Q1 views late Tuesday and threw down a platform gauntlet with a “Security Fabric” that could challenge Palo Alto Networks ( PANW ) and Cisco Systems ( CSCO ), a Dougherty analyst said Wednesday. In afternoon trading on the stock market today , Fortinet stock was up 7.5%, at a four-month high above 33. Shares of fellow cybersecurity firm Barracuda Networks ( CUDA ), meanwhile, were up 17%, at a three-month high near 18, after that company late Tuesday posted a fiscal Q4 and fiscal 2016 beat. But Summit Research analyst Srini Nandury says Barracuda has “too many moving parts” and won’t survive a mass small- and medium-business exodus to cloud products from the likes of Microsoft ( MSFT ) and Amazon.com ’s ( AMZN ) Amazon Web Services. Fortinet Tops On Service Revenue For Q1 ended March 31, Fortinet reported $284.6 million in sales and 12 cents earnings per share minus items, up a respective 34% and 50%, vs. the year-earlier quarter, and topping the consensus for $273.4 million and 9 cents. Billings flew 30% to $330.5 million, above Fortinet’s earlier guidance for $315 million to $322 million. Dougherty analyst Catharine Trebnick credited Fortinet’s sales beat to $160 million in service sales vs. expectations for $150.3 million. Billings from FortiSandbox, which offers advanced threat protection and virtual software, jumped 270% year over year. Bundling also helped drive outperformance, Trebnick wrote in a research report. Fortinet is pushing its “Security Fabric,” which attempts to holistically combine Fortinet’s products under “a single pane of glass.” “We believe this strategy could help incrementally improve margins and would generate more sticky revenue for the company from their SaaS components,” she wrote. “It remains to be seen whether they can outperform competitors such as Palo Alto Networks and Cisco Systems.” Trebnick boosted her price target on Fortinet stock to 40 from 38 and reiterated a buy rating. For Q2, Fortinet guided to sales of $301 million to $306 million, up 27% at the midpoint, and EPS ex items of 14 cents. Billings guidance for $365 million to $370 million would be up 24% at the midpoint. The consensus of 33 analysts polled by Thomson Reuters called for $300.8 million in sales and 15 cents EPS ex items. Barracuda SMB Customers ‘Hijacked’ Barracuda topped Wall Street’s billings and sales views for the first time in four quarters, William Blair analyst Jonathan Ho noted in a report. He reiterated his market perform rating on Barracuda stock, but questioned whether the company could survive the cloud transition. “The Barracuda story looks to have fundamentally changed, with the core value proposition of delivering IT solutions at low cost and complexity to SMB customers being hijacked by public cloud providers,” he wrote. For fiscal Q4 ended Feb. 29, Barracuda reported $83.7 million in sales and 15 cents EPS minus items, up a respective 16% and 114% vs. the year-earlier period, beating the consensus for $80.9 million and 8 cents. Billings were flat at $95.8 million. The company wrapped fiscal 2016 with $320.2 million in sales, 42 cents EPS minus items and $377.5 million in billings, up 15%, 50% and 4%, respectively. Sales and EPS flew past the consensus model of 16 analysts polled by Thomson Reuters for $317.3 million and 35 cents. But fiscal Q1 is expected to decelerate markedly on a year-over-year basis. For the current quarter, Barracuda guided to $83 million to $85 million in sales, 10-11 cents EPS minus items and $94 million to $96 million in billings, up 8%, 2% and 1%, respectively, at the midpoints.

Comcast Could Gain In China With DreamWorks Acquisition

Amid growing regulatory headwinds on the cable TV side of its business, Comcast ( CMCSA ) might again build up its content side by acquiring movie studio DreamWorks Animation ( DWA ). DreamWorks stock surged 17% in afternoon trading on the stock market today on multiple reports that Comcast is in talks to acquire the movie studio. Comcast did not comment on the DreamWorks speculation during its Q1 earnings conference call early Wednesday. Comcast posted Q1 earnings and revenue that topped views, as the cable TV firm added 53,000 video subscribers. Comcast owns NBCUniversal, where filmed entertainment revenue slipped 4.3% in Q1 vs. the year-earlier quarter, after surging 46% in 2015. Comcast is in talks to pay $3 billion or more for DreamWorks, according to reports in the Wall Street Journal and other media outlets. Aside from producing movies, DreamWorks has been creating original content for Web video streamers Netflix ( NFLX ) and Amazon.com ( AMZN ). DreamWorks owns AwesomenessTV, which develops shows for millennials, young adults ages 18 to 34. Verizon Communications ( VZ ) in early April acquired a 24.5% stake in AwesomenessTV for $159 million. One looming question is whether Verizon and its content partner Hearst hold rights to buy the remainder of AwesomenessTV if DreamWorks is sold to a competitor such as Comcast. “We have not made the terms of the agreements public,” a Verizon spokesperson told IBD. DreamWorks’ most popular movie franchises include “Shrek,” “Kung Fu Panda ” and “ How to Train Your Dragon.” There’s optimism, analysts say, for the upcoming “Despicable Me 3” and “The Secret Life of Pets.” DreamWorks has expanded into China, a key market for Comcast.  NBCU’s “Fast and Furious 7” movie last year grossed $400 million at the box office in China. Comcast, DreamWorks Both Building In China With Local Investors Comcast-NBCU is building a $3.3 billion theme park in Beijing with local investors. It’s slated to open in 2019. The Oriental DreamWorks movie studio, meanwhile, is building a new headquarters and entertainment center in Shanghai with local partners. While not commenting on interest in DreamWorks on Comcast’s Q1 earnings call, NBCU Chief Executive Steve Burke said that China “represents a big, big opportunity for the company.” “It already is a significant profit generator,” Burke added. “I think we’re doing all the things that you would expect us to do. (We) have a lot of big movies coming out in China in the next year and want to make sure that we’re doing everything we can to grow that market as aggressively as possible.” Comcast acquired NBCU from General Electric in 2011. For Q1, Comcast said cable TV revenue climbed 6.7% to $12.2 billion, while NBCU revenue rose 3.9% to $6.86 billion. NBCU’s theme park revenue jumped 57% to $1.02 billion. Comcast stock was up a fraction Wednesday afternoon, above 61, and it’s risen nearly 9% in 2016 despite facing regulatory headwinds. Cable TV firms have been squabbling with the Federal Communications Commission over broadband privacy issues as well as the agency’s plans to open up the set-top box market  to more competition. The Department of Justice on Monday cleared  Charter Communications ’ ( CHTR )  purchase of Time Warner Cable ( TWC ), and the FCC moves closer to granting its approval. Charter would be the No. 2 cable TV firm, behind Comcast. Charter will not be allowed to impose usage-based pricing or data caps on broadband customers for seven years as part of proposed conditions on the TWC deal. Whatever conditions Charter agrees to might set the bar for Comcast down the road, analysts say. Regulators thwarted Comcast’s acquisition of TWC in April 2015. Some analysts speculate that Comcast could buy a wireless firm, such as T-Mobile US ( TMUS ), if mobile video competition heats up. Comcast has filed to be a possible bidder in a government auction of radio spectrum owned by local TV stations that began in late March. Comcast said that its Q1 earnings, excluding items, rose 7% from the year-earlier quarter to 87 cents per share, while revenue increased 5.3% to $18.8 billion. Analysts had modeled EPS of 79 cents and revenue of 18.64 billion. Comcast’s video customer additions represent a swing from a loss of 8,000 in Q1 2015. It marked its most video subscriber additions in nine years. Comcast added 438,000 broadband subscribers, up from 407,000 in Q1 2015.

Twitter Stock Decline Latest Ill As New Ads Cannibalize Older Ones

Twitter ( TWTR ) collected a wave of price-target cuts and ratings downgrades on Wednesday, and its stock continued to fall, after the microblog late Tuesday posted a Q1 revenue miss and gave Q2 revenue guidance well below expectations. Twitter was down more than 15% in afternoon trading in the stock market today , near 15 and at a two-month low. The company said in a letter to shareholders that its revenue “came in at the low end of our guidance range because brand marketers did not increase spend as quickly as expected in the first quarter.” The weak demand among brand advertisers also resulted from newer advertising types, mainly video, cannibalizing the company’s legacy “promoted Tweet” ads. The continued slowdown in Twitter usage has come about despite a series of new features it rolled out last year, including video tool Periscope and Moments. The company said monthly active users rose to 310 million, up 3% year over year and up from 305 million in Q4. But that marked the ninth straight quarter of slowing year-over-year user growth. Twitter posted user growth of 18% year over year in Q1 2015. Still, the 310 million edged the midpoint of analysts’ views that Twitter’s user tally would be 307 million to 310 million. Pivotal Research Group cut its price target on Twitter stock to 27 from 39 on Wednesday. But the investment bank said its long-term view was positive. “Despite the slowdown in brand-related spending cited during the conference call, Twitter remains the fourth-most-important player in digital advertising outside of China (after Alphabet ( GOOGL )-owned Google, Facebook ( FB ) and Verizon ( VZ )‘s AOL). This position is unlikely to be altered any time soon,” wrote Pivotal analyst Brian Wieser in an industry note. Wieser lowered his estimated for 2016 revenue growth to 26% from 33%, but said “we continue to expect that the platform retains its current level of importance to consumers and advertisers alike.” Twitter’s Promoted Tweets Victimized By Other Twitter Ads Twitter’s higher-performing ad products — including auto-play video, app installs and direct response — “attracted greater demand than that of legacy Promoted Tweets, thereby cannibalizing previously housed revenue,” said Monness Crespi analyst James Cakmak in a Wednesday report. Cakmak said potential pluses for Twitter that could bring strength in the second half of the year include the microblog’s Web streaming deal recently reached with the National Football League. “This deal and perhaps more content partnerships can help serve as a user accelerant, assuming the product experience is right,” said Cakmak. This month, Twitter expanded its three-year relationship with the NFL to include streaming 10 “Thursday Night Football” games, as well as pregame analysis shows, postgame highlight shows and behind-the-scenes Periscope broadcasts next season. Cakmak added that search leader “Google’s dependence on Twitter content” is another positive. “Twitter makes Google stay relevant in real-time search, giving them every incentive to help the company succeed.  This is a critical alliance vs. Facebook,” he wrote. But Monness Crespi cut its price target on Twitter stock to 22 to 25. The real reason advertisers do not want to spend more on Twitter is because “its focus remains too narrow,” said Edison Investment Research analyst Richard Windsor in an industry note Wednesday. “To turn this around, Twitter needs to find something to encourage users to spend more time within its properties and break out of being a news broadcaster.”