Author Archives: Scalper1

Verizon Seen Putting ESPN In Skinny TV; Disney Praises Dish Sling

Verizon Communications ( VZ ) will bite the bullet and include sports channel ESPN in its “Custom TV” package, giving Walt Disney ( DIS ) a boost amid worries over falling pay-TV subscribers, speculates Deutsche Bank in a research report. “We believe Verizon will soon adjust its Custom TV packages to include ESPN in the base tier, which will be one less source of pressure on ESPN subscribers,” said Bryan Kraft, an analyst at Deutsche Bank, in the report. Verizon launched Custom TV in April. Custom TV isn’t delivered via the Internet; it’s for pay-TV customers with set-top boxes.  Plans start at $55 per month for 35 channels. Verizon’s base package has excluded Disney’s ESPN, which garners the highest fees among cable networks. Disney sued Verizon claiming it doesn’t have rights to exclude its sports channel from TV bundles under programming deals. On Verizon’s Q4 earnings conference call Jan. 21, Verizon CFO Fran Shammo spoke to the issue. “Look, this (dispute) will go its course,” he said. “They’re a great partner of ours; we will continue to work with them and I’m not going to speak to the actual lawsuit.” Speaking more generally, Shammo also said:  “Custom TV . . . we will refresh that here in the short term to be in compliance with the contractual arrangements that we need to be in compliance with.” Disney, on its Q1 earnings call on Tuesday, had good things to say about Sling TV, an Internet service offered by satellite TV broadcaster Dish Network ( DISH ). Disney CEO Iger: Sling ‘Quite Successful’ “We’re also pleased with what we’re hearing from Dish about the response to Sling TV, a light package that includes ESPN,” Disney CEO Bob Iger said on the call. “The service appears to be growing nicely and is proving very attractive to young consumers in particular, significantly over indexing among millennials, and has been quite successful in bringing previous cord cutters back to pay TV.” Dish rolled out its $20-per-month Sling service in January. Dish did not include the four major broadcast networks, opting instead to go with ESPN. Sling had 240,000 subscribers as of June 30, analysts estimate. Dish Network did not update Sling’s subscriber total when reporting Q3 earnings. Goldman Sachs has forecast that Sling could hit 2 million by year’s end. Disney’s ESPN is also not part of Comcast ’s ( CMCSA ) over-the-top “Stream” TV service. Comcast’s Stream is available in Boston, Chicago and, according to its website, parts of Indiana and Michigan. Stream requires that customers have a broadband connection from Comcast. The service works with Apple ( AAPL ) TV, Roku and other streaming devices. No set-top box is required. Comcast on its Q4 earnings call did not disclose how many Stream users were included in its 89,000 video subscriber additions. Comcast’s Stream service includes the major live broadcast networks — ABC, CBS, NBC and Fox — along with HBO and local TV channels.

Bubbles Bursting For Technology ETFs?

Technology ETFs are badly hit, having lost in the range of 8% to 23% so far this year (as of February 8, 2016). While the broader market selloff since the start of the year kept this high-beta segment subdued, the tension flared up when LinkedIn Corporation (NYSE: LNKD ) issued a lackluster guidance for the first quarter of 2016 in early February. LinkedIn set the alarm bells ringing for the entire social networking space and plunged 44% in just one day on February 5 – the day after it reported earnings. Though LinkedIn beat on both lines, it guided revenues in the range of $3.6−$3.65 billion for fiscal 2016, below the Zacks Consensus Estimate of $3.920 billion. Pressure is also building up in LinkedIn’s Talent Solutions business which closed out 2015 with 30% year-over-year growth and is now expected to moderate to the mid-20% level this year. Management held the ongoing global market turmoil, especially in EMEA and APAC regions , responsible for this slowdown. Investors took this performance as a cue to the upcoming disaster in the entire social media space. Is LinkedIn the Sole Spoiler? The technology sector is cyclical in nature and performs well in a recovering economy, especially in the early and mid-cycle phases, per Fidelity . In these cycles, economic activities bounce back, credit growth speeds up, and economic policies are still accommodative to neutral. However, since recessionary threats are grabbing hold of the global market presently, all this economic cycle related optimism appears to fade away. Several developed economies are getting recessionary warnings, emerging economies are slowing down and the U.S. economy – the star of last year – hit the brakes in the final quarter of 2015. Yes, the U.S. economy is still far away from anything that looks like a recession, but corporate recession in the U.S. has already taken hold. Investors should note that the earnings of the S&P 500 index is likely to decrease 4.6% in the first quarter of 2016 while revenues are expected to fall 1.7% as per the Zacks Earnings Trends issued on February 3, 2016. The earnings and revenue expectations are projected to fall 1.9% and 2.1%, respectively, in the second quarter of 2016. In such a situation, investors seem to have lost faith in the broad-based emergence and adoption of high-growth tech areas like Internet, social networking and clouds, per the analysts . And the tech bubble that formed last year surprisingly has burst now. Notably, the PowerShares QQQ Trust ETF (NASDAQ: QQQ ) – an ETF built on the tech-laden Nasdaq-100 index – added 8.7% in 2015 despite declines in the other two key indices the S&P 500 and Dow Jones Industrial Average. ETFs that Got Crushed Almost all ETFs catering to cyber security, broader Internet, cloud computing and software were the hardest hit in the recent technology meltdown. The PowerShares DWA Technology Momentum Portfolio ETF (NYSEARCA: PTF ), the First Trust DJ Internet Index ETF (NYSEARCA: FDN ), the PureFunds ISE Cyber Security ETF (NYSEARCA: HACK ), the iShares North American Tech-Software ETF (NYSEARCA: IGV ) and the PowerShares NASDAQ Internet Portfolio ETF (NASDAQ: PNQI ) were among the top five losers in the last five days, having lost in the range of 11.4-13.6%. Investors should note that overvaluation concerns also dragged down these tech ETFs. As of now, PNQI, FDN, PTF and IGV have P/E (36 months) of 41.82, 41.41, 35.84 and 34.56 times, respectively. These four ETFs topped the list of the highest P/Es in the Zacks Screener . The P/Es were against the SPY’s P/E of 16.14 times and QQQ’s P/E of 20.44. So, from this trend it is clear that investors are mainly dumping ETFs with outsized P/E ratios from the online segment of the tech space. Bets for Now Still, investors may hope for a market revival and keenly desire some tech picks as the sector is among the few that are likely to report positive earnings and revenue growth in Q1 of 2016. As of now, investors can have a look at these relatively undervalued ETFs. First Trust NASDAQ Technology Dividend Index ETF (NASDAQ: TDIV ) The fund includes 100 technology and telecom companies that pay a common dividend. The lure of dividend helped the fund to evade the recent blow by a large degree. TDIV shed only 3.3% in the last five trading sessions (as of February 8, 2016). TDIV yields 2.71% annually (as of February 8, 2016). Plus, TDIV has a compelling valuation with a P/E (TTM) of 15 times. PowerShares S&P SmallCap Information Technology Portfolio ETF (NASDAQ: PSCT ) This small-cap tech ETF is less exposed to global growth worries and mainly deals with demand from the U.S. PSCT has a Zacks ETF Rank #2 (Buy) and lost 5.4% in the last five trading sessions (as of February 8, 2016). PSCT’s P/E (TTM) stands at 23 times. Robo-Stox Global Robotics And Automation Index ETF (NASDAQ: ROBO ) The fund is designed to measure the performance of robotics-related and/or automation-related companies. ROBO’s P/E (TTM) is 19 times. The fund was off 3.9% in the last five trading sessions. Technology Select Sector SPDR ETF (NYSEARCA: XLK ) This is the largest tech ETF. This large-cap fund has a compelling P/E (TTM) of 17 times and has a Zacks ETF Rank #1 (Strong Buy). The fund retreated 5.9% in the last five days, much less than some Internet funds. Original Post

Feds Tell Google: AI Brain Can Be ‘Driver’ In Self-Driving Car

Hold onto your seats — the whole self-driving car revolution just accelerated. Feds have told Alphabet ’s ( GOOGL ) Google Car chief that under federal law, a computer can count as the “driver” in vehicles that lack things like steering wheels and brakes built for humans to control. “We agree that Google’s Self-Driving System may be deemed to be the driver” for purposes of compliance with certain provisions of law, the feds’ letter to Google says, “given that there will be no foot (or even hand) control to be activated, indeed, given that the SDS will have neither feet nor hands to activate brakes.” The Feb. 4 Google Car letter from the National Highway Transportation Safety Administration  amounts to an abrupt shift in thought after years of carmakers’ developing autonomous cars by focusing on the human driver as final decision maker on the road (which actually means semi-autonomous cars). The letter makes a fork in the road, with both paths likely going forward. Will cars free of human drivers get a final go? Some issues still “must be resolved through rule-making or other regulatory means,” the letter notes. Besides Alphabet,  Apple ( AAPL ) is rumored to be working on self-driving cars in its Project Titan. Electric carmaker Tesla Motors ( TSLA ) has rolled out advanced semi-autonomous driving and inched into full autonomy. The Tesla Summon feature even lets cars maneuver largely alone to pick up owners in their driveway as owners keep an eye on what’s happening. BMW has a Remote Control Parking function on its 7 Series cars, too. Automakers  Toyota ( TM ), Volkswagen ( VLKAY ), Ford ( F ), Volvo, Daimler ( DDAIF ) and others have been testing self-driving cars. Tech firms working on aspects of the innovations include Nvidia ( NVDA ), NXP Semiconductors ( NXPI ), Mobileye ( MBLY ) and others, in partnership with carmakers. How Does A Google Car Work? Google’s approach has stood largely alone, sans humans. Addressed to Chris Urmson, director of the Self-Driving Car Project at Google, the NHTSA letter responds to the company’s November request for interpretation of federal motor vehicle safety standards. “According to Google, those self-driving vehicles (SDVs) are fully autonomous motor vehicles, i.e., vehicles whose operations are controlled exclusively by a Self-Driving System (SDS). The SDS is an artificial-intelligence (AI) driver, which is a computer designed into the motor vehicle itself that controls all aspects of driving by perceiving its environment and responding to it. Thus, Google believes that the vehicles have no need for a human driver,” the letter says. It goes on to say, “In this response, NHTSA addresses each of Google’s requests for interpretation and grants several of them.” A Reuters report Wednesday delved into the details of the NHTSA letter to Google . Safety Worries In Human-Computer Handoff So what happens with insurance when AI is driving? “The insurance aspects of this gradual transformation are at present unclear,” the Insurance Information Institute (III) said in a February 2015 topic paper on self-driving cars . It summed up the special case with Google at the time this way: “Google, the company that has been the public face of self-driving cars in the United States for the past few years, announced in May 2014 that it is building a fleet of vehicles without a steering wheel or role for a driver because its technology has not been able to successfully switch control back and forth from automated driving to the driver in an emergency and does not expect to be able to accomplish that soon. The prototype will have a top speed of 25 mph and will be summoned by a smartphone, in effect serving as an automated taxi service.” The III went on, “Other companies building autonomous cars said that they will continue to work on vehicles that will be able to safely make that switch.” But before mass production of such cars would be possible, it added, the size and cost of sensors powered by lasers used to steer the cars must come down. In the NHTSA response to Google this month, the agency says that Google has been concerned that giving human occupants controls to operate things like steering and braking “could be detrimental to safety” amid human attempts to override a self-driving system. Feds Budget Billions For Autonomous Car Tests Tuesday,  President Obama’s $4.1 trillion federal budget proposal for fiscal 2017 lays out $3.9 billion to test, over 10 years, how connected cars and self-driving cars can operate with infrastructure and each other. The budget, which would levy a $10.25-a-barrel tax on oil, “calls for a 21st Century Clean Transportation initiative ,” Obama said in his budget message, “that would help to put hundreds of thousands of Americans to work modernizing our infrastructure to ease congestion and make it easier for businesses to bring goods to market through new technologies such as autonomous vehicles and high-speed rail, funded through a fee paid by oil companies.” Autonomous car testing is planned, the Department of Transportation said last month, in “corridors throughout the country” in order to accelerate development and adoption of “safe vehicle automation through real-world pilot projects.”