Deep into a major transition that has shed multibillion-dollar businesses, IBM (IBM) is scheduled to report second-quarter earnings after the market close Monday.

The consensus revenue estimate is $20 billion, down 4% year over year. That would continue a string of 17 straight quarters of year-over-year declines. The consensus on earnings per share minus items, as polled by Thomson Reuters, is $2.89, down 25% and the fifth quarter in a row of declines.

In the past several years, Big Blue has shed computer hardware units, reshuffled its software businesses and realigned its workforce to reduce costs as it focuses on growth areas such as cloud computing, Big Data analytics, security and mobile computing — areas that it calls strategic imperatives. Since 2010, IBM has invested about $30 billion in these areas.

They include the creation of a new business unit, Cognitive Business Solutions, with its backbone being IBM’s advanced Watson computer. Watson is being used in health care, the internet of Things, analytics and other fields. IBM says Watson can address a total market opportunity near $2 trillion.

Drexel Hamilton analyst Brian White in a research note said he’ll be looking to see what kind of progress IBM is making in its Read Full Article

Source: Technology – IBD

Apple‘s (AAPL) iPhone 7 ramp and “less bad” PC sales will lead to an in-line second quarter for chipmakers, but Brexit-fostered macro worries could play out in October-quarter earnings, Credit Suisse and MKM analysts said Friday.

Credit Suisse analyst John Pitzer’s top picks include Broadcom (AVGO), Intel (INTC), Analog Devices (ADI), Lam Research (LRCX), Microchip Technology (MCHP) and Mellanox Technologies (MLNX).

“Importantly, (the second half of 2016) should be up 2.5% year over year after four quarters of year-over-year declines,” Pitzer wrote in a research report. But overall he expects 2016 chip sales will be flat vs. earlier expectations for 3.8% growth.


IBD’s TAKE: IBD’s 33-company Electronics-Semiconductor Equipment industry group is currently No. 48 out of 197 groups tracked, having made big moves over the last eight weeks from No. 169. It’s led by ASML in market value, but KLA-Tencor tops the group in terms of Composite Rating. KLA has a CR of 92, meaning it outperforms 92% of all stocks in key metrics.


Apple iPhone suppliers — including Broadcom and Analog Devices — could benefit from a “lackluster iPhone 7 cycle” still likely to grow 55%-60% Read Full Article

Source: Technology – IBD

Diagnostic-test maker Alere (ALR) was up sharply in Friday trading as analysts saw better chances for its acquisition by Abbott Laboratories (ABT) to go through after it issued preliminary financial results.

Abbott first announced the $5.8 billion deal on Feb. 1, but a month later Alere said that it would not file its annual 10-K report for 2015 on time because it was looking into the timing of revenue recognition in Africa and China. Abbott asked Alere to terminate the merger agreement, but Alere’s board refused. Still, Wall Street remained uncertain whether the deal would close.

Late Thursday, Alere said that it will indeed have to revise earnings for 2013, 2014 and 2015, but it does not expect the changes to be material. It still hasn’t filed its 10-K but issued preliminary results for the year as well as for Q1 of this year. Both were somewhat below analysts’ consensus, but Canaccord Genuity analyst Mark Massaro was reassured enough to give the stock an upgrade to buy from hold.

“Alere’s update confirms to us that the scope of the audit squares on revenue recognition cutoff, and if the scope had expanded beyond that, Alere would have been required to disclose that in today’s interim Read Full Article

Source: Technology – IBD

Facebook (FB) received a spate of positive reviews this week, ahead of its second-quarter earnings report, which is expected to show double-digit growth in revenue and earnings.

The latest report came from Credit Suisse analyst Stephen Ju.

“We remain buyers as we believe the Street is not only undermodeling Instagram, but also not yet assigning additional optionality to the eventual monetization of Facebook’s two additional billion-user properties — Messenger and WhatsApp,” Ju wrote in a research note.

His core investment thesis is that Facebook will be able to drive long-term revenue growth without a material lift in ad loads. He believes Wall Street continues to underestimate the long-term monetization potential of upcoming new products.

Ju has an outperform rating on Facebook and a price target of 145. Facebook stock was trading near 117, down a fraction, in midday trading on the stock market today.

Facebook is scheduled to report second-quarter results after the market close July 27.

The consensus estimate is for revenue of $6 billion, up 50% year over year, maintaining a streak of double-digit growth going back more than four years.

The consensus on earnings per share minus items, as polled by Thomson Reuters, is 81 cents, up 62%.

Among other internet stocks, Read Full Article

Source: Technology – IBD

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Eric Lee displays the game Pokemon Go on his cellphone on July 13, 2016 in San Gabriel, California where he and friends were playing at the San Gabriel Mission, one of a number of landmarks across communities in southern California which can serve as gathering point for people playing the game. (Frederic J. Brown/AFP/Getty Images)

Eric Lee displays the game Pokemon Go on his cellphone on July 13, 2016 in San Gabriel, California where he and friends were playing at the San Gabriel Mission, one of a number of landmarks across communities in southern California which can serve as gathering point for people playing the game. (Frederic J. Brown/AFP/Getty Images)

The booming success of Pokemon GO might be a relief to parents who want their kids to get outdoors more. But the mobile video game might not be the safest pastime.

Players have been falling over things, falling into things, falling off of things and also trespassing, crashing their cars, and getting robbed.

Police departments from Australia to Virginia are warning players to pay attention and refrain from breaking the law. The game itself contains a warning against risky behavior.

The problem is, playing a video game can be hard to reconcile with functioning in the real world.

Pokemon GO was developed by Niantic and released on July 6 by The Pokémon Company. The game scatters virtual pocket monsters—Pokemon—at map locations in the real world. Much like geo-caching, players have to physically reach the location, as confirmed by their phone’s GPS, to Read Full Article

Source: The Epoch Times » Tech

Jefferies downgraded Equinix (EQIX) stock on views that its revenue growth through 2020 will be tied to higher investments in data center capacity, with demand for the additional space key.

Data center operators such as Equinix provide space, power and cooling. Customers pack the warehouse-size data centers with their own computer servers and other gear. Cloud computing — especially whisking data to mobile devices or PCs — has increased demand for data center space.

Jefferies analyst Mike McCormack downgraded Equinix to hold from buy while raising his price target to 400 from 380. Equinix stock has jumped 26% in 2016. Equinix stock slipped 1%, near 380, on the stock market today.

“We continue to believe Equinix is well positioned to benefit from the strong secular tailwinds of the cloud and an increasingly interconnected world. While estimates could push modestly higher, we believe upside is limited, and we look for a better entry point before becoming more constructive,” McCormack said in a report.

Equinix customers include Amazon Web Services, the cloud computing business of Amazon.com (AMZN),  and Microsoft (MSFT), as well as large companies moving to cloud services.

Equinix converted to a real estate investment trust (REIT) in 2015, which Read Full Article

Source: Technology – IBD

A Comcast (CMCSA) purchase of Level 3 Communications (LVLT) is unlikely near-term and Level 3 is more likely to make an acquisition itself rather than be sold, says Oppenheimer & Co. in a report.

Level 3 stock has shot up 19% since June 27. Level 3 has been reviewing strategic alternatives, according to an internet report on July 13.

“While we recognize the strategic value Level 3 would bring to Comcast, we do not think an acquisition is likely over the next couple of years,” Oppenheimer analyst Tim Horan said in a report. “We believe Comcast is focused on its consumer offerings, mainly figuring out its (online video). We also believe that the company is more likely to focus on its wireless strategy before it would consider making a major acquisition in the enterprises space.”


IBD’S TAKE: Comcast stock has been trading near all-time highs. Learn more at Swing Trader. Comcast’s biggest acquisition was NBCUniversal from General Electric (GE), whose stock has been at eight-year highs. GE has targeted the industrial internet. Comcast may eye a wireless acquisition such as T-Mobile US (TMUS), some analysts have speculated.


Horan speculates Read Full Article

Source: Technology – IBD

No. 1 fabless chipmaker Qualcomm (QCOM) is expected to print a fifth consecutive quarter of declines when it reports June-quarter earnings after the close Wednesday, but the Apple (AAPL) supplier will hit the black again in September on the iPhone 7, analysts say.

Qualcomm stock is up nearly 10% this year, outperforming IBD’s 41-company Electronic Semiconductor-Fabless industry group which has gained 7.6%. Shares are forming a flat base, with a possible 56.37 buy point. Shares rose above their 50-day moving average on July 8 and remain above that key support line.


IBD’s TAKE: Qualcomm, with an IBD Composite Rating of 43 and Relative Strength Rating of 44, is not a highly rated stock. But another fabless chipmaker, Broadcom, has a highest-possible CR of 99 and an RS of 81, and it might be worth more of your time because it also is among companies working on what look to be sound bases.


For its fiscal Q3 ended June 26, Qualcomm is expected to report $5.58 billion in sales ex items and 97 cents earnings per share minus items, down 4% and 2%, respectively, vs. the year-earlier quarter, according to the consensus of analysts polled by Read Full Article

Source: Technology – IBD

After being punished for antitrust violations in the e-books field, Apple (AAPL) is facing renewed accusations of anti-competitive behavior related to subscription services sold through its App Store.

Late last month, Apple streaming music rival Spotify accused Apple of anti-competitive behavior for rejecting its updated iOS app on the grounds that it violated the App Store’s “business model rules.”

Spotify didn’t file legal action, but instead publicly issued a call to elected and regulatory officials to act. And two legal experts told IBD that Spotify has a good chance of getting regulators, particularly in Europe, to go after Apple for its App Store policies.

“When you have an application of your own and you also control the distribution through the Apple App Store (of rival apps), that can easily raise anti-competitive concerns,” Nicholas Economides, a professor at New York University’s Stern School of Business, told IBD.

Apple App Store issues have been simmering, and Spotify aims to bring the pot to boil. While Apple doesn’t break out App Store revenue, and it might be relatively small, changing its policies could be a big revenue-booster for subscription services such as Spotify and streaming video providers Netflix (NFLX) and Hulu, among others.

Apple More Restrictive Read Full Article

Source: Technology – IBD