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| October 2008 |
| Archives |
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| Friday, October 31, 2008, 5:06 PM — by Rob DeFrancesco, TechStock Radar |
| IBM Rebounds 18% |
IBM (IBM, $92.97) shares jumped 13% this week and have rebounded 18% from last Friday’s low of $78.82. Even with the rally, IBM still trades at just 10X the 2009 consensus EPS estimate of $9.24. The company generates nearly 80% of its revenue from services and software. About 75% of total revenue comes from outside the U.S.
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| Friday, October 31, 2008, 3:29 PM — by Rob DeFrancesco, TechStock Radar |
| McAfee Surges 16% |
McAfee (MFE, $32.27) shares are up more than 16% today on heavy volume following the company’s strong Q3 earnings report. A close above $32.45 sets up a potential run to the 200-day moving average at $34.39. Deutsche Bank made an excellent short-term call yesterday afternoon when it recommended buying McAfee on weakness (the stock dipped to $24.72 intraday) ahead of the earnings release. For more on McAfee, see TechStock Radar—October 30, 2008.
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| Friday, October 31, 2008, 11:00 AM — by Rob DeFrancesco, TechStock Radar |
| Research in Motion Trading Update |
Research in Motion (RIMM, $50.13) is up 5.7% today as the stock continues its rebound from last Friday’s low of $40.21. For the latest trading update, Tech-Stock Prospector subscribers should see today’s Rob’s Journal.
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| Friday, October 31, 2008, 8:58 AM — by Rob DeFrancesco, TechStock Radar |
| ComScore: Needham Sees $20 |
Needham lowers its price target on ComScore (SCOR, $12.70) to $20 from $30 based on a more cautious outlook given the current slowdown in the online sector. ComScore provides audience and data metrics for websites and is working to integrate its M:Metrics acquisition to expand the tracking of mobile Internet subscribers. In the coming months, ComScore expects to build out its mobile measurement product offerings and services to include additional platforms, such as BlackBerry and Android. For 2008, revenue is expected to come in at $117.8 million to $119 million.
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| Thursday, October 30, 2008, 5:01 PM — by Rob DeFrancesco, TechStock Radar |
| McAfee Rebounds on Strong Q3 Results |
McAfee (MFE, $29.00 after hours) shares are up 4.5% after hours following the release of strong Q3 results. Per-share earnings of 53 cents beat the consensus by four cents on revenue of $409.7 million, vs. the consensus of $395.2 million. Enterprise revenue advanced 33% to $247 million. The company closed a record 28 deals worth more than $1 million each. Consumer revenue rose 20% to $163 million. For Q4, McAfee sees EPS of 50 cents to 56 cents (consensus is 52 cents) on revenue of $400 million to $420 million (consensus is $405.5 million).
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| Thursday, October 30, 2008, 3:24 PM — by Rob DeFrancesco, TechStock Radar |
| McAfee Slides 8% Ahead of Q3 Results |
Deutsche Bank recommends buying shares of McAfee (MFE, $25.35) ahead of Q3 results out after the close. The stock, which is down more than 8% today on heavy volume, hit a 52-week low of $24.72. For more on McAfee, see TechStock Radar—October 29, 2008.
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| Thursday, October 30, 2008, 12:28 PM — by Rob DeFrancesco, TechStock Radar |
| Cadence Design Systems: Buyers Step In |
After trading down to $2.42 a share last week, EDA-software provider Cadence Design Systems (CDNS, $3.73) is attracting some value hunters. The stock is up more than 12% today on heavy volume. Last Wednesday, the company delayed the release of Q3 results after discovering some revenue-recognition problems. Cadence Design said $24 million in revenue was recognized in Q1 for contracts involving revenue that should have been recognized ratably over the duration of the contracts, starting in Q2. The company plans to restate results for the first half and release Q3 results “as soon as possible.” In the middle of this month, Cadence Design’s CEO resigned in a management shakeup involving a total of five executives.
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| Thursday, October 30, 2008, 8:15 AM — by Rob DeFrancesco, TechStock Radar |
| Foundry Networks Accepts Reduced Offer |
Foundry Networks (FDRY, $13.00) agreed to a reduced buyout offer of $16.50 a share in cash from Brocade. This is below the original offer from July of $18.50 a share in cash + .0907 shares of Brocade. The shareholders vote on the new offer has been rescheduled until November 7. Lazard Capital made a good call on Monday when it upgraded Foundry (when the stock was trading at $12.05) based on the theory that the company would go along with a reduced offer. For more on Foundry, see TechStock Radar—October 27 & 28, 2008.
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| Wednesday, October 29, 2008, 5:21 PM — by Rob DeFrancesco, TechStock Radar |
| Digital River Sinks 7% on Weak Outlook |
Digital River (DRIV, $23.31) shares dropped 7.4% today after the company, which builds and maintains e-commerce websites for customers across various verticals, issued weak guidance for the December quarter. The company sees Q4 EPS of 43 cents to 48 cents, well below the consensus of 60 cents. For the full year, Digital River expects EPS of $1.82 to $1.86 (consensus is $1.98) on revenue of $392 million to $395 million, vs. the consensus of $409.1 million. Digital River shares are off 56% from the 52-week high of $53.44.
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| Wednesday, October 29, 2008, 1:55 PM — by Rob DeFrancesco, TechStock Radar |
| Apple Jumps 7% |
Apple (AAPL, $107.70) has rallied more than 26% from its October 10 low of $85.00. For the latest trading update, Tech-Stock Prospector subscribers should see today’s Rob’s Journal.
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| Wednesday, October 29, 2008, 8:46 AM — by Rob DeFrancesco, TechStock Radar |
| McAfee: Lazard Capital Sees Solid Q3 |
Lazard Capital says channel checks indicate that IT-security provider McAfee (MFE, $29.02) will at least meet Q3 estimates when the company reports results tomorrow. The consensus numbers: EPS of 49 cents on revenue of $395.2 million. The firm also doesn’t see McAfee disappointing when it comes to Q4 guidance. The Q4 consensus EPS estimate is 52 cents. For more on McAfee, see TechStock Radar—October 24 & 16, 2008.
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| Tuesday, October 28, 2008, 4:19 PM — by Rob DeFrancesco, TechStock Radar |
| Tech Stocks Rocket Up |
The Nasdaq Compositive Index vaulted 9.5% today from severely depressed levels. Some of the individual gains within the tech sector were stellar, including VMware (VMW, $27.06) exploding 16.7% higher on heavy volume. This marked the fifth positive session in a row for VMware shares, which have rallied 48% from Friday’s intraday low of $18.30.
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| Tuesday, October 28, 2008, 2:32 PM — by Rob DeFrancesco, TechStock Radar |
| Foundry Networks Rebounds |
Foundry Networks (FDRY, $13.50) shares are rebounding nearly 9% today ahead of the rescheduled shareholder vote on the proposed acquisition by Brocade set for tomorrow at 4 pm PT. Foundry remains below the pre-buyout announcement price of $13.66 from July 21. There’s continued speculation that Brocade is scrambling to complete the deal financing, which was to include $400 million of senior notes. For more on Foundry, see TechStock Radar--October 27, 2008.
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| Tuesday, October 28, 2008, 9:11 AM — by Rob DeFrancesco, TechStock Radar |
| Google Trading Update |
Google (GOOG, $329.49) shares retreated from the October 17 high of $386.00, but have managed to hold above the recent lows in the $309 to $311 range. Since the middle of this month, the 2009 consensus EPS estimate has dropped to $22.64 from $22.92. But the pace of the decline has slowed, with the consensus down just one cent over the past week. The forward P/E stands at 14.5, vs. the expected EPS growth rate of 15.9%. The low estimate for next year of $20.88 indicates growth of just 6.9%.
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| Tuesday, October 28, 2008, 8:10 AM — by Rob DeFrancesco, TechStock Radar |
| MICROS: OpCo Sees $24 |
OpCo cut its price target on MICROS Systems (MCRS, $17.50)—a provider of enterprise applications to the hospitality and retail sectors—to $24 from $38. But the firm maintains its ‘Outperform’ rating on the belief that much of the bad news is priced into MICROS shares at current levels. The stock has fallen 53% from its 52-week high of $37.49. At the end of June, MICROS had no debt and $382 million in cash, representing 27% of the recent market cap. The stock trades at 11.4X the fiscal 2009 (June) consensus EPS estimate of $1.53.
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| Monday, October 27, 2008, 1:49 PM — by Rob DeFrancesco, TechStock Radar |
| Foundry Networks: Lazard Upgrades |
Lazard Capital upgrades Foundry Networks (FDRY, $12.08) to ‘Buy’ with a price target of $16 based on the theory that the shareholder vote on the proposed acquisition by Brocade was postponed until Wednesday to give the two companies time to renegotiate the terms of the deal. The current buyout offer is valued at $18.78 a share. Brocade management must weigh the long-term synergies and expanded total addressable market against Foundry’s slumping non-Federal revenue in North America. With $1 billion in cash on the balance sheet, Foundry’s financial position remains strong. The company’s enterprise value is down to $780 million, vs. estimated 2008 revenue of $643 million. Foundry shares are trading below the pre-buyout announcement price of $13.66 from July 21. For more on Foundry, see TechStock Radar—October 24, 2008.
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| Monday, October 27, 2008, 9:01 AM — by Rob DeFrancesco, TechStock Radar |
| Hewlett-Packard: Bernstein Sees Value |
Bernstein reiterates its ‘Outperform’ rating on Hewlett-Packard (HPQ, $32.44) based on valuation. The stock, which is down 34% from the September high of $49.20, now trades at 7.9X the fiscal 2009 (October) consensus EPS estimate of $4.09, vs. the expected growth rate of 13.3%. Bernstein lowers its price target to $40 from $55.
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| Monday, October 27, 2008, 8:21 AM — by Rob DeFrancesco, TechStock Radar |
| Netflix: Stifel Nicolaus Sees $25 |
Stifel Nicolaus upgrades Netflix (NFLX, $18.95) to ‘Buy’ with a price target of $25 based on the company’s dominant market share and strong subscriber base. Netflix shares are off 20% since the company cut its 2008 subscriber-growth forecast on October 21. In this economic slowdown, Stifel says DVD rentals are a more value-driven alternative compared to other entertainment options. For more on Netflix, see TechStock Radar—October 21, 2008.
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| Friday, October 24, 2008, 5:32 PM — by Rob DeFrancesco, TechStock Radar |
| Foundry Networks Plunges: Deal Trouble? |
Shares of Foundry Networks (FDRY, $12.67) plunged nearly 26% after the company postponed today’s shareholder vote on the proposed buyout by Brocade Communications until Wednesday, October 29. Foundry cited “recent developments related to the transaction” for the delay. The press release was issued this afternoon at 1:54 pm ET. At one point, the stock traded as low as $9.65.
In early October, Brocade entered into a $1.225-billion secured credit facility with Bank of America to partially finance the acquisition. Last week, Brocade announced plans to offer $400 million in senior notes. The proposed acquisition involves $18.50 a share in cash + .0907 shares of Brocade.
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| Friday, October 24, 2008, 12:14 PM — by Rob DeFrancesco, TechStock Radar |
| McAfee Gets Cheaper |
Shares of IT-security provider McAfee (MFE, $26.93) traded as low as $25.22 this morning, bringing the forward P/E down to 13 based on the 2008 consensus EPS estimate of $1.96. For 2009, the consensus estimate of $2.22 indicates expected growth of 13.2%. The stock is off 33% from its August high of $40.25. For more on McAfee, see TechStock Radar—October 16, 2008.
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| Friday, October 24, 2008, 8:17 AM — by Rob DeFrancesco, TechStock Radar |
| Microsoft Gets Cautious |
Microsoft (MSFT, $20.78 pre market) offered conservative guidance for the December quarter: EPS of 51 cents to 53 cents (below the consensus estimate of 55 cents) on revenue of $17.3 billion to $17.8 billion (below the consensus of $17.96 billion). The company saw a slowdown in demand at the end of September from its SMB customer base.
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| Thursday, October 23, 2008, 5:40 PM — by Rob DeFrancesco, TechStock Radar |
| VeriSign Hit By Heavy Selling |
Someone dumped a lot of VeriSign (VRSN, $20.17) on the market today. The stock fell 8.4% on big volume of 11.99 million shares, more than 2.5X average daily volume. VeriSign traded down to $18.42 this afternoon before buyers stepped in on weakness.
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| Thursday, October 23, 2008, 12:56 PM — by Rob DeFrancesco, TechStock Radar |
| Garmin: Downward Spiral |
The outlook is getting worse for GPS-hardware vendor Garmin (GRMN, $21.20). Demand for standalone portable navigation devices is on the decline as more consumers switch to smartphones equipped with GPS. Over the past 30 days, the 2009 consensus EPS estimate of $3.87 has slipped below the 2008 estimate of $3.91. Garmin shares have dropped 78% YTD.
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| Thursday, October 23, 2008, 8:41 AM — by Rob DeFrancesco, TechStock Radar |
| GigaMedia: Merrill Sees $12 |
Merrill Lynch starts coverage of GigaMedia (GIGM, $6.13) with a ‘Buy’ rating and a price target of $12. GigaMedia develops and licenses software for online gaming. The company also operates online-gaming businesses in Asia. GigaMedia recently partnered with Electronic Arts to run NBA STREET Online in China. At the end of September, the company completed its strategic restructuring with the sale of its last remaining ISP business unit.
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| Wednesday, October 22, 2008, 5:05 PM — by Rob DeFrancesco, TechStock Radar |
| Apple Trading Update |
Apple (AAPL, $96.87) finished up 5.9% today after fluctuating in a wide range between $92.93 and $101.25. For the latest trading update, Tech-Stock Prospector subscribers should see today's Rob's Journal.
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| Wednesday, October 22, 2008, 11:56 AM — by Rob DeFrancesco, TechStock Radar |
| NetSuite Claws Salesforce.com |
NetSuite (N, $10.17) is going directly after the Salesforce.com (CRM, $28.01) customer base. For those willing to switch to NetSuite, the CRM vendor is offering Salesforce.com customers a 50% discount off the value of their current implementations. Calling Salesforce.com’s subscription fees “some of the industry’s highest,” NetSuite is marketing this as a way to realize more value in this economic downturn. This is the best part: Oracle CEO Larry Ellison and his children own 64.5% of NetSuite.
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| Wednesday, October 22, 2008, 7:34 AM — by Rob DeFrancesco, TechStock Radar |
| SanDisk: Samsung Pulls Buyout Offer |
This is not a big surprise. Samsung decided to pull its proposal to acquire SanDisk (SNDK, $11.20 pre market) for $26 a share. In a letter to SanDisk CEO Eli Harari, Samsung CEO Yoon Woo Lee cites the recently announced Q3 quarter billion dollar operating loss, a hurried renegotiation of the joint venture with Toshiba and major job losses across the SanDisk organization as proof of a considerable increase in the risk profile and material deterioration in value. Perhaps Samsung will come back with a lower offer once the downside of the cycle is in sight.
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| Tuesday, October 21, 2008, 6:07 PM — by Rob DeFrancesco, TechStock Radar |
| Apple Earnings Update |
Apple (AAPL, $102.62 after hours) shares are up more than 10 points in after-hours trading following the release of fiscal Q4 results. For a full update, Tech-Stock Prospector subscribers should see today’s Rob’s Journal.
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| Tuesday, October 21, 2008, 9:17 AM — by Rob DeFrancesco, TechStock Radar |
| Netflix Cuts Guidance Again |
It has been a tough October for Netflix (NFLX, $23.80), with net subscriber additions off 30% so far this month compared with last October. The company now expects to end the year with 8.85 million to 9.15 million subscribers, slightly below previously reduced guidance (issued earlier this month) of 8.95 million to 9.25 million subscribers. For more on Netflix, see TechStock Radar—October 12, 2008.
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| Tuesday, October 21, 2008, 8:38 AM — by Rob DeFrancesco, TechStock Radar |
| SanDisk: More Tough Times Ahead |
SanDisk (SNDK, $14.42) continues to suffer from pricing pressure in NAND flash. Revenue in Q3 fell 21% to $821 million and the company lost 59 cents a share. With the oversupply situation expected to only get worse over the next few quarters, SanDisk slashed its planned ‘09 capital expenditure to $1.3 billion from $3 billion. Without a deal with Samsung, Pacific Crest says SanDisk could fall to $10 a share. While SanDisk CEO Eli Harari says the company is open to an acquisition at the right price, he reiterates that the Samsung offer of $26 a share “significantly undervalues” the company based on expected synergies and IP (next-generation storage). At this point, the $26-a-share offer looks generous.
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| Monday, October 20, 2008, 6:16 PM — by Rob DeFrancesco, TechStock Radar |
| Myriad Genetics Plans Spin-Off |
Myriad Genetics (MYGN, $58.97) announced after the close that it would proceed with plans to split into two publicly traded companies: Myriad Genetics (molecular diagnostics) and Myriad Pharmaceuticals (drug development). The drug-development unit will be spun off from Myriad Genetics in the form of a dividend distribution. Myriad Genetics will hold a conference call tomorrow afternoon to discuss details of the proposed transaction. For more on Myriad, see TechStock Radar—October 8, 2008 and September 11, 2008.
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| Monday, October 20, 2008, 12:48 PM — by Rob DeFrancesco, TechStock Radar |
| DivX: JDS Capital Ups Stake |
JDS Capital Management has increased its position in DivX (DIVX, $5.44) to 2 million shares from 1.5 million shares held at the end of June. In Q2, the money manager bought 500,000 shares of DivX, a provider of digital-media technologies. JDS now owns 6.2% of the outstanding shares. Since the end of June, the stock is off nearly 26%.
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| Monday, October 20, 2008, 9:20 AM — by Rob DeFrancesco, TechStock Radar |
| SanDisk Restructures Toshiba Joint Venture |
SanDisk (SNDK, $15.51) and Toshiba have entered into an initial agreement in which Toshiba will buy 30% of the current manufacturing capacity of the parties’ NAND flash joint ventures. In an arrangement worth about $1 billion, SanDisk is expected to receive a combination of cash and reduced equipment lease obligations. It’s estimated the cash payment could total $400 million to $500 million. The two companies will continue to be equal partners for the 70% of capacity that remains in the joint ventures. The agreement will give SanDisk some breathing room as it tries to negotiate a higher buyout offer from Samsung.
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| Monday, October 20, 2008, 8:30 AM — by Rob DeFrancesco, TechStock Radar |
| VMware: 2009 EPS Estimates Span Wide Range |
VMware (VMW, $20.69) reports Q3 results tomorrow. The consensus estimates: EPS of 20 cents on revenue of $462.7 million. Since the end of August, VMware shares have fallen 48%, bringing the P/E down to 23 based on the 2008 consensus EPS estimate of 90 cents. For 2009, the consensus estimate of $1.14 (down from $1.20 in the middle of September) indicates expected growth of nearly 27%, well above the P/E of 18. But next year’s estimates range between $1.42 and 90 cents, with the low estimate showing zero growth.
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| Friday, October 17, 2008, 4:34 PM — by Rob DeFrancesco, TechStock Radar |
| Apple Steady Ahead of Earnings Report |
Apple (AAPL, $97.40) shares finished the week virtually flat despite trading in a wide range between $116.40 and $85.00. The company reports fiscal Q4 (September) results on Tuesday. For a full update on Apple, Tech-Stock Prospector subscribers should see today's Rob's Journal.
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| Friday, October 17, 2008, 11:48 AM — by Rob DeFrancesco, TechStock Radar |
| Buffett is Buying |
Warren Buffett is buying U.S. stocks for his personal account, taking advantage of depressed share prices. In an Op-Ed in The New York Times, Buffett says he’s following a simple rule: Be fearful when others are greedy, and be greedy when others are fearful. He points out that fear is now widespread across all investor classes. While Buffett emphasizes that he’s not interested in trying to predict short-term movements of stocks, he says history has shown that the market rebounds ahead of either sentiment or the economy. He’d rather be ahead of the curve, and that’s why he’s buying now.
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| Friday, October 17, 2008, 7:36 AM — by Rob DeFrancesco, TechStock Radar |
| Aladdin: Vector Capital Ups Buyout Offer |
Aladdin Knowledge Systems (ALDN, $12.20) confirmed the receipt of a higher buyout offer from Vector Capital of $14.50 a share. The company says the offer is non-binding and subject to the due-diligence process. For more on Aladdin, see TechStock Radar—October 15, 2008.
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| Thursday, October 16, 2008, 4:23 PM — by Rob DeFrancesco, TechStock Radar |
| Google: Q3 EPS Beats By 16 Cents |
Google (GOOG, $378.50 after hours) jumped 7% in after-hours trading on news that Q3 EPS of $4.92 topped the consensus estimate by 16 cents. Revenue of $4.04 billion (+34% year over year) was in line with the consensus of $4.06 billion. Paid clicks rose 18%, vs. a 19% increase in Q2. Cash flow from operations totaled $2.18 billion (up from $1.77 billion in Q2) and free cash flow totaled $1.73 billion. In Q3, capital expenditures were $452 million, the majority of which was related to IT infrastructure—including datacenters, servers and networking equipment. Google expects “to continue to make significant capital expenditures.” The mood of the conference call will be crucial in terms of holding the after-hours gains.
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| Thursday, October 16, 2008, 11:11 AM — by Rob DeFrancesco, TechStock Radar |
| Google: '09 Estimates Slashed |
Needham cut its 2009 EPS estimate on Google (GOOG, $313.70) to $20.70 from $22.74 based on an expected sharp slowdown in online-advertising spending. The firm maintains a ‘Buy’ rating, but lowers its price target to $525 from $690. The 2009 consensus EPS estimate is in a freefall this week, down to $22.92 from $23.35 last Friday. Google reports Q3 results today after the close. For more on Google, see TechStock Radar—October 14, 2008.
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| Thursday, October 16, 2008, 8:55 AM — by Rob DeFrancesco, TechStock Radar |
| McAfee: Lazard Capital Sees $38 |
Lazard Capital starts coverage of IT-security provider McAfee (MFE, $28.24) with a ‘Buy’ and a price target of $38 based on valuation and the company’s strong product portfolio. McAfee trades at 14X the 2008 consensus EPS estimate of $1.96, vs. the expected growth rate of 12%. For more on McAfee, see TechStock Radar—September 3, 2008.
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| Wednesday, October 15, 2008, 4:14 PM — by Rob DeFrancesco, TechStock Radar |
| Aladdin Jumps on Deal Rumor |
Shares of Aladdin Knowledge Systems (ALDN, $9.43) are down 30% since the company signed a standstill agreement on September 26 with Vector Capital. The two sides are trying to figure out a way to enhance shareholder value. In August, Aladdin rejected a buyout offer of $13 a share from Vector, which owns 14.2% of the outstanding shares. Aladdin reports Q3 results tomorrow before the opening of trading. The standstill agreement expires October 30.
Aladdin jumped 6.4% today on a report in an Israeli newspaper that Vector was considering raising its offer to $14.50 to $15 a share. [Globes online]
For more on Aladdin, see TechStock Radar—September 26, 2008.
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| Wednesday, October 15, 2008, 10:13 AM — by Rob DeFrancesco, TechStock Radar |
| IBM: Shelter From The Storm? |
JP Morgan thinks IBM (IBM, $92.17) is a good place to park some money during the economic storm that is expected to curtail IT spending over the next six to nine months. The firm upgrades the stock to ‘Overweight’ based on the company’s diversified revenue mix and steady flow of recurring revenue. While the 2009 consensus EPS estimate of $9.38 indicates growth of just 7%, the forward P/E is reasonable at 9.8.
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| Wednesday, October 15, 2008, 8:07 AM — by Rob DeFrancesco, TechStock Radar |
| Cadence Design Systems: CEO Out |
Cadence Design Systems (CDNS, $5.30) CEO Michael Fister resigns. He had been with the company since May 2004, when the stock was trading above $13 a share. In addition, Kevin Bushby, executive VP of worldwide field operations, is out. I’m sure this shakeup has something to do with the bungled acquisition attempt of Mentor Graphics from this summer. For more on Cadence, see TechStock Radar—October 13 and August 18, 2008.
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| Tuesday, October 14, 2008, 3:23 PM — by Rob DeFrancesco, TechStock Radar |
| Apple Trading Update |
At this morning’s high of $116.40, Apple (AAPL, $105.83) had rebounded 36.9% from Friday’s low of $85.00. For a full update on Apple, Tech-Stock Prospector subscribers should see today's Rob's Journal.
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| Tuesday, October 14, 2008, 12:33 PM — by Rob DeFrancesco, TechStock Radar |
| SanDisk Deal Watch |
SanDisk (SNDK, $17.71) remains well below Samsung’s unsolicited buyout offer of $26 a share. It’ll be a month on Thursday since SanDisk rejected the offer as inadequate for multiple reasons. Of interest, SanDisk has yet to announce the release date for its Q3 results. Last year, the company announced the release date of October 18 on September 27. For Q3, SanDisk is expected to lose 27 cents a share on revenue of $778.1 million.
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| Tuesday, October 14, 2008, 7:40 AM — by Rob DeFrancesco, TechStock Radar |
| Google: FBR Sees $530 |
FBR restarts coverage of Google (GOOG, $381.02) with a rating of ‘Outperform’ and a price target of $530 based on the company’s dominance of search and its growth prospects from the continued shift in advertising dollars to the Web. The 2009 consensus EPS estimate is down to $23.21 from $23.35 on Friday. The forward P/E of 16.4 is below the expected growth rate of 19.3%.
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| Monday, October 13, 2008, 4:23 PM — by Rob DeFrancesco, TechStock Radar |
| Relief Rally! Nazdaq Rebounds 11.8% |
Following last week’s 15.3% meltdown, the Nasdaq Composite Index rebounded nearly 12% today, driven by an 18.6% jump in Microsoft (MSFT, $25.49) and a 14.7% gain for Google (GOOG, $381.02). I guess the world isn’t coming to an end after all. But 2009 promises to be quite challenging: Gartner now sees worldwide IT spending up just 2.3% next year, below its previous growth forecast of 5.8%.
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| Monday, October 13, 2008, 2:28 PM — by Rob DeFrancesco, TechStock Radar |
| Cadence Design Systems: Citi Maintains 'Buy' |
Citi maintains its price target of $11.50 for Cadence Design Systems (CDNS, $4.86) ahead of next week’s Q3 earnings report. The stock dipped to $4.00 on Friday, down 50% from the end of August. The firm has reduced its 2008 cash-flow target to $136 million, well below the company’s goal of $175 million. But Citi still has a ‘Buy’ rating based on restructuring (including a potential workforce cut of up to 20%), expected share buybacks and valuation. For more on Cadence, see TechStock Radar—August 18, 2008.
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| Monday, October 13, 2008, 8:10 AM — by Rob DeFrancesco, TechStock Radar |
| Synopsys: RBC Sees $21 |
RBC Capital upgrades Synopsys (SNPS, $16.60) to ‘Outperform’ with a price target of $21 based on valuation and a solid order pipeline. The firm thinks Synopsys will be able to use this downturn to strengthen its competitive position in the EDA-software market. The stock trades at 9.4X the fiscal 2009 (October) consensus EPS estimate of $1.76, which has fallen over the past two months from $1.90. For more on Synopsys, see TechStock Radar—August 21, 2008.
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| Sunday, October 12, 2008, 4:20 PM — by Rob DeFrancesco, TechStock Radar |
| Netflix: Fidelity Takes 11% Stake |
In an SEC filing on Friday, Fidelity disclosed that it owns 11% of Netflix (NFLX, $24.29). The stock jumped 5.9% on Friday, but still finished down 16.2% for the week. Netflix traded as low as $21.50 on Wednesday and then fell to $21.62 on a retest on Friday before a late rally. Fidelity now holds 6.718 million shares. For more on Netflix, see TechStock Radar—October 6, 2008 and September 10, 2008.
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| Friday, October 10, 2008, 4:58 PM — by Rob DeFrancesco, TechStock Radar |
| Tech Deal Rumors |
With many tech stocks down 50% to 60% from their 52-week highs, expect the acquisition rumors to intensify over the coming weeks. Large-cap tech companies with piles of cash are now eyeing their prey. For the latest deal chatter, Tech-Stock Prospector subscribers should see today’s Rob’s Journal.
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| Friday, October 10, 2008, 1:52 PM — by Rob DeFrancesco, TechStock Radar |
| Google Approaches October 2005 Support |
Google (GOOG, $312.45) continues to suffer from downward estimate revisions. During this week, the 2009 consensus EPS estimate has dropped to $23.35 from $23.68. The forward P/E has been compressed to 13.4 on concerns about a major slowdown in online advertising going into next year. On a technical basis, the next significant support stands around $296 from October 2005.
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| Friday, October 10, 2008, 8:42 AM — by Rob DeFrancesco, TechStock Radar |
| Microsoft Trading Update |
Microsoft (MSFT, $22.30) shares are off 12% since the company announced its latest $40-billion buyback program on September 22. The stock now trades at 10.5 times the fiscal 2009 (June) consensus EPS estimate of $2.12. On a technical basis, the next significant level of support is $21.46 from June 2006.
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| Thursday, October 9, 2008, 5:02 PM — by Rob DeFrancesco, TechStock Radar |
| IBM: Not Good Enough |
IBM (IBM, $89.00) gave up its opening gains, falling from a high of $95.31 to finish in the red. This was the seventh down day in a row for Big Blue. The next significant level of interest is the gap on the price chart at $87.94 from October 2006. The stock now trades at 10 times 2008 EPS guidance of $8.75 a share.
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| Thursday, October 9, 2008, 9:39 AM — by Rob DeFrancesco, TechStock Radar |
| Sourcefire: Remember That Buyout Offer? |
I wonder if the management team at Sourcefire (FIRE, $5.46) still thinks it did the right thing back in July when it rejected Barracuda Networks’ buyout offer of $8.25 a share. Sourcefire’s market cap has slumped to $140 million, 2X estimated 2008 revenue of $68.3 million.
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| Thursday, October 9, 2008, 8:43 AM — by Rob DeFrancesco, TechStock Radar |
| IBM: Some Good News, Finally |
IBM (IBM, $90.55) pre-announced Q3 results last night in order to stop the slide in its share price. The bottom line beat the consensus by four cents, but revenue was more than $1 billion below expectations. The company reaffirmed 2008 EPS guidance of $8.75, which is a positive sign because it indicates Q4 might not be as bad as expected for the largest companies in the enterprise IT sector. For more on IBM, see TechStock Radar—October 3, 2008.
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| Wednesday, October 8, 2008, 2:47 PM — by Rob DeFrancesco, TechStock Radar |
| Mellanox: Alger Ups Stake to 13.3% |
In an SEC filing yesterday, Alger Management disclosed that it increased its position in Mellanox Technologies (MLNX, $8.16), a provider of InfiniBand adapters and switches, to 4.203 million shares from 3.218 million shares held at the end of Q2. The stock is down 40% since the end of June. Alger now owns 13.3% of the outstanding shares. For more on InfiniBand technology, Tech-Stock Prospector subscribers should see TSP #94—October 2008.
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| Wednesday, October 8, 2008, 10:57 AM — by Rob DeFrancesco, TechStock Radar |
| SanDisk Deal Watch |
According to South Korean news agency Yonhap, Samsung is still in initial negotiations with SanDisk (SNDK, $18.08) regarding the unsolicited takeover offer. With SanDisk shares trading well below the offer price of $26, the market doesn’t have high expectations for the deal. But there continues to be chatter that Samsung will up its bid. For more on SanDisk, see TechStock Radar—October 6, 2008.
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| Wednesday, October 8, 2008, 7:47 AM — by Rob DeFrancesco, TechStock Radar |
| Myriad Genetics: OpCo Sees $92 |
OpCo starts coverage of Myriad Genetics (MYGN, $59.30) with an ‘Outperform’ and a price target of $92 based on the strong growth profile of the core molecular-diagnostics business. By the end of the year, Myriad’s board is expected to come to a decision about spinning off the core business from the pharmaceutical unit. Myriad Genetics shares traded to a 52-week high of $69.14 on September 25. For more on Myriad, see TechStock Radar--August 8, 2008.
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| Tuesday, October 7, 2008, 5:51 PM — by Rob DeFrancesco, TechStock Radar |
| Google Hits New 52-Week Low |
Google (GOOG, $346.01) shares are off 13.6% over the past five trading days. Since the beginning of September, the 2009 consensus EPS estimate has dropped 39 cents to $23.68. But this still indicates expected growth of 21%, above the forward P/E of 14.6. Using the low EPS estimate for next year of $21.00, Google’s forward P/E is 16.5.
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| Tuesday, October 7, 2008, 1:19 PM — by Rob DeFrancesco, TechStock Radar |
| Tech-Stock Prospector October 2008 Issue Now Available |
The October 2008 issue of Tech-Stock Prospector (TSP #94) has been posted to the website. Subscribers can access the PDF from the main subscriber page.
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| Tuesday, October 7, 2008, 9:31 AM — by Rob DeFrancesco, TechStock Radar |
| VeriSign Sells Remaining Stake in Jamba |
VeriSign (VRSN, $24.69) announces the sales of its minority share in mobile-content provider Jamba to News Corp for $200 million. In September 2006, News Corp agreed to purchase 51% of Jamba from VeriSign for $188 million. VeriSign paid $273 million for Jamba in 2004. This is positive news for VeriSign, which is selling off non-core assets to focus on its Web infrastructure businesses. For more on VeriSign, see TechStock Radar—October 2, 2008.
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| Tuesday, October 7, 2008, 8:01 AM — by Rob DeFrancesco, TechStock Radar |
| eBay: Deutsche Bank Sees $16 |
Deutsche Bank sees eBay (EBAY, $17.89) shares falling to $16 based on deterioration in the core business. eBay will cut 10% of its workforce at the same time that it spends $820 million in cash (and $125 million in outstanding options) to purchase Bill Me Later, a provider of online billing services. The company also announced that it spent $390 million for two online classifieds sites in Denmark. While these deals could be positive over the long term, they have been interpreted as desperate moves by a company facing a significant slowdown in its auction business.
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| Monday, October 6, 2008, 5:26 PM — by Rob DeFrancesco, TechStock Radar |
| Apple Rebounds 12% From Low |
Apple (AAPL, $98.35) rallied 12.3% from today’s low of $87.54 to close with a gain of 1.3%. The stock remains 52% below its 52-week high of $202.96.
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| Monday, October 6, 2008, 11:20 AM — by Rob DeFrancesco, TechStock Radar |
| Netflix Hit By Consumer Slowdown |
Citing the current economic climate, Netflix (NFLX, $26.41) now expects to end the year with 8.95 million to 9.25 million subscribers, below previous guidance of 9.1 million to 9.7 million. The company ended Q3 with 8.672 million subscribers (up 3% sequentially), just below the low end of its previous guidance of 8.675 million to 8.875 million. According to CFO Barry McCarthy, Netflix had an unusually weak August in terms of net subscriber growth.
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| Monday, October 6, 2008, 7:47 AM — by Rob DeFrancesco, TechStock Radar |
| SanDisk: X4 is Key |
According to a WSJ article, SanDisk (SNDK, $18.38) could have a lot more leverage when it comes to negotiating an acquisition by Samsung. That’s because SanDisk owns the rights to an advanced NAND flash technology called X4, which stores four bits of data per cell, double the current standard. While it’s not yet in production, X4 is considered a breakthrough technology because of its speed and potential cost savings. With the rollout of X4, Samsung could see its royalty payments to SanDisk jump substantially, which is one reason for the unsolicited buyout offer of $26 a share. The current licensing arrangement between Samsung and SanDisk is set to expire next year, so it’s assumed that the negotiations probably would include future payment terms for X4.
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| Friday, October 3, 2008, 4:08 PM — by Rob DeFrancesco, TechStock Radar |
| IBM Gives Up '08 Gains |
IBM (IBM, $103.44) has dropped 21% from its July high of $130.93 and is now down 4.3% YTD. The forward P/E (based on the 2008 consensus EPS estimate) has fallen to 11.8 from 14.8 at the July high. There are concerns about the 2009 consensus estimate, which if off eight cents to $9.74 over the past month. On a technical basis, there’s downside risk to the January low of $97.15.
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| Friday, October 3, 2008, 8:31 AM — by Rob DeFrancesco, TechStock Radar |
| Informatica: Two Directors Resign |
In an SEC filing yesterday, Informatica (INFA, $12.74) disclosed that two directors resigned this week. Janice Chaffin, a group president with Symantec, had been on the board since 2001 and Carl Yankowski, former CEO of Palm, had been on the board since 2003. According to Informatica, the two did not leave because of a dispute with management. Informatica has been a rumored takeover target. For more, see TechStock Radar—October 1, 2008.
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| Friday, October 3, 2008, 7:59 AM — by Rob DeFrancesco, TechStock Radar |
| Sourcefire: Morgan Stanley Sees $10 |
Morgan Stanley starts coverage of Sourcefire (FIRE, $7.00) with a rating of ‘Overweight’ and a price target of $10. The network-security provider recently rolled out its Sourcefire RNA solution, which is capable of monitoring both physical and virtual machines. For more, see TechStock Radar—September 12, 2008.
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| Thursday, October 2, 2008, 4:16 PM — by Rob DeFrancesco, TechStock Radar |
| SanDisk Deal Watch |
SanDisk (SNDK, $20.65) rallied sharply today from its early low of $18.48 on speculation that the company had agreed to a slightly higher offer from Samsung. The initial unsolicited offer of $26 a share was rejected.
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| Thursday, October 2, 2008, 3:55 PM — by Rob DeFrancesco, TechStock Radar |
| Apple On The Edge of $100 |
Apple (AAPL, $100.50) this afternoon traded right at the $100 psychological support
level. The stock is now down more than 100 points from its high. How
low can it go? For the latest downside-risk analysis, Tech-Stock
Prospector subscribers should see today’s Rob’s Journal.
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| Thursday, October 2, 2008, 9:32 AM — by Rob DeFrancesco, TechStock Radar |
| VeriSign: Lazard Sees $36 |
Lazard starts coverage of VeriSign (VRSN, $25.30) with a ‘Buy’ and a price target of $36 based on continued divestitures and a renewed focus on the core domain-name services and security (authentication and SSL) businesses. The firm expects significant gross and operating margin improvements following the completion of the divestitures. Last month, AmTech raised its rating on VeriSign to ‘Buy’ with a price target of $35 based on valuation. For more, see TechStock Radar—September 24, 2008.
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| Thursday, October 2, 2008, 9:22 AM — by Rob DeFrancesco, TechStock Radar |
| SanDisk: Toshiba On The Sidelines |
The president of Toshiba said the company doesn’t find it necessary to make a rival offer for SanDisk (SNDK, $20.00), pointing out that the two companies go way back and have significant partnership agreements. This statement has a lot of holes in it because Toshiba could see the need arise at some point in the future. While there has been chatter that Toshiba would try to top Samsung’s unsolicited offer to purchase SanDisk for $26 a share, Toshiba doesn’t appear to have the financial resources to pursue a bid. SanDisk has rejected the Samsung offer as inadequate.
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| Wednesday, October 1, 2008, 3:27 PM — by Rob DeFrancesco, TechStock Radar |
| BigBand Networks Continues to Rally |
After dropping to $3.20 on Monday, BigBand Networks (BBND, $3.90) rallied 13.5% yesterday and is up 5.7% today on no news. The stock, which remains well above its September 9 low of $2.76, crossed back above its 50-day moving average of $3.86. For more on BigBand, see TechStock Radar—September 11, 2008.
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| Wednesday, October 1, 2008, 10:29 AM — by Rob DeFrancesco, TechStock Radar |
| Research in Motion Trading Update |
Research in Motion (RIMM, $65.71) is trying to stabilize after dropping 43.8% in September. For a full trading update, Tech-Stock Prospector subscribers should see today’s Rob’s Journal.
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| Wednesday, October 1, 2008, 7:37 AM — by Rob DeFrancesco, TechStock Radar |
| Informatica: Roth Capital Sees $17 |
Roth Capital upgrades Informatica (INFA, $12.99) to ‘Buy’ with a price target of $17 based on valuation. The stock trades at 17.5X the 2008 consensus EPS estimate of 74 cents. Last month, JMP Securities said Informatica could be a buyout target for Oracle. For more, see TechStock Radar—September 23, 2008.
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