Tag Archives: technology

Yahoo Earnings Fall Less Than Expected; No Update On Takeover Bids

Giving no specifics on its efforts to find a buyer for its core, and perhaps other, businesses,  Yahoo ( YHOO ) late Tuesday reported Q1 earnings and revenue that topped Wall Street expectations despite what its CEO called “substantial noise.” Yahoo stock was up 1.5% in after-hours trading Tuesday after the company released its earnings, though its Q2 revenue outlook lagged analyst expectations. “Over the past two months, (CFO) Ken (Goldman) and I have spent time in person and on the phone with interested participants,” Yahoo CEO Marissa Mayer said on the company’s earnings conference call. “We personally answered hundreds of requests for information. We are moving forward at the fastest possible pace.” The company reportedly had set a deadline of Monday for bids by potential acquirers, as the company has put all options on the table after failing to generate consistent revenue growth over the past decade.  Verizon Communications ( VZ ), which owns AOL, reportedly is among the most active bidders. For Q1, Yahoo said that its earnings per share minus items fell 47% to 8 cents from 15 cents in Q1 2015, but analysts polled by Thomson Reuters had expected just 7 cents. Revenue fell 11% to $1.09 billion, in the upper end of Yahoo’s guidance range of $1.05 billion to $1.09 billion and just above the $1.08 billion that analysts had expected. Yahoo posted revenue minus TAC — traffic acquisition costs, or what Yahoo must pay to other sites to carry its ads — of $859.38 million, down 17%. That’s above the $847 million that FactSet had forecast. But it’s below the $1.04 billion in ex-TAC revenue that Yahoo reported in Q1 2015. For Q2, the company forecast revenue of $1.05 billion to $1.09 billion, down 14% at the midpoint and lagging consensus views of $1.102 billion. Despite “substantial noise,” Mayer said on the conference call, the company has “made great progress.” CEO Said Company Aligned On Top Priority “Our 2016 plan is off to a solid start as we continue to focus on driving efficiency, lowering costs and improving long-term growth,” Mayer said in the company’s earnings release. “In tandem, we made substantial progress toward potential strategic alternatives for Yahoo. Our board, our management team and I are completely aligned on this top priority for shareholders.” Yahoo has formed a strategic review committee of independent directors to consider strategic alternatives for the company and for its big stakes in China’s Alibaba Group ( BABA ) and in Yahoo Japan. Yahoo stock fell a fraction in Tuesday’s regular session, to 36.33, but it’s up nearly 40% since touching a nine-month low in early February. S&P Global Market Intelligence analyst Scott Kessler, in a research report last week, said that he was bracing for disappointment, “given continuing fundamental challenges and questions about company leadership.” At the time, Kessler downgraded Yahoo stock to hold from buy. On the other hand, Yahoo stock received at least two price-target boosts in the past two weeks. Pivotal raised its price target to 40 from 35, primarily due to recent gains by Alibaba. Most of Yahoo’s value comes from its 15% stake in the China e-commerce titan. Yahoo’s total market cap is about $34 billion. SunTrust Robinson Humphrey analyst Robert Peck raised his price target to 44 from 40 on April 13 and maintained a buy rating, citing “hidden assets” that could drive up the bidding price for the struggling Web portal. Those assets, Peck said, include royalties from Yahoo Japan, thousands of patents and plentiful real estate. Minus a “potential upside” from those assets, SunTrust expects Yahoo to fetch bids in the $6 billion to $8 billion range for its core business. Some reports estimate that as many as 40 groups have expressed interest in the wilting Sunnyvale, Calif.-based Web portal, although Fortune said in a report on Friday that the number was too high. News site Re/Code said that documents Yahoo provided to potential bidders predict that Yahoo’s 2016 revenue will fall nearly 15% and its earnings by more than 20%. On Tuesday, Goldman said that Yahoo’s head count, including contractors, was down 42% from the start of 2012 to 9,200, and the company continues to cut costs. Yahoo reported that its revenue from Mavens rose more than 6% to $390 million and accounted for 38% of total revenue, up from 33% in Q1 2015. Mavens refers to Yahoo’s revenue from mobile, social, video and native advertising, where revenue is growing. The company hopes that the segment will offset declining revenue from its legacy advertising.

Intuitive Surgical Beats Q1 Estimates As Stock Hovers Near High

Robotic-surgery specialist Intuitive Surgical ( ISRG ) beat Wall Street’s Q1 earnings estimates late Tuesday, but the stock was down 1% in after-hours trading. Intuitive Surgical’s earnings totaled $4.42 a share, up 24% from the year-earlier quarter and topping analysts’ consensus of $4.33 a share, according to Thomson Reuters. Sales gained 12% to $595 million, vs. analysts’ $593 million. Intuitive Surgical is one of the highest-rated stocks in the Medical Systems group, which is collectively doing well at No. 24 on IBD’s ranking of 197 industry groups. Shares hit a lifetime high of 630.67 last Wednesday, and have hovered within 1% of that mark since then. The stock closed down a fraction in regular trade on the stock market today , at 623.71. Intuitive Surgical is the second of three hot medical stocks reporting earnings this week. Earlier Tuesday, Johnson & Johnson ( JNJ ) hit a new high of 113.95 after it beat Q1 estimates and raised its full-year guidance due to diminishing foreign-exchange headwinds. Stryker ( SYK ), which also hit a new high of 110.98 early Tuesday but gave back its gains later, is due to report earnings Wednesday after the close.

Microsoft, Amazon, Google Cloud Growth Lifts Fiber-Optics Firms

You might think the race to the cloud mostly benefits leading cloud services providers, such as  Microsoft ( MSFT ),  Amazon.com ( AMZN ) and  Alphabet ‘s ( GOOGL ) Google. Of all the electronics, communications and digitally inspired IBD industry groups, the Telecom-Fiber Optics industry group ranks the highest. It’s No. 6, up from No. 9 a month ago, No. 95 two months ago and No. 168 three months ago. What’s different from a few months ago? On March 9, Microsoft Azure Chief Technology Officer Mark Russinovich told the Open Compute Project summit that Microsoft will grow from 22 to 28 data centers in 2016. Azure is Microsoft’s cloud business. Also, Google announced March 22 that it would add 12 new data center regions globally by the end of 2017, including two in the U.S., nearly doubling its existing 14 regions. And cloud leader Amazon Web Services, a rising business of Amazon.com, will grow from 12 regional clouds to 17 “in the coming year,” CEO Jeff Bezos said April 6 in his annual letter to shareholders. Fiber-optic developers that create the high-speed lines and connections for data centers will be among those companies benefiting from this expansion. “The first two new data centers (Oregon and Tokyo) will come online later this year, with the others to be launched in 2017,” said Jefferies analyst George Notter, regarding the Google announcement, in a March research note. “Based on our conversations with industry contacts, we think the additional investments are great news for Infinera ( INFN ), Ciena ( CIEN ), and to a much lesser extent, Alcatel-Lucent.” He cited the three as Google’s vendors for wavelength division multiplexing (WDM, an optics technology) and Infinera’s Cloud Xpress as Google’s preferred metro data center interconnect (DCI) platform, “although we wouldn’t be surprised if they (Google) eventually operationalized other vendors as well.” Infinera Down After Analyst Calls Stock ‘Way Too Cheap’ At the time, March 24, Infinera was trading near 15 — “way too cheap,” Notter said. He reiterated Infinera’s buy rating with a 22.50 price target. Since then Infinera stock has fallen, after tumbling 2.7% Tuesday to 14.58, 42% off a nine-year high of 25.24 touched Aug. 18. But it was a tough day for the sector overall. Rival Ciena, however, fell 3% Tuesday, to 17.27, 33% off a 16-month high 25.77 touched July 23. Heading toward its first-quarter earnings release April 27 after the market close, Infinera is expected to report continuing choppy earnings growth on slower sales growth. Analysts polled by Thomson Reuters expect earnings up 6% to 17 cents per share minus items, on sales up 31% to $246 million. While earnings are expected to top the year-earlier 16 cents per share, it’s a tough comparison to the Q1 2015’s 433% EPS growth. With a market cap of $2.06 billion, Infinera is the second-largest company in the IBD fiber group, following Ciena’s $2.4 billion, but neither is among the healthiest. Ciena carries an IBD Composite Rating of 72, and Infinera has a 67. The healthiest, both with CRs of 97, are Lumentum Holdings ( LITE ) with $1.45 billion in market value, and little Clearfield ( CLFD ), with a $222 million market cap. The third- and fourth-largest among these small caps both carry 87 CRs: Finisar ( FNSR ) with $1.8 billion in market value, and Viavi Solutions ( VIAV ) with a $1.5 billion market cap. Finisar fell 2.9% Tuesday, and Viavi slipped 1.1%. Image provded by Shutterstock .