Tag Archives: aapl

Facebook, Microsoft Capital Spending Good For Data Center REITs

In their Q1 earnings reports, Apple ( AAPL ), Microsoft ( MSFT ) and other big Internet companies have signaled continued strong spending on cloud infrastructure — and that bodes well for data center operators, says Pacific Crest. “The five largest cloud companies ( Amazon.com ( AMZN ), Microsoft, Alphabet ‘s ( GOOGL ) Google, Facebook ( FB ) and Apple), which account for 80% of the capital investments by top-20 cloud companies, showed an acceleration in capital investments during Q1,” Brent Bracelin, a Pacific Crest analyst, said in a research report. Data center operators have been among the best-performing real estate investment trusts in 2016. REITs are essentially portfolios of income-producing properties. They bypass the standard corporate income tax obligations by distributing at least 90% of their income to shareholders in the form of dividends. Among the top data center companies, Equinix ( EQIX ) reports Q1 earnings on Wednesday after the close, while CyrusOne ( CONE ) reports on Thursday. Equinix stock, which has a so-so IBD Composite Rating of 64, is up 9% in 2016. But  CoreSite Realty ( COR ) stock has shot up 32% and leads its group with a highest-possible CR of 99. DuPont Fabros ( DFT ) is up 25%, while Cyrus One has jumped 17%. Digital Realty ( DLR ), meanwhile, has climbed 16%. Still, IBD’s 50-company Finance-Property REIT group overall is up just 3% this year and ranks No. 53 out of 197 groups tracked. Bracelin said Facebook’s capital spending jumped 125% to $1.1 billion. Microsoft’s capital spending rose 66% to $2.3 billion, while Amazon.com’s increased 35% to $1.2 billion. “Because many of these cloud operators use custom software and white-box infrastructure, there are few direct beneficiaries across the traditional technology landscape beyond some of the data center REITs,” said Bracelin.

Apple Investors Worry That Glory Days Are Over

Now that Apple ( AAPL ) has gone ex-growth, investors are wondering if the stock’s new theme song is Bruce Springsteen’s “Glory Days.” Is it time, as the Boss sings, to “sit around talking about the old times” and “boring stories of glory days”? With the smartphone market maturing and Apple still looking for its next big thing, the heady days of double-digit sales and earnings growth could be over, some observers say. Even billionaire investor Carl Icahn doesn’t see much upside for Apple. Icahn announced Thursday that he has sold all of his Apple stock. He used to own 53 million shares, or nearly 1% of the company. Apple’s disappointing March-quarter earnings report and June-quarter guidance provided more fuel for Apple bears who say the company is past its prime. Apple stock fell 1.2% to 93.74 on Friday. Its shares have fallen in 10 of the past 11 trading sessions, tumbling 16.4% during that period. Apple stock has been a loser since it joined the Dow Jones Industrial Average on March 18, 2015. Since being added to the Dow, Apple stock has fallen 26.2%. Stock market observers note that stocks that join the blue-chip index are often past their prime . Apple late Tuesday reported that its sales fell for the first time since 2003 and iPhone unit sales fell for the first time ever on a year-over-year basis. Apple’s earnings per share declined 18% to $1.90 and its sales shrank 13% to $50.56 billion, both missing Wall Street’s targets. Analysts polled by Thomson Reuters predict that Apple’s sales will fall 15% in the June quarter, 9% in the September quarter and 3% in the December quarter. Will iPhone 8, In Late 2017, Be Next Catalyst For Apple? Oppenheimer analyst Andrew Uerkwitz on Wednesday lowered his rating on Apple stock to perform from outperform. Weakness in Apple’s business is likely to persist until late 2017 when the company launches the rumored iPhone 8, he said. Uerkwitz adopted a “more bearish outlook” for the upcoming iPhone 7, due out in September. He doubts the iPhone 7 will have enough innovative features to drive upgrade sales. “We see the stock trading sideways while investors grapple with perceived slowing innovation and unit growth on the one hand, and massive cash generating, dividend paying, attractive valuation on the other,” he said in a report. Apple’s iPhone shipments are likely to decline 10% in fiscal 2016, which ends Sept. 24, and increase by just 2% in fiscal 2017, Uerkwitz said. Uerkwitz said he is questioning his faith in Apple. “We like Apple as a company, but less so as an investment,” Uerkwitz said. “We believe investors will question if the ‘best times have passed’ or if ‘Apple can innovate no more’,” he said. To appeal to more value-oriented investors, Apple on Tuesday raised its cash return program. It increased its dividend by 10% to 57 cents a share and hiked its stock buyback plan to $175 billion from the $140 billion level announced last year. Apple CEO Cook Has Not Delivered ‘Transformative Products’ FBN Securities analyst Shebly Seyrafi on Wednesday cut his price target on Apple stock to 110 from 120, but maintained his outperform rating. “We are concerned that, over four years since assuming the CEO position in late 2011, CEO Tim Cook has not delivered any real transformative products,” Seyrafi said. Apple’s only new product introduced since the 2011 death of the company’s revered co-founder and CEO Steve Jobs was the Apple Watch, which has failed to live up to expectations. “Investors simply need to wait until 2017 when the company’s comparables get much easier,” Seyrafi said. IPhone sales growth might not return until March-quarter 2017, Rosenblatt Securities analyst Jun Zhang said in a report Wednesday. He rates Apple stock as neutral, with a price target of 102. Zhang is especially concerned about Apple’s declining sales in China, which had been a growth driver for the company. The high-end smartphone market where Apple plays appears saturated in China, he said. Enthusiasm for the Apple brand might be waning in China as well, he said. “In the past, iPhones were an icon of social status in China, but starting last year, we actually found many business persons carrying Huawei or Xiaomi phones,” Zhang said in a report. On Thursday, research firm Strategy Analytics reported that Apple fell to No. 5 in China smartphone shipments with an 11% market share in Q1. A year earlier, it was No. 2, with 12.3% share. RELATED: Apple Offers Possible Clue To Apple Car In SEC Filing Smartphone Shipments Decline; Apple, Samsung Lead Retreat

Pandora Q1 Tops Views; ‘Ticketfly’ Growing, On-Demand Platform Near

Pandora Media ( P ) stock jumped on growth in listening hours among music streaming app users and a smaller-than-expected loss amid stiff competition from Apple ( AAPL ) Music and others. On Pandora’s Q1 earnings conference call late Thursday, management reported progress developing an on-demand music platform and integrating concert ticketing services into its app. “Ticketfly” revenue of $22.3 million topped analysts’ estimate of $17 million. Pandora expects to launch an on-demand service by year-end. Marketing expenses are rising as the company diversifies. “Pandora’s user base growth continues to languish (likely due to competition from Spotify and Apple Music),” said Mark Mahaney, an analyst at RBC Capital Markets, in a research report. “Pandora is undergoing a dramatic growth investment phase to protect and grow its core ad-supported music streaming business while spending $120 million to develop an on-demand music service — a tough challenge.” Dan Salmon, analyst at BMO Capital Markets, is also cautious. “Pandora believes it can generate better margins than existing on-demand offerings through ‘free’ customer acquisition from its user base, and will aim to counter the cannibalization dynamic by targeting lower monetizing users,” he wrote in a report. Pandora said that its Q1 revenue rose 29% year over year to $297 million, topping Wall Street views of $286 million in sales. The company reported a loss of 20 cents per share minus items,  vs. expectations of a 31-cent per-share loss. Pandora raised its full year 2016 revenue and EBITDA (earnings before interest, taxes, depreciation and amortization) guidance each by $10 million. Pandora stock was near 10, up 6% in afternoon trading on the stock market today , near 10. With Friday’s gain, Pandora’s stock is still down 23% in 2016. Pandora has a low IBD Composite Rating of 27 out of a possible 99. The company said that total listening hours for its music streaming service rose 4%, to 5.52 billion. “We believe there is more value in Pandora’s roughly 80 million monthly active listeners than the market currently rewards shareholders,” William Blair analyst Ralph Schackart said in a research note, “while acknowledging the stalled-out user growth concern.”