Tag Archives: technology

Could Lam-KLA Marriage Face ‘Deal-Killing’ Objection By Intel, TSM?

Lam Research ( LRCX ) and KLA-Tencor ( KLAC ) could be forced to trim competitive segments to push through the $10.6 billion merger that threatens to swallow rival Applied Materials ( AMAT ), Semiconductors Advisers President Robert Maire said Monday. And unlike Applied Materials’ failed attempt to acquire Tokyo Electron, Lam only sees $250 million in initial savings and therefore has less wiggle room to negotiate potential antitrust remedies, Maire wrote in a research report. “Both Lam and KLA are already superbly run companies without a lot of cleaning up to be done,” he wrote. “This suggests that there is not a lot to be gained in efficiency by the combo as they are already quite profitable as separate entities.” The synergies, however, have likely prompted antitrust concerns. Last week, the U.S. Department of Justice sent a “ second request ,” asking for more information into Lam’s plan to buy KLA. Now, the duo could be forced to sign a “plea bargain,” Maire said. KLA products measure competitors’ dep and etch tools, leading to a “fox guarding the hen house” paradigm where a Lam-owned subsidiary would be charged with rating rivals’ tools. Under the DOJ consent decree, KLA could be forced to divest those businesses or license its technology. “The range (of potential remedies) is quite broad, from almost zero cost to deal-killing cost and everything in between,” Maire said. Applied Materials and Tokyo Electron eventually called off their merger in the face of stringent regulatory concerns. After the DOJ rules, the Lam-KLA deal still faces potential fights from regulators in Japan, China, Korea and the Netherlands, where a number of rivals operate. And major chip manufacturers  Intel ( INTC ) and Taiwan Semiconductor Manufacturing ( TSM ) also will likely have objections, Maire says. “We would imagine that they are concerned about their suppliers gaining too much leverage against them and holding too much consolidated power,” he wrote. “Both are probably happier with the status quo.” On the stock market today , Lam and KLA stocks were each rose a fraction, trailing a 1% rise in Applied Materials stock. No. 1 chip-gear maker ASML ( ASML ) stock also rose a fraction Monday.

Netflix Shows Signs Of Life While Facebook, Amazon Breach Key Levels

Loading the player… The “FANG” stocks are showing some compelling chart action today, with Netflix ( NFLX ) seeing some signs of life and Facebook ( FB ) dropping back below buy range. Meanwhile, Amazon ( AMZN ) is breaching a short-term support level and Google owner Alphabet ( GOOGL ) is hitting resistance at a long-term measure. Netflix Netflix rose 2.6% in average volume to hit its highest level in a month. The stock is now nearing its 50-day line, an area it breached after issuing disappointing quarterly results. If Netflix can retake that level it would be bullish. Shares are 28% below their all-time high reached in December. Facebook Facebook once again fell back below buy range from a cup-with-handle base it initially cleared on the heels of its view-topping quarterly earnings report about a month ago, losing 1.2%. Despite the negative action, volume was lighter than average and the stock is only 4% below its all-time high. It’s also still holding above its 50-day line and sell territory. Amazon Amazon fell below its 10-day line, sliding 0.9%, after finding support there in the past four sessions. But the stock is just 3% below its high and is extended 16% past a cup-with-handle base buy point it cleared ahead of the company’s estimate-beating earnings report. Alphabet Alphabet continued to hit resistance at its 200-day line for a third session, dropping 0.6%. Shares tried to break out of a cup-with-handle base ahead of its latest quarterly report, but breached their key moving averages in the wake of the results. Alphabet is now trading 11% below its high reached in February.

Two Techs In Hyper-Growth Mode Positioned For Solid Earnings

Splunk ( SPLK ) and Pure Storage ( PSTG ) are positioned to deliver solid earnings this week, despite a challenging environment for spending on information technology, analysts say. Pacific Crest Securities analyst Brent Bracelin said in a research note Monday that Splunk remains the firm’s “highest-conviction growth idea that continues to deliver solid results.” And he said Pure Storage has emerged as the largest and fastest-growing provider of flash-based storage technology “that we believe remains well positioned to grow 60%-plus this year, driven by share gains in a shrinking storage market.” IBD Take: Splunk ranks No. 4 in its group. Learn why at IBD Stock Checkup . Splunk provides software for machine-to-machine data analytics that companies use to attain real-time intelligence. The consensus on Splunk is for revenue of $174.1 million for its fiscal Q1 ended on or near April 30, according to a poll by Thomson Reuters. That would be an increase of 38.5% year over year, maintaining its double-digit growth rate going back more than four years. Analysts expect a 2-cent loss per share minus items, vs. a 1-cent loss in the year-earlier quarter and an 11-cent profit in the previous quarter. Splunk is set to report after the market close Thursday. “We remain bullish on the prospects for Splunk to grow into a $1 billion-plus revenue franchise based on a differentiated software,” Bracelin wrote of the company that posted revenue of $668 million for fiscal 2016 ended Jan. 31. RBC Capital Markets analyst Matthew Hedberg has an outperform rating on Splunk stock and a price target of 60. Splunk shares were near 54, up 2%, in afternoon trading in the stock market today . The stock is 81% higher since hitting a low of 29.85 on Feb. 12. Pure Storage, meanwhile, is set to report earnings after the market close Wednesday for its fiscal Q1 ended April 30. The Wall Street consensus estimate on revenue is $138 million, up 86% year over year, following 12 quarters in a row of triple-digit gains. The bottom-line consensus is for a per-share loss minus items of 23 cents, vs. a 26-cent loss in the year-earlier quarter. Pure Storage received an upbeat review ahead of its Q1 report, with an analyst saying the flash storage market appears to be growing faster than expected. Pure Storage stock was trading near 14.75, up 1.5%, Monday afternoon. It came public in October 2015 with shares priced at 17. Other tech companies reporting this week include  Hewlett Packard Enterprise ( HPE ) and HP Inc. ( HPQ ) Hewlett Packard Enterprise, which provides business enterprise services and cloud-enabled technologies, is projected to report revenue of $12.3 billion and EPS minus items of 42 cents. It reports after the close Tuesday. Hewlett-Packard Enterprise was trading near 16, up 1.5%. HP, which sells personal computers and printers, reports its fiscal second quarter after the close Wednesday. The consensus on revenue is $11.7 billion, with views for EPS minus items of 38 cents. HP stock was near 11.70, up a fraction.