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Cogent Stock Buybacks Loom, As Regulatory Outlook Improves

Cogent Communications Group ( CCOI ) might bring back a stock buyback program later this year, analysts say, and regulatory developments could also work in its favor. Cogent late Thursday reported Q1 earnings and revenue that modestly beat views. Cogent stock was up nearly 3% in late-afternoon trading in the stock market today , above 39. The provider of Internet communications services to small and midsize businesses has an IBD Composite Rating of 91 out of a possible 99, and it broke out of a cup-with-handle base at a 36.85 buy point on Feb. 26. Cogent stock has climbed 13% in 2016. Cogent told analysts on its earnings call after the close Thursday that it could bring back a share repurchase program if its debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization) ratio improves. “As EBITDA should trend higher in the subsequent quarters, Cogent management intimated that it will re-implement a capital return program to complement the regular dividend,” Jim Breen, an analyst at William Blair, said in a research report. At Cowen & Co., analyst Colby Synesael wrote that “we have updated our model to reflect what we think will be a stock buyback of equal size to its current recurring dividend, starting in Q3.” There might be upside for Cogent from Internet video, also called over-the-top (OTT) services, some analysts say. On the regulatory front, the  Federal Communications Commission has proposed to regulate prices in the $20 billion market for business data services , drawing criticism from  AT&T ( T ) and cable TV rivals. The proposal could help companies such as Level 3 Communications ( LVLT ) and Cogent, which sometimes lease lines from bigger telecom firms to serve their own customers. Cogent reported Q1 profit of 8 cents per share, swinging from a 4-cent per-share loss in the year-earlier period. Revenue rose 11% to $108.3  million. Analysts had modeled profit of 7 cents and revenue of $107.6 million.

Huawei P9 Imitates Apple: ‘New Dog With Old iPhone Tricks’

Chinese Huawei’s P9 is a “new dog with old iPhone tricks,” beating Apple ( AAPL ) to the smooth-backed punch, but including the usual chip suspects — Broadcom ( AVGO ), NXP Semiconductors ( NXPI ), Skyworks Solutions ( SWKS ) and Texas Instruments ( TXN ). But the iFixit teardown of the P9 smartphone did little for Broadcom stock was down a fraction in late-afternoon trading Friday, while NXP and Skyworks were both up a fraction. Texas Instruments stock, however, was up 1% on the stock market today . The Huawei P9 looks familiar , iFixit wrote, wondering, “just how far did Huawei go to imitate, and perhaps surpass, the iPhone?” IFixit notes the Huawei P9 camera is embedded within the body — as opposed to the bump in the iPhone 6S. Apple suppliers fill the inside of the Huawei P9, but their functions can vary from the iPhone 6S. Samsung supplies both — but it has a flash-memory chip inside the P9 as opposed to a RAM (random access memory) offering within the 6S, says iFixit. Huawei tapped SK Hynix for its RAM. Apple used Toshiba for its 6S flash memory. Texas Instruments supplied a fast-charging chip for the Huawei P9 vs. a power-management chip for the Apple 6S. And Huawei’s audio codec by HiSilicon is mirrored by Cirrus Logic ‘s ( CRUS ) chip inside the Apple flagship. Broadcom provides two chips for Huawei as opposed to a single chip for Apple. NXP, a single chip for the P9 and two chips for the 6S. The Huawei phone has three Skyworks chips vs. two Skyworks power amplifiers within the iPhone 6S. Huawei’s and Apple’s flagship phones both scored a 7 out of 10 on iFixit’s scale of repairability.

Alibaba’s Audacious Goal To Reach $1 Trillion In Merchandise Sales

Alibaba ( BABA ) says it’s on a path to realizing its vision of achieving $1 trillion in gross merchandise volume in about four years, as it also pursues a goal of reaching 2 billion consumers on its e-commerce platforms. During the company’s conference call after posting its fiscal-fourth-quarter earnings on Thursday, company CEO Daniel Zhang cited reasons he’s optimistic of hitting the $1 trillion GMV goal. One big reason, he noted, is Alibaba’s successful transition from PCs to mobile devices. By comparison, e-commerce software firm ChannelAdvisor ( ECOM ) estimates Amazon.com ‘s ( AMZN ) GMV in 2015 at $225.6 billion, with 310 million users. At the time of Alibaba’s initial public offering in September 2014, mobile contributed less than 40% of GMV. Today, it’s 73%. Success also depends on international expansion and in continuing to transform its e-commerce business, along with continued investments and growth in its media and digital entertainment platforms, as well as its cloud computing business. Alibaba is one of the four largest Internet companies in China. The others are JD.com ( JD ), which runs a direct-to-consumer e-commerce site similar to Amazon ( AMZN ); China search-engine leader Baidu ( BIDU ); and Tencent Holdings ( TCEHY ), which dominates in gaming and mobile messaging. For all Zhang’s bravado, Alibaba is less than halfway toward its goal: For its fiscal year ended March 31, Alibaba had GMV of $485 billion, up 27%. And it said it had 423 million active buyers, up 21%. GMV is the total value of goods sold across Alibaba’s e-commerce platforms. Alibaba does not take part in direct sales, hold inventory or compete directly with its merchant base. Businesses and consumers use Alibaba’s e-commerce platform, and Alibaba takes about a 2.5% cut of GMV sales. It also makes money from advertising. Alibaba Counts On Growth For Tmall, Taobao Alibaba’s core e-commerce retail platforms are Taobao, Tmall and Juhuasuan. Together, they have 367 million active buyers, with about 90% of Alibaba’s revenue generated in China. Getting to $1 trillion will depend on the growth and expansion mainly of Tmall and Taobao. Tmall is China’s largest business-to-consumer website. Taobao is a consumer-to-consumer e-commerce website similar to eBay ( EBAY ). Taobao is the larger of the two. In fiscal 2016, it hit GMV of $295 billion, up 18%. Tmall reached $190 billion, up 43%. Part of Alibaba’s GMV growth is pegged to global expansion. Alibaba last month announced it acquired a controlling stake in Singapore-based Lazada, a leading e-commerce platform in Southeast Asia, for $1 billion. Lazada operates online retail platforms across Indonesia, Thailand, Philippines, Malaysia, Vietnam and Singapore, with GMV of $1 billion in 2015. “Our acquisition of a controlling stake in Lazada will allow access to 560 million consumers in one of the most promising markets for e-commerce,” said Chung Tsai, Alibaba executive vice chairman, in the earnings conference call. Alibaba in the March quarter showed its highest growth rate in a year, despite an economic slowdown in China. “In these challenging times for the global economy, Alibaba is bucking the trend,” said Tsai. He said Chinese households today have aggregate net cash reserves of more than $4.6 trillion. “This accumulated wealth and liquidity is the result of real double-digit wage growth over the past decade,” he said. Kerry Rice, an analyst at Needham, says Alibaba has a lot of room for growth ahead. “We expect the company’s core business to continue to be the engine of growth, and despite its scale and dominant market share, we believe it still has significant room for growth,” Rice wrote in a research report. Rice rates Alibaba stock a buy, with a price target of 95. Alibaba stock was up a fraction in afternoon trading in the stock market today , near 79.50. Alibaba stock is up nearly 30% since touching a seven-month low in early February. Alibaba’s stock has had a rocky trip since its blockbuster IPO raised $24 billion, the most ever. Shares priced at 68 and hit a peak of 120 in November 2014. RBC Capital Markets analyst Mark Mahaney has an outperform rating and price target of 105 on Alibaba stock, up from a previous target of 89. Based on its strength in mobile, “we believe this means Alibaba can sustain premium growth rates in its key retail segment for the foreseeable future,” Mahaney wrote in a research note.