Tag Archives: technology
Mellanox Tanks On Q2 Guidance, But ‘Well Ahead’ Of Intel, Broadcom
Mellanox Technologies ( MLNX ) stock dove Thursday on weaker-than-expected Q2 guidance late Wednesday, but analysts say the IBD Leaderboard stock won’t succumb to competition from “large incumbents” Intel ( INTC ) and Apple ( AAPL ) supplier Broadcom ( AVGO ). Summit Research analyst Srini Nandury calls Mellanox stock “the name to own in this space,” talking about the Ethernet and Infiniband markets. But Mellanox stock was down 14% in midday trading on the stock market today , at a two-month low below 48. For Q1, Mellanox reported 81 cents earnings per share ex items on $196.8 million in sales, up a respective 35% and 34%. Both metrics topped the consensus of 14 analysts polled by Thomson Reuters for 75 cents and $191.7 million. IBD take: Mellanox is a big mover today, and the move is down, but it had been doing well. The Q2 guide was Wall Street’s sticking point, Credit Suisse analyst John Pitzer wrote in a research report, though he retained an outperform rating and 60 price target on Mellanox stock. Current-quarter sales guidance for $210 million to $215 million, up 30% at the midpoint, was slightly short of Wall Street expectations for $214.6 million, Pitzer wrote. Q1 was Mellanox’s seventh consecutive beat and fourth straight of record quarterly revenue, Piper Jaffray analyst Andrew Nowinski and Summit Research analyst Srini Nandury wrote in separate reports. Nowinski maintained his overweight rating and 65 price target on Mellanox stock. Nandury rates Mellanox stock a buy and also has a 65 price target. Both note Intel’s Omnipath isn’t, so far, holding a candle to Mellanox’s 100-gigabit/second (Gb/s) Infiniband product. Omnipath is also 100 Gb/s, but Mellanox is on track to launch 200-Gb/s and 400-Gb/s products in 2017 and a 1-terabit/second (Tb/s) product early next decade. “Mellanox is seemingly ahead of everybody in the market and is executing flawlessly on the Infiniband road map,” Nandury wrote. He said Mellanox is the only OEM to deliver 25/50/100-Gb Ethernet adapters in addition to switches, “well ahead of Broadcom.” Intel stock was down a fraction and Broadcom stock down 1% midday Wednesday. No. 1 chipmaker Intel, late Tuesday, reported mixed Q1 results on a minimal year-over-year climb in PC sales and announced it would lay off 12,000 in an effort to focus on stronger segments.
Baidu Reportedly Pulling A Google, Spinning Off Video Service
Baidu ( BIDU ) will reportedly spin off its professional Baidu Video service, as the China Internet search leader looks to pare is newer, money-losing businesses from its core search operation. Baidu Video would receive RMB 1 billion ($154.3 million) in new investment as it takes on two more partners, according to a report Thursday from Young’s China Business blog . Rumors about changes at Baidu Video come soon after reports of a major corporate reorganization at Baidu that aims to separate its older, profitable search services from its newer businesses, many of which are losing money. This is similar to what Google did in creating Alphabet ( GOOGL ) as the parent company for all its operations. Like Alphabet, Baidu is investing to develop self-driving cars and other technology not related to its core search operations. In November, Baidu announced it had submitted an application for a direct-banking license in partnership with China’s Citic Bank and for an online insurance license in partnership with Allianz ( AZSEY ) and Hillhouse Capital. To continue its growth, Baidu should follow in Google’s footsteps “and split its non-core businesses from its core search and ads business. If they do this, Baidu stock would likely receive a big boost, leaving them with the cash to make a foray into the U.S. market,” Taiwan-based Sephi Shapira, CEO of mobile advertising platform MassiveImpact, told IBD via email in February. Baidu Could Be Eyeing Big Structural Changes Young’s China Business said the Baidu Video unit is separate from Baidu’s iQiyi.com, the online video service that is similar to Google’s YouTube. Baidu announced in February that it would sell money-losing iQiyi to an outside group led by Baidu CEO Robin Li. IQiyi is looking to become a bigger force in the country’s video-streaming and movie-making fields, a nearly $6 billion market that also includes Baidu rivals Alibaba Group ( BABA ), Sohu.com ( SOHU ) and Tencent Holdings ( TCEHY ). Last year, Netflix ( NFLX ) said it wants to begin operating in China, but the streaming media company has expressed uncertainty about its planned move into the country by 2016. Baidu plans several changes to its business structure, including establishment of a subsidiary that will house its online search services, said Marbridge Consulting, citing a release via Baidu’s official account on Tencent’s WeChat mobile messaging platform. According to Marbridge , the spinoff will see New Culture Media Group and venture capital firm SAIF each invest about RMB 500 million ($77.1 million) in Baidu Video. Each of the new partners would receive about 20% of Baidu Video, Marbridge said. Baidu stock has nearly doubled since skidding to a three-year low of 100 in early February. Baidu stock broke out of a cup-with-handle base in late March, at a 189.90 buy point. Shares were flat in midday trading in the stock market today , near 194. Baidu will report Q1 earnings on April 28 and has given revenue guidance below analyst expectations, as the company invests heavily in its “O2O” (online-to-offline) strategy to draw Web shoppers to in-person services and physical stores. Baidu recently said it is seeking a $1 billion loan. A Baidu spokeswoman said the company aims to borrow the funds through a five-year syndicated facility for general corporate purposes, according to the Bloomberg report. Image provided by Shutterstock .