NetApp (NTAP, $30.01) shares have fallen more than 6% since the release of fiscal Q3 results in the middle of this month.
But earnings estimates are on the rise for both fiscal 2010 (April) and fiscal 2011. The FY11 consensus estimate of $1.69 is up four cents since the end of January.
The forward P/E (on the FY10 consensus of $1.43) has dropped to 20.9 from a recent peak of 25.5.
Jennison Associates ($57.4 billion in long equity assets/26% tech weighting) sees value in NetApp shares, having increased its position by just over 53% in Q4 with the purchase of 8 million shares.
Jennison is now the #1 investor in NetApp with 23.1 million shares, while Fidelity is #2, holding 19.5 million shares.
For more on NetApp, see TechStock Radar—February 16, 2010.
Research in Motion (RIMM, $71.06) shares quietly moved back to the top of their recent range, rallying from the January 26 low of $60.40.
The stock is once again trading above its 200-day moving average of $69.94. A close above $71.33 would be a positive sign.
RIMM shares are up 5.2% YTD, vs. a 3% drop for Apple.
Palm (PALM, $6.53) could be nearing its end of life. Poor smartphone sales, increased competition and high cash burn are raising red flags across Wall Street.
The stock is down 35% YTD and well off its September high of $18.09.
In today’s WSJ, Charter Equity Research analyst Ed Snyder says, “I wouldn’t say [Palm is] done, but they’re pretty close.”
The company is now in survival mode, pumping up advertising and dispatching an army of some 200 employees to train Verizon sales reps.
There’s still hope: Palm could debut the Pre and Pixi to an adoring audience at AT&T or Elevation Partners could double down and kick in more cash, hoping for success from a new handset.
There's also the slim chance that the company gets bought out, but that's just a lot of wishful thinking by the bulls at this point.
This isn't the first time Palm's future has been questioned of late. See TechStock Radar--October 26, 2009.
Apple (AAPL, $200.05) shares just quickly jumped from around $198 to nearly $201 on rumors of a 4-for-1 stock split.
There could not be a more stupid reason to buy shares in Apple than because of an expected stock split.
The level of ignorance among some “investors” never ceases to amaze.
Kaufman raises its price target on Salesforce.com (CRM, $66.89) to $80 from $75 after the company reported better-than-expected results for fiscal Q4, with deferred revenue coming in at $704 million (+19% y/y), vs. the consensus of $667 million.
New bookings growth of 24% was at the high end of expectations, indicating customers continue to shift over to the SaaS model.
Per-share earnings of 16 cents beat the consensus by a penny on revenue of $354 million, vs. the consensus of $342.2 million.
At the Goldman Sachs tech conference today, CEO Marc Benioff said Salesforce.com’s model gets “a gold star” because it gave the company the stability it needed during an unstable time over the past six quarters.
Benioff said Salesforce.com is "hunting" for the $2-billion revenue year and is still fighting it out for market share, especially against legacy software. For fiscal 2011, management expects revenue of $1.4 billion to $1.41 billion.
Palm (PALM, $7.05) shares are off more than 12% this morning after the company reduced revenue guidance for the February quarter. The stock traded as low as $6.30 earlier in the session.
For fiscal Q3, Palm sees revenue of $300 million to $320 million, well below the consensus estimate of $424.6 million.
Palm now expects fiscal 2010 revenue to be “well below” its previously forecasted range of $1.6 billion to $1.8 billion.
The company blames the shortfall on “slower than expected consumer adoption” of Palm products. Translation: No one wants our boring handsets.
It’s interesting that management on February 11 blamed recent manufacturing reductions on the Chinese New Year. What a load of bull that turned out to be.
At the Goldman Sachs Technology and Internet conference, IAC/InterActiveCorp (IACI, $22.14) CEO Barry Diller said the Apple iPad is going to be “a wonderful form factor for delivering rich advertising” on the Web.
Diller thinks premium content with premium advertising is the wave of the future online. Subscription paid systems will become the norm over the next five years when it comes to premium content, according to Diller.
“Display advertising is worth very little,” said Diller, who pointed out that IAC’s DailyBeast.com won’t accept low-cost displays.
Diller was totally on during the Q&A session, ribbing the Goldman analyst about his questions. When Diller’s mobile phone rang (a dog-barking ringtone!) in the middle of the presentation, he said that it must be “someone nefarious” calling.
Autodesk (ADSK, $27.87) shares are up more than 8% after the company reported fiscal Q4 (January) EPS of 30 cents, seven cents above the consensus estimate, on revenue of $456.1 million, vs. the consensus of $432 million.
There are signs of an improvement in IT spending in the manufacturing vertical, which represents 35% to 40% of Autodesk’s revenue. But the construction vertical (also as much as 40% of revenue) remains challenging.
For fiscal Q1, the company looks for EPS of 18 cents to 23 cents (the consensus is 20 cents) on revenue of $420 million to $440 million, above the consensus of $429.5 million.
Needham this morning upgrades Autodesk to ‘Buy’ with a price target of $31, saying early-cycle metrics point to a more positive outlook.
For more, see TechStock Radar—February 17, 2010.
A survey by RBC/ChangeWave indicates that pre-launch demand for the Apple (AAPL, $197.06) iPad is greater than that for the iPhone debut back in 2007.
Of the 3,200 participants, 13% said they are likely to purchase the iPad, vs. 9% who planned to buy the iPhone at launch.
Not surprising, the respondents said they’d use the iPad for Web surfing, e-mail and reading eBooks/magazines/newspapers.
RBC estimates that Apple will sell 5 million iPads in calendar 2010, contributing $2.4 billion in revenue and 33 cents of earnings per share.
MKM Partners remains negative on Motorola (MOT, $6.78), saying the company should miss consensus revenue estimates for Q1 through Q3 because of weaker-than-expected handset shipments.
Also, the firm is concerned that poor pricing this spring and summer will hurt Motorola’s legacy phone platforms.
MKM reiterates its “Sell” rating and price target of $5.
In Q4, Marvin & Palmer ($1.9 billion in long equity assets/35% tech weighting) cleared out of its entire Motorola position, selling 7.7 million shares. The money manager put new money to work in Cisco Systems, increasing its stake by 178%.
On the DreamWorks Animation (DWA, $41.42) Q4 conference call, CEO Jeffrey Katzenberg fielded plenty of analyst questions about the upcoming release of How To Train Your Dragon and its ability to hold 3D screens once Clash of the Titans is released a week later on April 2.
Katzenberg pointed out there are now 3,800 3D screens in North America, up from 2,175 a year ago. Of these, 218 are IMAX screens.
How To Train Your Dragon has an exclusive six-week commitment on 188 U.S. and 80 overseas IMAX screens, according to Katzenberg.
Shares of Brocade Communications (BRCD, $5.34) are off more than 23% today on extremely heavy volume of 146 million shares, vs. average daily volume of 19 million shares.
The stock is tanking because the company was forced to reduce 2010 revenue and EPS guidance due to poor performance in the Ethernet switching business (Foundry acquisition). On the conference call, management said it would go back to focusing on end-user demand, backing off its earlier promises to gain share by expanding its OEM channel.
About 90% of Foundry’s salesforce is still with Brocade, so they need to get to work. The company is clearly losing share now to competitiors such as Cisco Systems and Juniper Networks.
Analysts questioned this abrupt shift in strategy, saying Brocade recently boasted about its expertise as an OEM-focused company. As one analyst put it, this stumble in the Foundry business makes one wonder if there are “structural issues” in the OEM channel related to Ethernet switching, which could take several quarters for Brocade to sort out.
It’s interesting that back in early October when The WSJ reported that Brocade had put itself up for sale (a claim Brocade management denies), Bernstein estimated the company would be worth at least $13 a share in a buyout. OpCo was a little more rational at the time, saying there was “a small likelihood of a near-term sale.” Looks like buyers were smart to stay away.
BofA/Merrill reduces Palm (PALM, $8.65 pre market) to ‘Underperform’ and cuts its price target in half to $10, saying the company’s smartphones are not seeing enough consumer demand or getting enough carrier support.
Palm shares traded as high as $14.17 as recently as January 19.
Maverick Capital ($9.1 billion in long equity assets/24% tech weighting) and Blue Ridge Capital ($5.2 billion in long equity assets/19% tech weighting) made smart moves in Q4, selling out of their entire positions in Palm.
For more on Palm, see TechStock Radar—February 9, 2010 and October 26, 2009.
After advancing to a new 52-week high of $67.30 earlier in the session, Netflix (NFLX, $64.33) shares are now off more than 3% on a report that Wal-Mart has agreed to purchase Vudu, an on-demand movie service embedded in TV sets.
According to The NY Times, Wal-Mart and Vudu began informing movie studios and TV manufacturers of the deal today, but terms of the transaction are not available.
As part of Wal-Mart,Vudu represents a potential competitive challenge for Netflix’s Watch Instantly service. Vudu already has relationships in place with LG Electronics, Vizio and Mitsubishi, with new arrangements with Samsung, Toshiba, Sharp and Sanyo announced at CES.
But Netflix, of course, is the dominant online service to beat (everyone is gunning for it) and has the big first-mover advantage.
Goldman boosts its DreamWorks Animation (DWA, $40.98) price target to $50 from $45 ahead of tomorrow’s release of Q4 earnings.
The firm expects better-than-expected results based partly on strong DVD/Blu-ray sales for Monsters vs. Aliens.
Based on upbeat prospects for DWA’s 2010 release schedule, Goldman increases its EPS estimate to $2.80 from $2.55, above the consensus EPS estimate of $2.56.
First up, DreamWorks releases How To Train Your Dragon at the end of March, followed by Shrek 4 in May.
MKM Partners starts coverage of Riverbed Technology (RVBD, $27.27) at ‘Buy’ with a price target of $32, citing “very strong” business momentum in the current quarter and a pick up in large-deal activity.
The firm also says cross-selling opportunities for the Cascade product are coming in above expectations
MKM sees 2010 product-revenue growth of 15%, driven by virtualization, cloud computing and disaster recovery.
For 2010, the consensus EPS estimate of 84 cents is up three cents over the past 30 days. The high estimate is 99 cents.
Deutsche Bank upgrades Viacom (VIA.B, $29.94) to ‘Buy’ with a price target of $37, citing valuation and sustainable affiliate fee revenue growth.
The firm also says share repurchases should resume by the middle of the year as management shifts its focus away from acquisitions.
According to DB, Viacom is strategically complete in terms of new deals and offers one of the best ways to play the attractive cable-networks business.
In Q4, Fidelity boosted its Viacom position by 38% with the purchase of 5.26 million shares and now owns 19 million shares, making it the #6 investor. Janus Capital more than doubled its holdings, purchasing 4.1 million shares.
Aruba Networks (ARUN, $12.22) shares are experiencing short covering and some institutional accumulation today, with the stock up 12% on extremely heavy volume of 7.5 million shares. Aruba earlier hit a new 52-week high of $12.74.
In August, TSP subscribers were alerted to the hiring of Hitesh Sheth to fill Aruba’s newly created position of COO, a positive development. The appointment of Sheth, who most recently was the VP/GM of Juniper’s Ethernet Platforms Business Group, was a sign that the company was committed to remaining independent and winning market share in the WLAN sector.
Given Aruba’s 34% growth in product revenue in the latest quarter, it’s clear that the company is taking market share away from #1 competitor Cisco Systems. The stock is up 53% since the news of Sheth’s hiring.
In Q4, Coatue Management ($1.96 billion in long equity assets/55% technology weighting) added to a few key tech positions, and its five largest holdings are now all tech names.
Apple remains its #1 holding (1.68 million shares), representing about 17% of the long portfolio.
Coatue beefed up its position in #2 holding F5 Networks (FFIV, $55.39) by 130%, adding 1.86 million shares. The firm now owns 3.31 million shares and is the #3 investor in F5.
Coatue also added to its stakes in #3 Google (GOOG) and #4 Equinix (EQIX). Citrix Systems (CTXS) rounds out the top five.
Outside of the largest positions, Coatue raised its Yahoo (YHOO, $15.60) stake by 51% with the purchase of 1.3 million shares. Yahoo is now a top 15 holding.
FBR is the latest firm to upgrade Adobe Systems (ADBE, $33.24) based on a positive outlook for the CS5 upgrade cycle.
FBR raises Adobe to ‘Outperform’ with a price target of $39, saying CS5 will benefit from an improvement in online ad spending and a better take rate following the dismal sales performance of CS4.
Expectations are reasonable going into the upcoming product cycle, says FBR. Adobe shares are down 13% from the December high of $38.20.
For more on Adobe, see TechStock Radar—February 18, 2010.
The bulls have powered Citrix Systems (CTXS, $44.48) to a new 52-week high on active volume.
This is good news for Lone Pine Capital ($9.6 billion in long equity assets/17.4% tech weighting), which increased its Citrix position by 176% in Q4, adding 2.33 million shares.
The money manager now holds 3.65 million shares and counts Citrix among its 15 largest holdings. Among Lone Pine’s other big tech positions: Apple, Qualcomm and Hewlett-Packard.
Another big Citrix buyer in Q4 was Maverick Capital ($9 billion in long equity assets/24.1% tech exposure)—the firm opened a position of 2.55 million shares. Maverick’s other top tech holdings: Apple, Oracle (new position, 10.3 million shares) and Marvell Technology.
Priceline.com (PCLN, $227.50 pre market) shares are up more than 6% in pre-market trading following a strong Q4 report.
The company came in with Q4 EPS of $1.99, 31 cents above the consensus estimate, on revenue of $541.8 million (+33% y/y), vs. the consensus of $529.8 million. International gross travel bookings rose 69.5% and U.S. bookings increased 20.6% (guidance was +15%).
For Q1, Priceline sees EPS of $1.57 to $1.64 (the consensus is $1.41) on revenue of $568 million to $586 million (the consensus is $584.7 million). The company expects international bookings growth of 56% to 64% (local currency basis) and U.S. bookings growth of 10% to 15%.
Following the report, Kaufman bumps up its Priceline target price to $280 from $240.
In Q4, Capital Growth Management ($6.6 billion in long equity assets/21.7% technology weighting) opened a Priceline.com position of 1.01 million shares. The money manager now counts Priceline among its 15 largest holdings.
Capital Growth’s other top tech positions: Google, Apple, Marvell Technology and Amazon.com.
Morgan Stanley thinks Adobe Systems (ADBE, $32.33) is an undervalued cyclical and secular growth story. The firm recommends buying here, with a price target of $42.
After recent meetings with Adobe management, Morgan Stanley is now more optimistic about the prospects for CS5, Acrobat 10, Flash as a revenue driver and the Omniture acquisition.
The firm says Adobe is entering a multi-quarter period of product and financial catalysts.
In Q4, Marsico Capital Management ($40.9 billion in long equity assets/17.5% technology weighting) increased its position in Adobe by 121% with the purchase of 10.77 million shares. The money manager now owns 19.6 million shares and is the #3 investor behind Primecap and Jennison.
For more on Adobe, see TechStock Radar—February 10, 2010.
In Q4, Primecap Management ($69 billion in long equity assets/27% technology weighting) bought 13.51 million shares of Electronic Arts (ERTS, $16.59), bringing its total position up to 18.53 million shares.
Primecap is now the #3 holder of EA shares behind T. Rowe Price and Dodge & Cox.
After dipping to $15.70 following the latest disappointing earnings report, EA shares have stabilized and rallied a bit, indicating the stock is washed out at these levels.
There’s a theory floating around that EA management was extremely conservative with guidance given the recent history of misses and guide downs. The only way to gain back some credibility at this point is to beat-and-raise.
For fiscal 2011 (March), the consensus EPS estimate stands at 61 cents, down from 75 cents in the middle of January. The high estimate is 76 cents.
In Q4, Maverick Capital ($8.9 billion in long equity assets/24.2% technology weighting) opened a position in Autodesk (ADSK, $25.73).
The money manager bought 5.8 million shares and now counts Autodesk among its 25 largest holdings. The stock traded below $23 in early October.
Goldman yesterday upgraded Autodesk to ‘Buy’ with a price target of $30, saying the stock has “significant value” as the economy begins to improve and demand picks up for the company’s design software.
Apple is Maverick’s #1 holding. Other top tech holdings include Oracle, DirecTV and Marvell Technology.
In an SEC filing today, Fidelity disclosed that it has increased its stake in VMware (VMW, $47.11) to 7.2%. The mutual-fund giant now owns 7.34 million shares, up from 4 million shares held at the end of September.
Fidelity has been building its position over the past couple of quarters, also picking up 1.1 million shares in Q3. VMware shares dipped below $26 in early July.
Also in Q4, Jennison Associates ($56 billion in long equity assets/26.5% technology weighting) opened a position of 4.93 million shares.
For more on VMware, see TechStock Radar—January 26, 2010.
Artisan Partners ($23.2 billion in long equity assets/29% tech weighting) in Q4 lifted its holdings in L-3 Communications (LLL, $87.40) by 32% with the purchase of 509,300 shares. The stock traded below $73 in October.
The money manager now owns 2.1 million shares and is among L-3’s 10 largest investors.
L-3, a provider of defense-electronics solutions, is expected to earn $8.15 a share this year, up 6% from 2009. The forward P/E is 10.7.
The company’s key growth driver continues to be its ISR (Intelligence, Surveillance and Reconnaissance) business, which experienced 17% y/y revenue growth in Q4. ISR represents about 20% of total revenue.
In Q4, T. Rowe Price increased its position in Synaptics (SYNA, $26.56) by 268% with the purchase of 2.38 million shares.
The mutual-fund company now owns 3.27 million shares and is the #2 holder behind Fidelity, with 3.9 million shares.
Synaptics, a provider of touchscreen solutions for PCs and handsets, has seen it shares recover from a low of $20.80 in the middle of October. But the stock remains well off its June 2009 high of $40.94.
There are concerns that Synaptics is losing market share in the important handset segment, with Cypress Semiconductor and Atmel representing the biggest competitive threats.
Broadpoint AmTech is out with bullish comments on NetApp (NTAP, $31.46) ahead of tomorrow’s release of fiscal Q3 numbers.
For the January quarter, the firm sees EPS of 39 cents on revenue of $960 million, vs. the consensus estimates of 38 cents/$953 million. The high EPS estimate is 41 cents.
Broadpoint AmTech expects solid demand for NetApp’s midrange storage offerings to continue over the next few quarters, and says the company is well positioned to gain share in virtualized environments.
NetApp shares are off 10% from the December 2009 high of $34.99, but have recovered somewhat from the recent reaction low of $28.92.
The stock trades at 19X the fiscal 2011 (April) consensus EPS estimate of $1.66. The high estimate for next year is all the way up at $1.86.
Value shop Dodge & Cox discloses in an SEC filing that it now holds a 5.9% stake in Electronic Arts (ERTS, $16.12). The money manager owns 19.3 million shares.
Electronic Arts is struggling to deal with the consumer-demand shift to online/digital games from shrink-wrapped offerings. The transition has been a lot worse than expected. EA shares traded above $50 as recently as May 2008.
For fiscal 2011 (March), the consensus revenue estimate of $3.79 billion represents a decline of 8.5%, with growth in EA’s digital games not expected to offset sales declines for traditional games.
The company is trying to execute better, reducing the number of shrink-wrapped offerings and pushing more digital content out to various devices.
Roth upgrades NVIDIA (NVDA, $16.37) to ‘Buy’ with a price target of $21 based on expecations for improving margins as non-PC businesses (Tegra and Tesla) grow and Fermi ramps in the GPU segment.
In addition, Roth sees positive impacts from newer technologies—including 3DVision, Optimus and application support for GPU acceleration.
For fiscal 2011 (January), the consensus EPS estimate is 83 cents, with the high estimate at $1.05.
Jefferies upgrades Adobe Systems (ADBE, $32.31) to ‘Buy’ with a price target of $40, saying concerns about the future of Flash have been overdone. Competition from HTML5 technology is on the rise, but it’s still a ways off from becoming a significant standard.
The firm is also upbeat that Creative Suite 5 will experience a solid upgrade cycle after many users delayed the upgrade to CS4 because of the economy.
On the IAC/InterActiveCorp (IACI, $21.62) Q4 conference call, CEO Barry Diller said the stock continues to trade at a discount because of the company’s high cash stake and concerns about usage.
As of December 31, IAC had about $1.7 billion in cash & marketable securities, with just $95.8 million in long-term debt. For 2009, CFFO totaled $331.5 million. The company’s market cap is just $2.8 billion.
During the quarter, IAC spent $217 million to repurchase 11.2 million shares at an average price of $19.38 a share.
Diller said the sentiment is until this cash is dealt with one way or another, the stock will trade at a discount to its peers. As of this time, Diller still doesn’t see any “acquisitions of size” out there.
He also said there’s “a lot cooking behind the scenes” to build the CityGrid local publisher network, and that there is plenty of skepticism surrounding this effort as there’s no guarantee it will be a hit with users.
As for the Ask.com search business, Diller said it’s not currently for sale, but he repeated that it could be a part of a larger organization at some point in the future. The overall search business (including Citysearch) accounted for half of Q4 total revenue.
According to ComScore, Apple (AAPL, $194.12) increased its share of the U.S. smartphone market to 25.3% in December from 24.1% in September.
Apple remains #2 behind Research in Motion (RIMM, $66.67), which saw its share dip to 41.6% from 42.6% during the period.
Google’s Android operating system upped its share to 5.2% (5th place) from 2.5%, while Palm’s share fell to 6.1% (4th place) from 8.3%. Given the strong growth in Android-based handsets, Google could soon surpass Palm.
Microsoft is in third place at 18%, down from 19%.
Electronic Arts (ERTS, $15.77 after hours) shares are off nearly 10% in after-hours trading following disappointing guidance for fiscal 2011 (March).
The company now sees EPS of 50 cents to 70 cents (below the consensus estimate of 74 cents) on revenue of $3.65 billion to $3.9 billion (below the consensus of $4.07 billion).
CEO John Riccitiello has lost all credibility on Wall Street because of the company’s constant guide downs. The positive spin from Riccitiello on the EA conference calls has become an absolute joke.
Collins Stewart ups Amazon.com (AMZN, $117.39) to ‘Buy’ with a price target of $150, saying the stock offers an attractive entry point after the recent pullback.
Besides the strength in the core business, the firm says the Kindle franchise is already bigger than what many analysts think, which means estimates are too low for this year.
Amazon trades at 41 times the 2010 consensus EPS estimate of $2.85.
Leap Wireless (LEAP, $13.77) shares are off more than 5% today after JP Morgan downgraded the stock to ‘Underperform’ and cut its price target to $10 from $12.
The firm acknowledges that Leap is probably on the block, but thinks any deal would be “challenging” because the company’s fundamentals are not appealing, especially at this valuation.
For more on Leap, see TechStock Radar—February 3, 2010.
Equinix (EQIX, $95.34) is extending its recent losses today and is now down more than 13% from the January 6 high of $110.57.
There’s support from late November around $93.50. There’s also a gap on the price chart from November 4 at $89. The 200-day moving average is still trending up from $86.45.
The RSI is approaching oversold levels at 31.1.
Research in Motion (RIMM, $66.91) shares have stabilized and are now back above the 50-day moving average of $63.87. The stock has rebounded from its January 26 low of $60.40.
The next level to watch on the upside is the January 14 high off $67.16. There’s more significant resistance at the 200-day moving average at $70.08.
Research in Motion trades at 13X the fiscal 2011 (February) consensus EPS estimate of $5.05.
Leap Wireless (LEAP, $15.40) shares are up more than 16% this week after The WSJ reported the company hired Goldman Sachs to explore a possible sale.
Potential buyers include MetroPCS, AT&T and Verizon Wireless. However, some have speculated that even if a buyout did happen any deal premium could be small, especially given the recent rally in the shares.
Riverbed Technology (RVBD, $22.64) reported Q4 EPS of 21 cents, three cents above the consensus estimate, on revenue of $112.9 million (+22.4% y/y), vs. the consensus of $106.5 million.
For Q1, the company sees revenue of $106 million to $109 million (the consensus is $104.8 million) and EPS of 17 cents to 18 cents (the consensus is 17 cents).
Riverbed shares are off more than 4% this morning as guidance didn’t come in well above expectations.
Shares of Amazon.com (AMZN, $118.87) finished down 5.2% after trading as low as $113.82 intraday on news that the company pulled all Macmillan e-books from its online store because of a dispute over pricing.
While Amazon lists mostly all of its digital books for $9.99, Macmillan’s new pricing plan starts at $12.99 and goes up to $14.99. It is scheduled to go into effect in March. Other publishers may follow Macmillan’s lead.
Amazon was able to quickly build its Kindle business by offering cheap e-books. The concern is that higher book prices and new competition from the likes of Apple will squash Amazon’s hold on the e-book market.
