Barclays Capital analyst Vishal Shah this morning lifted EPS estimates and price targets for both First Solar(FSLR) and SunPower(SPWRA). Here are the details:
First Solar: Shah keeps his Equal Weight rating, but lifts his target to $160, from $140. (The stock closed yesterday at $146.99.) He also raised his 2009 EPS estimate to $8.16, from $7. For 2010, he trims his forecast to $7.28, from $7.75; but for 2011, he now sees $9.60, up from $9.21. Shah contends that risk/reward heading into Q3 earnings is “positive,” and that near-term concerns on pricing and margins appear to be largely discounted in teh shares. He sees longer term share appreciation, driven by an improving cost picture, a “downstream” focus and a strong record in the utility market, among other factors.
SunPower: Shah again maintains his Equal Weight rating, while increasing his target to $35, from $31. (Yesterday it closed at $31.47.) For 2009, he ups his EPS estimate to $1.25, from $1.09; for 2010 he goes to $2, from $1.80. As with FSLR, he says that near-term risk/reward “appears attractive,” with pricing pressure and margin concerns priced in. “SunPower remains well positioned in the U.S. residential market and large scale U.S. utility market and appears to be gaining traction in Germany,” he writes. Shah adds that “pricing power appears to be better than expected,” and that cost reduction potential likewise appears better than expected.
FSLR today is up $7.08, or 4.8%, to $154.07; SPWRA is up 99 cents or 3.2%, to $32.46.
Sorry, mobile WSJ readers: the free ride is about to end.
As News Corp.(NWS) CEO Rupert Murdochwarned earlier this week, Dow Jones is about to start charging for full mobile access to the Wall Street Journal. This morning, the company confirmed that effective October 24, the WSJ Mobile Reader application for the Apple(AAPL) iPhone and iPod and the Research In Motion (RIMM) BlackBerry will require a separate mobile subscription for full access to the Journal. The app itself will remain free, and will contain both free and subscription content, much like WSJ.com.
The company said it is adding some new functionality to the software, including new save and share capability, enhanced market data, stock tracking and personalization features.
A mobile only subscription will cost $2 a week. For those with either a print or WSJ.com subscription, the cost will be $1 a week. People with both print and Web subscriptions will get full mobile access for free.
Note: Barron’s is published by News Corp., as well, and some Barron’s content can be accessed via the WSJ Mobile Reader.
The Russian government is reportedly in talks to buy a stake in chip maker Infineon(IFNNY.PK).
According to Bloomberg, Leonic Melamed, the CEO of the Russian holding company AFK Sistema said at a new conference that the Russian government plans to buy a stake in Germany-based Infineon. He says Sistema won’t buy shares in the deal, but that it has been “invited to participate” as an industry expert.
Bloomberg notes that a Russian newspaper previously had reported that Sistema wanted to buy a 20% stake in the chip company for about 1 billion Euros.
Meanwhile, Bank of America/Merrill Lynch analyst Jonathan Crossfield this morning cut his rating on the stock to Underperform from Outperform, noting that the shares had moved above his 3.80 Euro/$5.60 U.S. price target. He contends Infineon shares look expensive relative to others companies in the sector; he thinks better bets in the European chip sector would be STMicro(STM) or ASM International(ASMI)
In trading on the pink sheets, Infineon shares are down 15 cents, or 2.7%, to $5.48.
This morning, Bernstein Research analyst Craig Moffett added to the fading sentiment on Sprint shares, asserting that “got it alone” remains the most remains the most likely strategy scenario for the company. “And unfortunately,” he writes in a research note, “the go it alone path remains a difficult one.”
Moffett, who has a $3 price target on the stock - which yesterday closed a hair under $4 - says fundamentals in the wireless carrier segment continue to weaken.
In particular, he notes that pricing for the post-paid market now “seems at risk.” And he points out that Sprint has made no progress in increasing its share of post-paid gross subscriber additions at a time when post-paid growth has slowed to 3.2%.
Moffett now expects the company to suffer 4.4 million post-paid net subscriber losses in 2009, up from a previous forecast of a loss of 3.5 million net subs. He think Q3 is proving difficult for Sprint - despite the exclusive deal on the Palm Pre - as iPhone sales remain strong at AT&T and Verizon continues to aggressively promote the BlackBerry.
Sprint today is down 4 cents, or 1%, at $3.94.
UPDATE: Bloomberg reports that Deutsche Telekom, already heavily leveraged, could face significant shareholder opposition if it actually does decide to pursue an acquisition of Sprint, MetroPCS(PCS) or Leap Wireless(LEAP).
Palm (PALM) after the close will post results for its fiscal first quarter ended August, and the Street is getting nervous.
Adding to the jitters, Canaccord Adams analyst Peter Misek this morning cautioned that results could disappoint. The Street consensus is for revenue of $297.7 million and a loss of 24 cents a share. Misek today cut his top-line forecast to $278 million, from $381 million, with a new loss estimate of 45 cents a share, versus a loss of 29 cents previously. Misek writes that “based on recent handset survey results and channel checks,” there is software in Pre sales: he now sees unit sales for the phone in the quarter of 500,000, down from 750,000. (I would note that the company to date has not been reporting unit sales for the phone.)
Misek, who maintains a Sell rating and $10 target on the stock, says the Pixi launch and additional carrier announcements could provide some near-term lift for the shares. But he adds that he is waiting to see “evidence of real traction” for the new Palm devices. He also contends the stock’s valuation is too rich: with a $3 billion enterprise value, the stock trades at 30x his fiscal 2011 EPS estimate of 48 cents a share. (And in case you were wondering, the Street consensus is actually lower, at 40 cents.)
Broadpoint.Amtech analyst Benjamin Schachter this morning pounded the table on Google(GOOG), repeating his Buy rating and lifting his price target to $575, from $520. He also boosted EPS estimates: Schachter now sees 2009 EPS of $22.40, up from $22.21; for 2010 he goes to $25.68, up from 25.40. For Q3, he goes to $5.62, from $5.57; for Q4, he now sees $6.25, up from $6.12.
Schachter didn’t change his top-line forecasts for the company, but he reduced anticipated operating expenses based on “increasing confidence” about moderating headcount growth in the near-term, based on a lower number of publicly available company job postings.
He also notes that by the end of of 2010, the company should have $31 billion in cash and short-term investments, or about $100 a share. Which makes you wonder when they might go out and buy something.
GOOG today is up $7.82, or 1.6%, to $496.11, a new 52-week high.
Barclays Capital analyst Douglas Anmuth this morning raised his price target for Overweight-rated Yahoo (YHOO) to $23, from $20, while increasing EPS estimates for the company. For 2009, he goes to 39 cents, from 35 cents; for 2010, he now sees 51 cents, up from 42 cents. The Street is lower for both periods, anticipating 35 cents this year, 40 cents next year.
Anmuth writes that he revised the model to reflect the effects of the pending search transaction with Microsoft(MSFT). He notes that the stock is up 20% this month, but contends the stock is still not reflecting much credit for the MSFT partnership, which he thinks has a net present value of at least $4 billion, and which he expects to boost profitability and free cash flow materially in both 2011 and 2012.
For the quarter, the China-based solar company said it expects to report revenue of between 918 million and 984 million RMB, which translates to $134.5 million to $144.1 million, which is actually well below the Street at $163.1 million. The company also repeated a previous forecast for module shipments above 100 MW. SOLF said it sees gross margin of 17%, which would be up from about 15% in Q2.
In a statement, SOLF President Peter Xie said the third quarter is “progressing well,” with improving end market demand, but “a highly competitive pricing environment.”
Despite the apparently weak revenue forecast, SOLF this morning is up 63 cents, or 10.2%, to $6.83.
Joltid, a company owned by Skype founders Janus Friis and Niklas Zenstrom, filed a copyright infringement suit in federal court in California today against eBay(EBAY) and the members of an investment group who have agreed to acquire a majority stake in Skype. The suit seeks an injunction against Skype and statutory damages for copyright infringement, the Wall Street Journal reports. The suit claims damages in the case “are amassing at a rate of more than $75 million daily.”
As the Journal notes, Joltid owns a peer-to-peer technology used in Skype’s software; in March, Joltid terminated Skype’s license to the software, a move which triggered litigation between the two sides in the U.K.
Joltid said in a statement that it will “vigorously enforce its copyrights and other intellectual property rights in all of the technologies it has innovated.” An eBay spokesman said they had not seen the complaint yet.
Earlier this month, eBay agreed to sell a 65% stake in Skype to a group of private investors, including Silver Lake, Andreesen Horowitz and the Canada Pension Plan Investment Board, for $1.9 billion in cash plus a $125 million note.
KKR agreed to invest up to $400 million in senior secured noted due 2017; Kodak also will receive warrants to buy up to 53 million shares. Kodak will have the right to reduce the note position sold to KKR to as low as 300 million, which would bring the number of warrants to be issued down to 40 million.
The notes will bear interest at 10%-10.5%, plus payment-in-kind interest of between 0.5% and 1.5%. The warrants will be exercisable for eight years after the close of the transaction, and will have an exercise price no greater than $5.50 a share. KKR will be required to hold the warrants, or shares issued as a result of the warrants for at least two years. KKR will get two Kodak board seats.
Before the transaction, Kodak had 268.2 million shares outstanding. (Add 53 million shares to that for the new warrants, then divide 53 million by that number, and you get 16.5%.)
Kodak will also launch a private placement of another $300 million of convertible senior notes due 2017, with up to $45 million of additional notes available to cover over-allotments. Terms of the convertible notes are still to be determined.
Kodak also repeated its previous forward guidance: the company sees 2009 digital revenue down 6%-12%, with revenue from the traditional business down 25%-30%, for an overall revenue drop of 12%-18%.
Proceeds from the new offerings will be used to repurchae the company’s 3.375% convertible senior notes due 2033; the company announced plans to tender for up to $575 million of the notes, at a price still to be determined.
In late trading, EK is down 19 cents, or 2.8%, to $6.49.
Speaking on a post-earnings conference call, Oracle(ORCL) President Safra Catz said the company expects non-GAAP profits for the fiscal second quarter ending November of 35-36 cents a share, up from 34 cents a year ago. The Street consensus was for 36 cents.
The company sees GAAP EPS of 26-27 cents a share, up from 25 cents last year.
Catz said the company sees non-GAAP revenue in the quarter ranging between positive 2% and negative 1%, or -2% to -5% on a constant currency basis. GAAP revenue is expected to range from flat to up 3%, or between -1% and -4% on a constant currency basis. New software license revenue is expected to range from -10% to flat, or between -5% and -15% at constant currency rates.
Note that Catz said currency this quarter becomes a positive factor, lifting license revenue by 5% and overall revenue by 4%, and boosting net income by about 2 cents a share.
Catz said the guidance does not include the pending acquisition of Sun Microsystems (JAVA); she said the company has no additional information on when the deal will close. It still awaits approval from the EU. Catz said the company is “still quite confident” that the deal will be accretive to operating income by $1.5 billion in the first full year.
One fun, typically Oracle-like note: the company said the modest Q1 top-line shortfall was in part due to weaker database sales at certain resellers - in particular singling out SAP, noting that the company saw a 40% drop in apps revenue in the latest quarter. In other words: Oracle’s shortfall? Blame it on SAP.
In late trading, ORCL is off 97 cents, or 4.4%, to $21.16.
Oracle(ORCL) shares are trading lower after the company posted weaker-than-expected revenue for the fiscal first quarter ended August 31.
Revenue for the quarter was $5.1 billion, down 5% year over year, and below the Street at $5.25 billion. Non-GAAP EPS of 30 cents a share was in line with expectations; the company said results would have been two cents higher in constant currency exchange rates.
GAAP new software license revenues were down 17%; software license updates and product support was up 6%.
The company’s guidance had been for revenue to be down 3%-5%; non-GAAP profits were in line with the forecast range of 29-31 cents.
In late trading, ORCL is down 95 cents, or 4.3%, to $21.18.
MEMC Electronic Materials(WFR) shares are trading higher today on vague rumors that the company might be a takeover target. The rumors have been picked up by TheFlyOnTheWall.com and Briefing.com, among other places; but there doesn’t seem to be much substance to the chatter. I’d note that WFR is a frequent subject of speculation, sometimes more specific than others: back in March there was talk that the company might be acquired by BASF. The Street was rightly skeptical that time, and of course, no deal ever materialized. I can’t see why you should have any more confidence in the buzz this time.
Google (GOOG) disclosed in a blog post today that it has acquired reCAPTCHA, a company that provides those Web-based security systems that involve reading squiggly type and typing it into a box. As Wikipedia notes, CAPTCHA is an acronym, that comes from the phrase “Completely Automated Public Turing test to tell Computers and Humans Apart.” According to Goole, reCAPTCHA provides CAPTCHAs to more than 100,000 wen sites.
The interesting thing is that the words in many of the CAPTCHAs come from scanned newspapers and old books. “Computers find it hard to recognize these words because the ink and paper have degraded over time, but by typing them in as a CAPTCHA, crowds teach computers to read the scanned text,” Google said in the post. So the technology will be used not only for security purposes, but also to improve Google’s book and newspaper scanning.
SanDisk(SNDK) shares received a boost this morning from Broadpoint.AmTech analyst Dinesh Moorjani, who raised his rating on the stock to Buy from Neutral, with a price target of $26, up from $20.
Moorjani writes that NAND flash supply has gotten tighter “and is now on allocation.” He reports that despite increased supply from idle capacity being turn on, NAND pricing has moved higher in both the spot and contract markets, “driven by strength from the handset and MP3 player markets.” Moorjani writes that prices are up 13% month-to-date, and 30% quarter-to-date.
“Following 3-plus years of oversupply, we believe the NAND market is in the early innings of an upcycle and that 2010 will be another year of benign pricing,” he writes. “Supply bit growth decelerated significantly this year and we do not see material new capacity coming online in the next 12 months. Notably, Samsung is not planning new capacity at this point for 2010.”
Moorjani lifted his 2009 EPS estimate to 82 cents from 30 cents; for 2010 he goes to $1.20, from 85 cents.
Google(GOOG) is in talks to buy video hosting service Brightcove for $500 million to $700 million, according to Mark Glaser, editor of the PBS MediaShift web site. Glaser wrote about the deal in a post on Twitter. He attributed the information to a “source with knowledge” of the deal.
Motorola(MOT) last night held a meeting with analysts in New York to give them an up-close look at the new Android-based Cliq smartphone. Based on some of the research notes on the event, the company did not give much more detail than it provided at the launch of the phone last week. Almost everyone had nice things to say about the phone; but there was some mixed feelings on the stock, which has already received a nice lift from the arrival of the new phone. Since the announcement, the stock is up 17%, lifting Motorola’s market cap by about $3 billion.
One thing to keep a close eye on: pricing. One analyst today said the price could be $49 or less, which would only aggravate the fierce competition in the segment. There is also a belief that Moto phones now in the works for Verizon and AT&T could be higher-end than the Cliq, which is targeting younger users who are heavy users of social networking sites.
Here’s a rundown on some of the commentary from the Street:
Phil Cusick, Macquarie: He raised his rating to Outperform from Neutral, setting a price target of $11. (The stock closed yesterday at $9.) “While the shares have run, we believe that an economic recovery can bring improved growth and margins in non-handset businesses and that the handset product cycle is just beginning.” He raised his 2010 EPS estimate to 33 cents, from 24 cents.
T. Michael Walkley, Piper Jaffray: He repeated his Neutral rating, but upped his target to $10, from $7. “While we are impressed with Motorola’s cost execution and believe its Android smartphone strategy should improve margin, we maintain our Neutral rating due to valuation,” he writes.
Matthew Hoffman, Cowen: He repeats his Outperform rating. Hoffman asserts that the Cliq could debut for $49 or less, with the overseas version - the Dext - priced at 50 Euros.
Bank of America/Merrill Lynch analyst Tal Liani: He keeps his Buy rating and $10.60 target. Liani writes that he would rate the stock a 7 out of 10, compared with a 10 for the iPhone, and 9.5 for the Palm Pre, and a 5 for the Nokia 5800 and the Research In Motion BlackBerry Storm. He notes that the Cliq is “a lower end device,” and that a higher-end device will be launched with Verizon in a few weeks, with “the best device” coming for AT&T in February.
Jeff Kvall, Barclays: Kvall keeps his Equal Weight rating and $7 target. “Motorola delivered a credible first entrant plus room for further differentiation. Sell through trajectory is now key.”
Jim Suva, Citigroup: Suva maintains his Hold rating and $7.50 target. “We are impressed with MOT’s new smartphone and attractive consumer experience but recognize the shares have run ahead of new phone launches and our experience is it is difficult to select which phones will attract customers for a sustained period,” he writes, adding “we look to assess our view on the shares as we gather more insights into customer and carrier adoption.”
Maynard Um, UBS: Keeps Buy rating and $11.50 target. “We remain constructive on MOT’s brand and distribution support which should help the company gain some traction.”
Matthew Sheerin, Thomas Weisel Partners: Keeps his Neutral rating. He writes that the company “on the right track,” but notes it will be up against “a plethora of competing devices hitting the market over the next few quarters. He points out that the stock “is already pricing in at least a modest comeback in mobile devices.”
Garmin(GRMN) should see a boost to profits in Q3 and Q4 from retailer restocking after overly tight inventory levels earlier in the year, according to Deutsche Bank analyst Jonathan Goldberg.
Goldberg today lifted his rating on the GPS device maker to Hold from Sell; he raises his price target $33, from $15. The stock closed yesterday at $36.81. He also raised his 2009 pro forma EPS forecast to $2.92, from $2.64. For 2010, he goes to $2.55 a share, from $2.24.
“Long-term trends remain highly unfavorable, and we still expect a secular decline in [personal navigation device] sales, with nothing to offset this in Garmin’s orders,” he writes. “Despite this, we would not be sellers of the stock going into the coming earnings season. The next catalyst will be sell through trends, which should become clearer post-Black Friday.”
Apple(AAPL) shares are getting a big lift today after a bullish screed on the stock last night by Jim Cramer on Mad Money. Cramer says his new price target on the stock is $264, up from $200. The issue he focused on was a coming accounting change - which I wrote about on Monday - that would allow the company to end its current practice of recognizing revenue from the iPhone over a 24-month period.
Cramer noted that the shift in revenue recognition could result in FY 2011 EPS estimates increasing to $12 a share, from a current $8.
While there is nothing fundamental in the accounting change, it will result in much higher consensus EPS estimates as tracked by First Call. And that, he says, will make the stock more appealing to the Street.
AAPL today is up $6.31, or 3.6%, to $181.47; the stock traded earlier as high as $182.75.