Author Archives: Scalper1

Apple Suppliers Cirrus Logic, Analog Devices Begin iPhone 7 Prep

Apple ( AAPL ) suppliers Cirrus Logic ( CRUS ) and Analog Devices ( ADI ) are lapping up foundry capacity in the back half of 2016 in anticipation of the iPhone 7, expected to be released in September, according to a report. The duo recently requested that foundry and back-end service providers reserve a significant portion of production capacity in Q2 and Q3, industry insiders told Digitimes.com. In afternoon trading on the stock market today , Cirrus Logic stock was up nearly 4%, and Analog Devices stock was up a fraction. Cirrus Logic and Analog Devices are expected to have a big impact on the design of Apple’s iPhone 7, which is widely expected to be the name of the next phone in Apple’s smartphone line. Audio chipmaker Cirrus Logic began touting its noise-canceling headphones in January. “There are definitely people considering putting that (noise-canceling headphones) in the (mobile) box,” Cirrus Logic CEO Jason Rhode said during the company’s earnings conference call. But Rhode didn’t specifically mention the iPhone. Apple generally encourages suppliers to refrain from any such comments. Apple’s iPhone 7 is expected to be thinner, ditching the headphone jack in favor of a Lightning cord connection. The iPhone 7 will also likely include Force Touch — a feature introduced in the iPhone 6S, which was released last September. Analog Devices is the rumored provider for the Force Touch technology, but tear-downs don’t make the supplier apparent. And it appears that Taiwan Semiconductor Manufacturing ( TSM ) will manufacture the lion’s share, if not all, of Apple’s A10 processors, insiders told Digitimes. Taiwan Semiconductor and Samsung both sourced the A9 inside the iPhone 6S series. That was the first time that the two companies shared this job. Previously, the pair had battled for Apple’s processor-supply manufacturing contract, leapfrogging each other from year to year. In December, Wall Street began whispering that Samsung wouldn’t pursue the A10.

Palo Alto Networks Nabs Cisco, Juniper Market Share … Again

Palo Alto Networks ( PANW ) last quarter again nabbed market share from rivals  Cisco Systems ( CSCO ), Check Point Software Technologies ( CHKP ) and Juniper Networks ( JNPR ), a Piper Jaffray analyst wrote Monday ahead of Palo Alto’s fiscal Q2 earnings late Thursday. In a survey of third parties selling Palo Alto products, half said Palo Alto is most consistently beating out Check Point, Piper Jaffray’s Andrew Nowinski wrote in a research report. “Cisco, Check Point and Juniper have consistently been called out by resellers as the vendors most frequently losing to Palo Alto,” he wrote. “These are also the top vendors in the firewall market, suggesting Palo Alto continues to gain share at the expense of all the major vendors in the space.” That’s sure to rile Cisco, which last week  unveiled a next-generation firewall in direct competition with Palo Alto, Check Point, Fortinet ( FTNT ) and Intel ( INTC )-owned McAfee. It was also the first time that Check Point was cited as the vendor Palo Alto beats most often, Nowinski wrote. Nowinski retained his rating on Palo Alto Networks stock to overweight, with a 208 price target. At least three other analysts, however, cut their price target on Palo Alto stock Monday ahead of the Thursday earnings report. Sales, EPS Seen Decelerating Palo Alto stock was up 1% in afternoon trading on the stock market today , but rival  FireEye ( FEYE ) was up 9%. FireEye announced Hewlett Packard Enterprise ( HPE ) as its global alliance partner of the year. For fiscal Q2 ended in January, Palo Alto Networks is expected to report $318.3 million in sales and 39 cents earnings per share ex items, up 46% and 105%, respectively, vs. the year-earlier quarter. It would be its first quarter eclipsing the $300 million-mark. But sales and EPS minus items are expected to decelerate for the second consecutive quarter, according to the consensus of 40 analysts polled by Thomson Reuters. The consensus model is in line with Palo Alto’s earlier guidance for $314 million to $318 million and 38 cents to 39 cents. Palo Alto stock is down 28% this year, slightly worse than IBD’s 25-company Computer-Software Security industry group, which is 24% off its 2015 closure. Cybersecurity stocks were pounded in January on a perceived slowdown in spending after gloomy reports from firms like Tableau Software ( DATA ) and LinkedIn ( LNKD ). Neither Nowinski nor Dougherty analyst Catharine Trebnick see that slowdown for Palo Alto. Trebnick maintained her buy rating and 215 price target on Palo Alto stock. She urged investors to compare Palo Alto to direct next-generation firewall vendors. Firewall Vendors Outperform Peers Barracuda Networks ( CUDA ), CyberArk Software ( CYBR ), Proofpoint ( PFPT ), Imperva ( IMPV ), Rapid7 ( RPD ), Qualys ( QLYS ), Splunk ( SPLK ) and FireEye “have provided a seemingly negative read-through for Palo Alto Networks,” Trebnick wrote in a research report. “Unlike elsewhere in security, next-generation firewall vendors that cater to enterprises have all managed to produce good enough results for investors.” Trebnick expects Palo Alto to beat consensus expectations. Wildfire and Traps are driving higher attach rates, she wrote. Wildfire is Palo Alto’s cloud-based malware-analysis system, which competes with FireEye. Traps is an endpoint-security product. Over the past 12-16 months, Palo Alto has expanded its suite of products to seven from four, Trebnick wrote. Together, Palo Alto touts them as a “next-generation security platform.” “Our sources have indicated that they are now seeing increased success from this approach as enterprises are broadening their purchases to include more of the auxiliary software subscriptions,” she wrote. Trebnick and Nowinski alike see a strong April-quarter pipeline for Palo Alto. Nowinski said he expects a 3%-4% upside to Q3 guidance despite typical seasonal weakness.

Verizon XO Purchase Could Boost 5G Wireless, ‘Small Cell’ Plans

Verizon Communications ( VZ ), in a move that could boost its plans to offer 5G wireless services, agreed to buy privately held XO Communications’ fiber-optic network for about $1.8 billion. Verizon said it expects the deal to close by June 30. Level 3 Communications ( LVLT ) has also been viewed as a potential buyer of XO Communications. Controlled by activist investor Carl Icahn, XO Communications provides services to large and midsize businesses. It also connects cellphone towers to mobile switching centers, where calls are routed to long-distance networks. In that market, XO competed with Zayo Group Holdings ( ZAYO ) and others. Verizon plans on improving its wireless network with “small cell” technology in urban areas, a process called densification. The low-power “base stations” are located in shopping malls and outdoor public spaces. “Verizon’s ownership of XO’s fiber-based IP and Ethernet networks will help better serve enterprise and wholesale customers. In addition, acquired fiber facilities will help Verizon continue to densify its cell network,” said Verizon in a statement. Verizon will also lease XO Communications’ high-frequency wireless spectrum, with an option to buy for $200 million, by year-end 2018, UBS said in a research report. “LMDS (local multipoint distribution service) is very high frequency spectrum in the 28-31 GHz bands, which Verizon believes will be well-suited for 5G,” UBS analyst John Hodulik said in the report. “XO’s LMDS spectrum covers some of the largest U.S. metros, including New York, Boston, Chicago, Minneapolis, Atlanta, Miami, Tampa, Dallas and Austin, Denver, Phoenix, San Francisco and Los Angeles.” XO has also competed in what’s called the “special access” market, along with Sprint ( S ) and Level 3, vs. Verizon and AT&T ( T ). The Federal Communications Commission has been probing how banks, schools, retail outlets and others buy high-speed data services from telecom companies. Verizon stock was up a fraction in early afternoon trading in the stock market today .