Twitter Update

Twitter stock slumps 50 percent as Goldman, Deutsche Bank still say `buy’

13 hours ago – Reuters
Twitter stock slumps 50 percent as Goldman, Deutsche Bank still say `buy’By Supantha Mukherjee and Saqib Iqbal Ahmed(Reuters) – Twitter Inc investors who heeded the advice of high-profile banks such as Goldman Sachs Group Inc and Deutsche Bank AG to buy the social media company’s shares might be kicking themselves.

Much more accurate calls were made by Wells Fargo, Atlantic Equities , Macquarie Research, and Jack A. Bass ,who advised clients to get out of the high-flying stock about the time it peaked in December.

On Wednesday the stock fell as low as $37.24, 50 percent below its peak of $74.73 the day after Christmas, wiping almost $18 billion off Twitter’s market capitalization.

The downgrades, and the subsequent swoon by the stock, reflect concern about slowing growth in Twitter’s user base and the company’s ability to reverse the trend. Year-on-year growth in the number of Twitter users has fallen for five straight quarters, and the company said on Tuesday that its 255 million monthly users, on average, appeared to check the service less frequently than a year ago.

That in turn has fueled doubts that Twitter could one day attract as many users as Facebook Inc’s 1.2 billion, or match its much larger rival’s power as an advertising vehicle. It’s also raised questions over whether it can sustain growth over the long term. While no one is suggesting Twitter will lose its consumer cachet as happened to companies such as MySpace or Orkut, neither can anyone guarantee that as tastes change newer rivals won’t usurp it.

“Can they become a mainstream company? That’s the open question,” said Ben Schachter, the Macquarie Securities analyst who downgraded Twitter’s stock to “underperform” on December 27 – the day after it peaked.

It’s a far cry from the enthusiasm that greeted the company when it debuted on the New York Stock Exchange on November 7 and its shares soared 73 percent over the offering price. There was no let-up for the next two months, as the stock scaled fresh highs with little or no news to justify the valuation.

That got some analysts worried. Schachter, speaking to Reuters on Thursday, recalls a “runaway momentum.”

Google Update

Shares in Google have dropped 5% despite the technology giant reporting a first-quarter profit rise of 3%.

Profits were $3.45bn (£2.05bn), but investors are preoccupied by Google’s inability to maintain advertising prices.

A widely watched measure, the average “cost per click”, was down 9% from a year earlier.

Another weak spot highlighted in the report was the firm’s discounted sale of Motorola Mobility to Lenovo.

Google sold the smartphone maker to Lenovo in January for close to $3bn, after paying $12.5bn for the firm less than two years ago.

Despite investors’ reaction, Google’s chief executive, Larry Page, was upbeat: “We completed another great quarter,” he said in a statement.

“We got lots of product improvements done, especially on mobile. I’m also excited with progress on our emerging businesses.”

However, Google continues to struggle with its ability to charge advertisers higher prices for mobile ads, which are increasingly important with more and more consumers accessing Google’s browser through their smartphones.

Advertisers have proven reluctant to pay as much for ads on mobile screens compared to Google’s bread-and-butter desktop ads, which have been the main revenue generator at the firm.

Rates for mobile ads can be half as much as on personal computers, according to Needham & Co analyst Kerry Rice.

However, Google expects mobile ad prices to catch up with PCs eventually as it becomes easier for consumers to buy products using mobile devices, Google chief business officer Nikesh Arora said.

‘A little bit dodgy’

Google has greatly diversified its portfolio of products in recent years, speculatively branching out into phonesdronesGoogle Glass, and even thermostats and fire alarms, CNet technology analyst Larry Magid said.

“Some of these crazy ideas need to become less crazy and more profitable,” he told the BBC. “Their core business, what really brings in the money, that’s beginning to get a little bit dodgy for them.”

Google’s results were not the only ones to disappoint investors on Wednesday.

Technology giant IBM reported its lowest quarterly revenue in five years.

IBM attributed the drop in revenue, which went down 4% to $22.5bn, to weak hardware sales.

Enterprise technology spending has shifted away from traditional computing giants as governments and corporations move towards online services, large-scale data analysis and IT security, FBR analyst Dan Ives said.

Facebook Target Price $ 60

 

FB : NASDAQ : US$48.45
BUY 
Target: US$60.00

 

INITIATING COVERAGE WITH BUY; EARLY STAGES OF MONETIZING THE USER BASE
Investment recommendation
We initiate coverage of Facebook with a BUY recommendation and $60 price target. Despite the stock price’s recent doubling, we believe the company is very early in generating revenue from its enormous user base.
While the path higher may not be linear, we expect Facebook’s reach, robust network effects, vast self-disclosed user data, and product innovation will increasingly make it a high-priority target destination for many marketers.
Investment highlights
 While the US is close to saturation, Facebook’s global penetration currently stands at only ~20% and we believe there is still room for user growth. Facebook already has nearly 1.2 billion monthly users, but we believe the user base can grow by roughly one-third by 2015.
 In light of the continuous user shift to mobile consumption, Facebook mobile monetization has become vital. We believe that Q2/13 was a turning point in the company’s mobile monetization. While some categories of mobile ad spend may be volatile (app downloads), we believe Facebook’s sponsored stories product is at last compelling brand advertisers to commit more spend to mobile.
 We believe Facebook is early in innovating both for ad and user products. We expect the long-anticipated video ad product and forthcoming Instagram monetization could lend upside to our outlook. In addition, new features such as real-time social metering and more ties to consumer media and entertainment could put the user base on a steeper engagement curve.
Valuation
Our $60 price target is based on 45x our 2015 EPS estimate of $1.33.
Risks
Competitive platforms might impact usage. Individuals may opt out of “sharing overload” over time. Higher ad loads could impact user satisfaction. Dual share class structure with the CEO controlling 53% of voting rights.

LinkedIn BUY Target $ 200

Image representing LinkedIn as depicted in Cru...

Image via CrunchBase

LNKD : NASDAQ : US$176.95
BUY 
Target: US$200.00

COMPANY  DESCRIPTION:

LinkedIn is the world’s largest professional network on the Internet with more than 200 million members in over 200 countries and territories. LinkedIn generates revenue through selling Hiring Solutions to corporations, Marketing Solutions to Advertisers, and Premium Subscription to members and recruiters.

Investment recommendation

We areincreasingly confident in the company’s strategy, opportunity, competitive position and long-term outlook. We note greater interest in
the transition occurring within Marketing Solutions and the timing of when growth might reaccelerate, and we will be watching the company’s progress with feed-based Sponsored Updates advertising for signs of inflection later this year.
Investment highlights
 We continue to expect Marketing Solutions (MS) revenue growth to be relatively flat sequentially for Q2 and Q3, as ~$8-10 million per quarter in “legacy” ad revenue rolls out of the model; we believe Sponsored Updates can return MS to growth by Q4.
 Member engagement continues to climb, and our new engagement index shows a doubling of per-member activity over the past five quarters.
 The transition to in-house hosting could contribute to as much as 500 bps of gross margin expansion over the next four years, although we are only modeling 300 bps.
Valuation
Our $200 price target is unchanged and is based on 60x our 2016 EPS estimate of $4.96 discounted to present at 11%.

Tech Trends That Will Make Someone Billions Of Dollars Next Year

Big Data

Big Data (Photo credit: Kevin Krejci)

The world will spend a whopping $2.1 trillion on tech in 2013

The world will spend a whopping $2.1 trillion on tech in 2013

401

2013 will be a make-it-or-break-it year in mobile for some vendors

2013 will be a make-it-or-break-it year in mobile for some vendors

Steve Kovach, Business Insider

When it come to mobile, 2013 will bring us these three things:

  • Mini tablets with screens less than 8 inches in size will be the rage, accounting for 60% of tablets sold.
  • The market for smartphones and tablets combined will grow by 20%.
  • 2013 will be a make-or-break year for mobile platforms. Those that don’t attract interest from at least 50% of app developers won’t survive. Google and Apple are past that threshold. Microsoft now sits at 33%. RIM is at 9%.

Big IT companies will feast on smaller cloud players

Big IT companies will feast on smaller cloud players

The software-as-a-service phenomenon really grew up in the past 12 months, with big vendors like Oracle and SAP spending billions to buy their way into the market.

IDC thinks we haven’t seen anything yet.

“There will be over $25 billion in SaaS acquisitions over the next 20 months, up from $17 billion in the past 20 months,” it says.

Some companies are too highly valued to make for easy acquisitions, like the publicly traded Salesforce.com, worth $22 billion, or the fast-growing, still-private Box at $1.2 billion. But a bunch of others could be ripe for deals: Okta, Zenoss, and ServiceMax come to mind

A lot of smaller, specialized clouds will sprout up

A lot of smaller, specialized clouds will sprout up

In 2012, a lot of new cloud tech came out that made it easier and more affordable for anyone to build a cloud.

That means that in 2013, a whole bunch of new clouds will crop up. These will serve specific industries, for instance hospitals, construction companies, banks.

Big data will get bigger

Just like 2012 was the year that mobile devices and cloud computing became the must-have things for every company, big data will be the thing everyone will use in 2013.

IDC says the big-data market will grow at an annual rate of 40%. It will hit about $5 billion in 2012, $10 billion by 2013, and $53 billion by 2017.

The data center as we know it is over

The data center as we know it is over

Meet Yellowstone, the super hero supercomputing fighting climate change

NCAR

New data-center technologies that took root in 2012 will become the big thing in 2013.

These include “converged systems,” where companies buy machines that have computation, storage, networking, and software bundled together.

Another is software-defined networks, which is a new way to build networks.

These represent a tremendous opportunity for the established players like Cisco, Dell, HP, and Oracle. But they are also a big risk if they get it wrong. A whole class of startups are rising up to disrupt these guys.

Your work computer will be an ID you keep in your head

Your work computer will be an ID you keep in your head

AP

The bring-your-own-device trend, also known as BYOD, will morph into BYID—bring-your-own-ID.

That is, your work computer will be available to you anywhere, on any device. All you have to do is properly log in.

This is the ultimate result of investments in new cloud, mobile, and data-center technologies

iPhone 5 New York Times Review

English: The logo for Apple Computer, now Appl...

English: The logo for Apple Computer, now Apple Inc.. The design of the logo started in 1977 designed by Rob Janoff with the rainbow color theme used until 1999 when Apple stopped using the rainbow color theme and used a few different color themes for the same design. (Photo credit: Wikipedia)

Sept.12.

SAN FRANCISCO — Apple introduced a new iPhone on Wednesday with a larger screen, faster wireless Internet speeds and a more powerful chip, as the company again seeks to demonstrate the staying power of one of the technology industry’s great franchises.

The new iPhone 5, which will go on sale Sept. 21, will start at $199 with a two-year wireless contract, as have previous versions of the device. Apple said the new device would be 18 percent thinner and 20 percent lighter than the previous version of its smartphone.

“IPhone 5 is the best phone we’ve ever made,” said Philip Schiller, Apple’s senior vice president for worldwide marketing, at an event in San Francisco where the device was introduced.

In what could be one of Apple’s more vexing moves with a new product, though, the company got rid of the traditional 30-pin dock connector for connecting the iPhone to power cables, stereo docking stations and other peripherals, replacing it with a smaller connector it calls Lightning. The change means that owners of existing iPhone accessories will have to purchase an adapter from Apple so they can plug the new phone into the those devices. The company did not say how much that adapter would cost.

Apple said it was making the change because the new connector is more durable and frees up space for other technologies inside the iPhone. The company said many of the functions of traditional iPhone cables, other than charging, were now handled by wireless connections like Bluetooth.

The bigger screen in the iPhone 5 marks the first time Apple has altered the dimensions of the iPhone’s display, which has measured 3.5 inches diagonally since the original iPhone Apple released in 2007. While the display at that time seemed gigantic compared with the tiny screens on most cellphones, Apple’s competitors have been far more aggressive in pushing more capacious displays on their smartphones, with some screens approaching nearly 5 inches.

Apple said the new display offered a bigger canvas for activities like reading a book, browsing Web sites and watching movies. It also shows how the dividing line between phones and tablet computers is becoming fuzzier.

Apple is developing a new model of the iPad with a 7.85-inch display that it could announce before the start of the holiday shopping season, according to people with knowledge of the project who declined to be named discussing confidential plans. The size of the display on the current iPad is 9.7-inches.

Apple’s closest rival in the smartphone market, Samsung, has experimented ceaselessly with different screen sizes. Its Galaxy S III smartphone has a 4.8-inch display, while its Galaxy Note tablet has a 5.3-inch screen.

The iPhone 5 is a more significant overhaul of the design of Apple’s smartphone than the iPhone 4S, a product criticized by some for featuring mostly incremental improvements inside a device that looked nearly identical to the iPhone that came before it. Apple seemed to denote that product’s more modest changes by reserving the iPhone 5 name for the product it introduced on Wednesday.

Even so, the iPhone 4S went on to be a big seller.

Apple will continue to sell its iPhone 4S, dropping the starting price of the device to $99 with a two-year wireless contract. The iPhone 4 will be free with a contract.

The new, faster Apple-designed chip inside the iPhone will let users open e-mails, load music and interact with other applications more quickly. The game developer Electronic Arts showed a photo-realistic car-racing game running on the new device with graphics that closely resemble those of high-end console systems.

The device will also work on the latest variety of high-speed data networks with wireless carriers, known as LTE.

  The iPhone 5 has a new feature that will allow users to easily stitch together multiple images into a panorama, a feature that has been available in some apps and stand-alone digital cameras for some time.  

Apple also announced a revamping of some parts of its product line that have received less attention in recent years — its iPod media players and iTunes software. It redesigned the iPod Nano with a bigger screen that supports multitouch gestures. And a new version of the company’s most popular iPod, the iPod Touch, will come with the same 4-inch high resolution display as the new iPhone will have. The new iPod Touch will also support Siri, Apple’s voice-activated assistant, and will come in a variety of colors.

Anticipation for the new iPhone ran high ahead of the event, as it always does leading to the late summer and early fall period when Apple typically introduces new electronics products. The usual swirl of rumors around the latest Apple phone were so intense this year that Apple said they were hurting sales of current iPhones, leading to a rare earnings disappointment from Apple.

The iPhone has become a gold mine for Apple, accounting for $16.2 billion in sales, or 46 percent of Apple’s total revenue, during the quarter that ended June 30.

But the company has also faced growing competitive pressure, most notably from Samsung, which extended its lead over Apple during the second quarter of the year. Samsung accounted for 32.6 percent of global smartphone shipments during that period, compared with 16.9 percent for Apple, according to IDC.

Most of Samsung’s share of the smartphone comes from products that run Google’s Android operating system, which powered 68.1 percent of smartphones shipped worldwide in the second quarter, IDC estimated.

Apple’s share of the phone market, though, often gets a big boost over the holiday season and in the quarter immediately after the company introduces a new iPhone model. Wall Street analysts expect that pattern to continue with the new iPhone.

Apple is also fighting Samsung in courtrooms, where it has said that the company has violated Apple patents. Last month, Apple won a huge victory in the most significant of the legal fights against its South Korean rival, after a jury in a federal court in San Jose, Calif., awarded Apple more than $1 billion in damages. Samsung has said it would appeal the decision.

YELP – Post IPO Lockup

Image representing Yelp as depicted in CrunchBase

Image via CrunchBase

August 30

Yelp

YELP : NYSE : US$22.22

Over 50 million shares of Yelp became available for trading after their post-IPO lockup on Wednesday, and after falling by more than 30% in the past three weeks, shares rallied as bearish investors looked close their short positions. With many of 2012’s tech IPOs getting smacked down on their first free trading days ( Facebook (FB ) down 6.9% on August 16 and Groupon (GRPN)  down 8.9% on June 1), investors were unloading and shorting shares of Yelp in advance of the lockup expiration.

As of Tuesday, 29% of Yelp shares were shorted according to Markit. The end result? A short squeeze as short sellers were forced to buy back shares, pushing the price higher. As the stock climbed, more short sellers were required to buy back their positions at even higher prices helping push Yelp deep into the green and above its IPO price.

 

 

Apple TV ?

Inside an Apple TV.

Inside an Apple TV. (Photo credit: Wikipedia)

Apple (AAPL : NASDAQ : US$636.34)

august 17
 Apple is reported to be in talks with large U.S. cable operators about letting consumers using an Apple device as a set-top box for live TV and other content.

The company does not appear to have a deal in place with any operators, and some may be reluctant to let Apple into their customers’ living room. Apple would also need to persuade consumers to shell out a few hundred dollars for a set top box as opposed to renting one from their cable provider for $10-15 per month.

Talking with cable providers would be a significant shift in strategy for Apple, looking to partner as opposed to licensing
their own content and competing directly. Currently, Apple sells a $99 Apple TV box that lets users access internet video on
their TVs, but does not provide live channels. Sources close to the matter said that Apple looked into creating a set top box a
few years ago before launching the latest version of Apple TV, but Steve Jobs dismissed the idea as he believed working with
cable operators would be problematic because they did not have national reach. Cable operators have also been somewhat cold
to an Apple set top box as slow sales of Apple TV have led them to focus more on developing apps for iPhones and iPads.

Millennial Media – Mobile Advertising Pure Play Target $ 18

Image representing Millennial Media as depicte...

Image via CrunchBase

Millennial Media 
MM : NYSE : US$10.19 | US$836.0M | Buy , Target US$18.00

August 9
• Solid Q2 results show steady progress; maintaining BUY and $18 target
Investment recommendation
After a volatile few weeks for MM stock, Millennial reported solid Q2 results characterized by steady progress and no major surprises. We continue to believe Millennial will benefit as a mobile advertising pure-play, and our key thesis points remain intact. We are raising our estimates slightly for the rest of the year, reflecting stronger business and guidance.
Investment highlights
• All key metrics are headed in the right direction. Importantly, gross margin (take rate) continued its upward march, helped by a seasonal mix shift towards brand advertising in the quarter. While this may moderate in Q3, we believe the company is on track to achieve 42% gross margin in 2014, if not sooner.
Revenue from existing advertising customers grew 118% and accounted for 71% of revenue. We believe this reflects well on the prospects for mobile ad growth and note management’s upbeat comments regarding prospects for large brand advertisers to significantly increase spending in the near future.
• We are raising our estimates for Q3 and 2012. For Q3, our revenue estimate goes from $44.4 million to $45.2 million, and for 2012 from $175.6 million to $178.9 million. EBITDA remains at a (smaller) loss for the year.
Valuation
Our $18 price target is unchanged and is based on 25x our unchanged 2016 EPS estimate of $1.20, discounted to present at a rate of 12.1%.

Apple After Pinterest Rival Fancy

Fancy

Fancy (Photo credit: woordenaar)

August 6

Fancy That !

Apple is in talks to acquire The Fancy, a fast-growing social commerce site backed by cofounders of Twitter and Facebook, Business Insiderhas learned.The objective: to secure a role for Apple in the growing e-commerce market, putting the 400 million-plus users with credit cards on file with Apple’s iTunesStore to work shopping—with Apple getting a cut of the action.While The Fancy is far smaller than archrival Pinterest, which similarly lets users make lists of things they find interesting, the 20-person New York startup, led by cofounder and CEO Joe Einhorn, is much farther along in linking its users to transactions. The Fancy takes a 10 percent cut of purchases. Last we checked in, sales were exploding.

There is no signed deal and no guarantee one will happen. We do not know the price Apple has proposed to pay for The Fancy or how recently talks took place.

However, given what we’ve learned, it was apparently no coincidence that Einhorn and Apple CEO Tim Cook met at Allen & Co.’s Sun Valley conference earlier this year. The notoriously private Cook, who does not visibly participate in any well-known social media sites, started using The Fancy shortly afterwards.

The Fancy raised a $10 million round at a reported valuation of $100 million last fall, led by PPR, the French luxury conglomerate behind Gucci. It previously raised $6 million in 2010; $2.7 million of that round went to Einhorn and his cofounder, his brother Jack Einhorn, according to an SEC filing. Investment bank Allen & Co. was an early investor.

It would be reasonable to think its investors would expect a healthy return—call it 3 to 5 times what they paid. (Consider that nothing more than informed speculation, based on similar deals.)

Twitter cofounder Jack Dorsey and Facebook co-founder Chris Hughes are on the board, along with LeRoy Kim of Allen & Co. and James Pallotta, the owner of the Boston Celtics. Marc Andreessen and Ben Horowitz, the co-founders of venture-capital firm Andreessen Horowitz, are also investors.

Apple is not known for making big, splashy acquisitions. But a source familiar with Apple’s acquisition strategy noted to us that The Fancy is at a stage where Apple typically buys companies.

For example, in recent years, it has bought several companies to bolster its online offerings, like Chomp, an app search engine; Lala.com, an online music service; and Placebase, a digital mapping company. It is in the process of trying to buy AuthenTec, a mobile security company.

Still, how can a two-year-old company with 20 employees possibly be worth that much to Apple?

Apple’s history in e-commerce stretches back almost 15 years to November 10, 1997, when it opened its first online store. On April 28, 2003, it got into digital commerce with the iTunes Music Store. Those foundations in e-commerce let it roll out the iPhone‘s App Store. As Apple’s sales of mobile devices exploded, so did its rolls of online customers registered with a credit card.

But as its tentative moves into general e-commerce have shown, sending those customers on a shopping spree isn’t a simple matter. PassBook, a new online wallet introduced in the latest version of iOS, Apple’s mobile operating system, lets users store discounts, gift cards, and airline tickets—but it doesn’t let people spend money with stored credit cards.

The Fancy could change all that by giving Apple a clear route to converting people’s interest in an object into a sale.

Apple could well build an e-commerce layer into its operating system and let application developers hook into it, giving them a way to make money besides advertising.

The Fancy has recently rolled out a system that gives users a cut of the sales their lists of objects generate.

Einhorn’s company began life as a project called Thing Daemon, or ThingD, which aimed to be a universal database of things. In February, it adopted a model focused around e-commerce—and its business has taken off since.

The Fancy’s offices are situated above an Apple Store in New York City. We don’t think that has anything to do with anything, but it’s funny, given the circumstances.

Einhorn declined to comment. Apple, Dorsey, Hughes, and PPR did not respond to requests for comment

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