Author Archives: Scalper1

Palo Alto Networks Q2 Beats Amid Market Share Gains

Palo Alto Networks ( PANW ) stock rocketed Thursday as the cybersecurity firm’s model of providing a simplified product boosted market-share gains and helped fiscal Q2 results as well as Q3 sales guidance top projections. For its fiscal Q2 ended Jan. 31, Palo Alto’s earnings per share soared 110.5% to 40 cents, beating estimates by a penny. Sales jumped 54% to $334.7 million, above views of $318.3 million. Both measures, however, decelerated for the second consecutive quarter. Shares closed up 9.7% and rallied another 4% in after-hours trading. Customers aren’t interested in puzzle-piecing together their security solution, CEO Mark McLaughlin said on a conference call. That platform focus drove Palo Alto to add 2,000 new customers to its 30,000-strong client base. He also noted a “paradigm shift” from reactive security to the platform. ‘Buying All Elements’ “People are not interested in adding one more agent onto the endpoint,” he said. “So simplified on the endpoint is a driver and it’s very analogous to when people say, ‘Hey, I don’t want firewall and plus, plus, plus (more products).” Billings also surged 62% to $459 million during Q2 as customers began “buying all elements of our platform,” CFO Steffan Tomlinson said on the call. Subscription revenue of $84.3 million grew 68% vs. the year-ago quarter. “We’re seeing customers standardizing on our platform,” McLaughlin said. And with that, “they’re adopting a lot more subscription services than they have in the past.” Current-quarter sales guidance for $335 million-$339 million topped analyst forecasts for $334.9 million, but Palo Alto’s EPS ex items outlook for 41-42 cents missed Wall Street expectations for 45 cents. The company’s Q3 sales would be up 44% at the midpoint of guidance, and EPS ex items would rise 80% at the midpoint. But both metrics would also decelerate for the third consecutive quarter. On a seasonal basis, Q1 and Q3 tend to be weaker, Tomlinson said. While McLaughlin said security remains a top priority globally, IBD’s 41-company Computer Software-Security group has fallen 20% year to date. Over the same time period, Palo Alto Networks stock has lost 26%. McLaughlin acknowledged the stock shake-up — likely related to disappointing guidance from tech firms like Tableau ( DATA ) and LinkedIn ( LNKD ) — but said there’s nothing to indicate the macro environment will play out along stock market lines. Taking Market Share Palo Alto also appears to be swiping market share from Cisco ( CSCO ), Check Point Software Technology ( CHKP ), Fortinet ( FTNT ) and Juniper Networks ( JNPR ), McLaughlin said. Of the $300 million in added 2015 revenue across the five vendors, Palo Alto accounted for $120 million. “The average is $58 million,” he said. “I think it’s very obvious we’re taking share from everyone in the space for the math to work out that way.” During Q2, Palo Alto also announced a data-sharing partnership with Proofpoint ( PFPT ), similar to a deepened IBM ( IBM )-Check Point alliance unveiled Thursday. The Palo Alto-Proofpoint alliance will drive automated and coordinated protection across Palo Alto’s platform, Proofpoint’s targeted attack protection and SocialPatrol. The Big Picture Customers are fed up with cybersecurity vendors that try to monetize data threat intelligence, McLaughlin said. “The big picture is the way we monetize intelligence is in the platform itself,” he told analysts. “The more intelligence we have in the platform, the better job we do. And we have an insatiable desire for platform intelligence.” He added: “You better be able to take intelligence and put it in your platform, and do something with it. That’s where the value will lie.”

Baidu Stock Soars After Hours As Q4 Revenue Beats

China search leader Baidu ( BIDU ) reported Q4 revenue late Thursday that beat Wall Street’s expectations, sending Baidu’s stock up by double digits in after-hours action. Riding along with volatile China stocks feeling the impact of a slowing economy at home, Baidu’s U.S. stock is up 58% since late August but down 23% in the past 12 months, after closing Thursday’s regular session at 158.22, down 2.8%. After hours, shares of China Internet giant  Alibaba ( BABA ) were up more than 1.5% and shares of China e-commerce giant JD.com ( JD )were  up more than 1%. For Q4, Baidu saw revenue rise 33% year over year in local currency to $2.88 billion, or RMB 18.69 billion. Analysts polled by Thomson Reuters had expected RMB 18.54 billion, up 32% in local currency. Baidu posted Q4 EPS  excluding the net gain recognized from Baidu’s Oct. 26 exchange of  Qunar ( QUNR ) shares with fellow China online travel firm  Ctrip ( CTRP )  of RMB 7.61, or $1.18. Analysts polled by Thomson Reuters had expected EPS of RMB 6.62. The company guided Q1 revenue of RMB 15.41 billion to RMB 15.97 billion ($2.379 billion to $2.465 billion).  On an apples-to-apples basis, excluding Qunar from Baidu’s financials, the guidance represents a 27.8% to 32.5% year-over-year revenue increase, the company said. But that still missed the analyst consensus estimate for RMB 16.32 billion Baidu-backed Qunar announced its share swap with Ctrip.com, another leading Chinese online travel agency, in October. In the company’s earnings release, Baidu CEO Robin Li called 2015 “a touchstone year for Baidu: We made significant progress in broadening our online marketing platform and further extending our reach into transactions services. Even as China’s overall growth slows, services and domestic consumption are growing.” Company executives were slated to hold a conference call with analysts late Thursday. Baidu’s top revenue vertical markets — retail/e-commerce, local services, financial services, health care and education — “reflect Baidu’s vital role in connecting users with merchants in these growing sectors,” Li said in his statement. For Q1, Baidu is guiding revenue in an amount ranging from RMB 15.41 billion ($2.37 billion) to RMB 15.97 billion ($2.46 billion). That’s up 21.1% to 25.5% year-over-year in RMB. On an apples-to-apples basis, excluding Qunar from Baidu’s financials, the Q1 guidance represents a 27.8% to 32.5% year-over-year increase, Baidu said. As a result of Baidu’s exchange of Qunar shares with Ctrip, Baidu deconsolidated Qunar’s financials after Oct. 26. Online-To-Offline A Baidu Focus In June 2015, Baidu announced it would invest $3.2 billion during the next three years to bolster its lineup of online-to-offline, or O2O, offerings by fortifying group-buying website Nuomi, which Baidu acquired for $160 million in 2014. Baidu has emphasized that big up-front spending to establish its O20 business will pay off because its vast abilities in search will eventually translate to revenue from business commissions. The O2O business model aims to attract customers online and then direct them offline to make purchases at physical stores and to services including health care and food delivery. Earlier this month, Baidu announced that the company has received a nonbinding proposal from two Baidu executives to acquire the company’s fast-growing Qiyi video wing for $2.8 billion. The nonbinding proposal came from CEO Li and from Qiyi CEO Yu Gong, Baidu said. The pair have proposed acquiring all of the outstanding shares of Qiyi owned by Baidu based on an enterprise valuation of U.S. $2.8 billion. Should the deal be approved by a special committee formed by Baidu to review the offer, Qiyi will remain a strategic partner, although it will be independent. Baidu currently owns 80.5% of Qiyi’s total outstanding shares.  

Apple Seeks Reversal Of Judge’s Order In iPhone Encryption Case

Apple ( AAPL ) on Thursday asked a federal judge to reverse her order that the company work with the FBI to hack a password-protected iPhone used by one of the shooters in the San Bernardino, Calif., terrorist attack. In a court filing, Apple argued that the government has overstepped its bounds. “The government’s request here creates an unprecedented burden on Apple and violates Apple’s First Amendment rights against compelled speech,” it said. To fulfill the government’s demands, Apple would have to write special software that would create a “backdoor” to bypass the iPhone’s privacy and security protections. Apple CEO Tim Cook has said that complying with the court order would set a “dangerous precedent” that threatens the personal data of all iPhone users. If Apple creates the software that the government wants, it would make iPhones vulnerable to hackers, criminals, and foreign and domestic spies, he said. “This is not a case about one isolated iPhone,” Apple’s legal team wrote. “Rather, this case is about the Department of Justice and the FBI seeking through the courts a dangerous power that Congress and the American people have withheld: the ability to force companies like Apple to undermine the basic security and privacy interests of hundreds of millions of individuals around the globe.” Apple’s motion to vacate says the court order would open the floodgates to other law enforcement and government requests to hack iPhone security. Apple said the Justice Department and FBI are trying to do an end run around Congress and use the courts to set a legal precedent by invoking “terrorism.” Earlier Thursday, FBI Director James Comey told a congressional panel that court approval of the FBI’s request was “unlikely to be a trailblazer” in other cases. While the case “will be instructive for other courts,” larger policy questions about reasonable law enforcement access to encrypted data will need to be resolved by Congress and others, Comey said, according to Reuters . Microsoft ( MSFT ) President and Chief Legal Officer Brad Smith said his company “wholeheartedly” sides with Apple in its fight with the FBI over unlocking a terrorist’s iPhone, the Seattle Times reported . “We at Microsoft support Apple and will be filing an amicus brief next week,” Smith said Thursday during a congressional hearing on laws governing data transfers across borders. An Amazon.com ( AMZN ) spokesperson said that company is looking to file a brief supporting Apple’s position, BuzzFeed reported , and Alphabet ‘s ( GOOGL ) Google is also in support. On Feb. 16, U.S. Magistrate Sheri Pym ordered Apple to provide “reasonable technical assistance” to the FBI to unlock an iPhone belonging to Syed Farook, one of the killers in the San Bernardino shootings. The order calls for Apple to create software that can get around or disable the security option that erases data from an iPhone after 10 unsuccessful attempts to unlock it. Farook and his wife, Tashfeen Malik, shot and killed 14 people on Dec. 2. The radicalized Muslim couple, described in press reports as supporters of terror group ISIS, later died in a gun battle with police. RELATED: Poll Shows Solid Support For Apple In iPhone Encryption Case .