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Google Worries Mount Over EU Antitrust Fine, Oracle Case Outcome

The European Commission may hit Alphabet ‘s ( GOOGL ) Google with a $3.4 billion fine as early as June on grounds that the U.S. Internet giant favors its own shopping service in Internet searches. The European Union’s biggest antitrust fine to date was $1.45 billion, against chipmaker Intel ( INTC ) in 2009. The EU in 2013 also fined Microsoft ( MSFT ) $730 million for failing to respect an antitrust settlement with regulators. The most Google could be fined would be 10% of annual revenue under EU law, which would be roughly double the $3.4 billion fine. Google posted revenue near $75 billion in 2015 and reported $75.3 billion in cash, cash equivalents and marketable securities in its Q1 earnings release. The Sunday Telegraph first reported the antitrust fine. Google has not commented. The EU’s European Commission (EC) regulators in recent years have investigated other U.S. companies — including Amazon.com ( AMZN ), Facebook ( FB ) and Apple ( AAPL ) — over antitrust and privacy issues. If the EU fines Google, it would put U.S. regulators in the spotlight. The Federal Trade Commission in 2013 ended an investigation into whether Google abused its dominance in the Internet search market without bringing charges. The EU has opened up a separate probe involving Google’s Android smartphone software. Meanwhile, a copyright infringement case involving Oracle ( ORCL ) and Google is heading into its second week. Oracle claims Google violated its copyright on parts of the Java programming language when it created the Android mobile operating system, now used in mobile phones worldwide. Oracle is seeking $8.8 billion in damages. “If the EC does issue the ruling, Google is required to comply with the nondiscrimination ruling even while pursuing a possible court appeal, which could take three to five years,” said Paul Gallant, an analyst at Guggenheim Partners, in a research report. “This is not well understood by investors. “In addition, if Google refuses to comply — or if its revisions are deemed inadequate — it can be subject to an ongoing noncompliance fine  of up to 5% of its global annual revenues, pro-rated daily.” Alphabet stock was flat in early trading, near 724. Alphabet stock broke out of a cup-with-handle base at a 777.41 buy point on April 14, but it is now near the 7% to 8% decline where selling shares is recommended.

Salesforce Billings In Focus Ahead of Q1, Buzz Over AWS Deal

Amid buzz over its deal with Amazon Web Services, Salesforce.com ( CRM ) reports fiscal Q1 earnings after the close Wednesday, with profit minus items expected to rise 46% to 23 cents per share and revenue growing 25% to $1.89 billion. Some analysts are cautious after Salesforce’s Q4 beat, thinking some deals might have closed a quarter earlier than expected, lifting Q4 but hurting Q1. “For Q1, we forecast a year-over-year billings increase of 13%,” said Barclay’s analyst Raimo Lenschow in a research report. “While optically low, Salesforce is seeing more renewals shift into Q4, where billings grew 28%, with some of that coming out of Q1.” Salesforce last week said it would offer a new “Internet of Things” service using AWS, the cloud computing business of Amazon.com ( AMZN ). Salesforce’s service, expected to launch this fall,  collects data from Web-connected devices. AWS is the No. 1 cloud services provider. Salesforce has an IBD Composite Rating of 95 out of a possible 99, putting it among the top 5% of all stocks in such key metrics as sales and revenue growth. But its Computer-Software Enterprise group ranks just No. 115 out of 197 groups tracked by IBD. Salesforce stock, up a fraction near 77 in early trading in the stock market today , is down 1.5% in 2016, but it’s up nearly 35% since touching a 19-month low in February, during the broad market sell-off. The growth trajectory of the software maker’s Marketing Cloud platform should be one topic on the earnings call. “After a monster Q4, first quarter fiscal 2017 optics will look worse,” said Citigroup analyst Walter Pritchard in a research report. Citigroup “inputs suggest strong business activity for Salesforce in Q1, but in context of (its) strong Q4, which likely pulled in some Q1 business,” wrote Pritchard. “We forecast billings +14% to $1.43 billion, at the high end of guidance.” For the June quarter, analysts polled by Thomson Reuters estimate EPS growth of 30% and sales to rise 21%.

Pfizer Acquiring Anacor For Potential Blockbuster Eczema Drug

Big pharma Pfizer ( PFE ) said Monday that it’s acquiring small biopharma Anacor Pharmaceuticals ( ANAC ) for $4.5 billion in cash, sending the latter’s stock up more than 50% in early Monday trading. Pfizer agreed to pay $99.26 a share for Anacor, a 55% premium over Friday’s closing price. The total transaction value is $5.2 billion, assuming the conversion of Anacor’s outstanding convertible notes, Pfizer said. Anacor’s sole commercial product is a toenail-fungus ointment called Kerydin, distributed by Novartis ( NVS ), but Pfizer’s press release on the merger played up Anacor’s eczema treatment crisaborole, which is under FDA review due for completion by Jan. 7. “We believe the acquisition of Anacor represents an attractive opportunity to address a significant unmet medical need for a large patient population with mild-to-moderate atopic dermatitis, which currently has few safe topical treatments available,” said Albert Bourla, head of Pfizer’s innovative businesses, in the release. Pfizer estimates crisaborole could reach peak annual sales of $2 billion. The buyout adds another asset to Pfizer’s innovate drug business, which it is widely expected to separate from its established-products business sometime in the next few years. Pfizer has said that it will make a decision on whether to split by year’s end. Pfizer already has a significant presence in inflammation and immunology, including blockbuster rheumatoid arthritis treatments Enbrel (sold in partnership with Amgen ( AMGN )) and Xeljanz.  Regeneron Pharmaceuticals ( REGN ) recently reported strong late-stage data for its injectable drug dupilumab in atopic dermatitis, so while the market is currently underserved, it may soon become more competitive. Anacor stock was up 54.7% in opens trades  on the stock market today , near 99. Pfizer stock was down a fraction, near 33. Regeneron stock was up almost 3%.