Posts by Aaron Pressman
Aaron Pressman at Yahoo Finance 3 days ago
Newly separated HP Inc. ( HPQ ) and Hewlett Packard Enterprise ( HPE ) reported a messy final quarter together on Tuesday, but amid the mishmash, one growing risk jumped out to investors. For the entire already-split enterprise, HP reported slightly less revenue than Wall Street expected at $25.7 billion, a 9% drop marking the 16th out of the past 17 quarters when sales declined. And adjusted earnings per share of 93 cents were below Wall Street's 97 cents expectations. There was also some minor tweaking of guidance for the next year on both sides. But shares of HP Inc., the PC and printer arm, have tanked on Wednesday, dropping 14% to $12.61 in midday trading. And that's not about a few tweaks, the messy alterations to the timing of job slashing and cost cutting or even the general weakness in PC and printer markets. Rather, HP let slip that there's a problem with its cash machine, responsible for over 90% of its operating income: ink. Printers and PCs are a low- to no-margin business. It's the supplies that provide almost all the profits for HP. That's why analysts and investors must have sat up straight in their Aeron chairs when they heard new HP Inc. CEO...
Aaron Pressman at Yahoo Finance 4 days ago
Forecasting Apple's (AAPL) holiday quarter sales has been more of a dark art than a science on Wall Street the past few years. Analysts look to everything from supply chain clues and consumer surveys to the number of Google searches mentioning iPhones, but there's been no reliable method yet discovered. This year there's a new contender, as IBM (IBM) decided to throw the mighty weight of its Watson data analytics software service at the holiday prognistication problem. Data scientists at IBM have set Watson loose reading millions of posts on thousands of social networks, blogs and web sites ahead of Black Friday in an effort to predict the hottest gifts of this gift-giving season. The big surprise so far? The top gift by far appears to be not a cute Star Wars robot or a talking Barbie doll but the Apple Watch, left for dead by analysts and panned by most reviewers. If Watson is correct, Apple's holiday quarter could be a lot better than Wall Street expects. Analysts see Apple selling 76.5 million iPhones, up a paltry 3% from last year, along with an almost irrelevant 6 million of the new Apple watches, according to FactSet. At that level, the watch, which starts at $349, would bring in only about $2 billion to $3 billion, or maybe 5% of total revenue for the quarter. Whether Watson hits the mark or not, the debate has been roiling Apple's stock price as Black Friday and Cyber Monday approach. The kerfuffle started back on Nov. 10, when Credit Suisse analyst Kulbinder Garcha said he was hearing of reduced orders from Apple's Asian suppliers. "Apple has lowered its component orders by as much as 10%, according to our teams in Asia," Garcha wrote. He also slashed his estimate of iPhone sales over the next year and reduced his earnings forecast. Apple's stock fell 8%, from $120.57 to a low of $111, over the next five days. Predictions based on the supply chain have a shaky track record, however -- Apple CEO Tim Cook went out of his way to deride the method in April. And since Garcha's report, other signs have emerged that maybe Apple's holidays won't be quite so glum, helping the stock recover somewhat. The shares were almost unchanged in midday trading on Tuesday at $117.91.
Aaron Pressman at Yahoo Finance 9 days ago
Shares of upstart credit card processor Square (SQ) jumped nearly 50% on Thursday, after lackluster interest from investors in the company's initial public offering depressed its value.
On Wednesday evening, underwriters for Square sold 27 million shares to big investors at $9 each, well below the $11 to $13 range it had sought and valuing the company at half of what private investors had assumed a year ago.
But the stock price leapt as high as $14.78 once ordinary investors could buy the shares on the open market Thursday. In frenzied trading of over 47 million shares, the stock finally ended the day at $13.07, still a 45% gain.
Square built its business with a tiny, plastic device that could turn any smartphone into a credit card reader. The simple card reader attracted millions of small merchants, like coffee shops and food trucks, that previously couldn't accept credit cards. Now the company's growth strategy depends on selling those customers other services, like payroll processing and working capital loans.
Aaron Pressman at Yahoo Finance 10 days ago
It's been a dull, depressing year for initial public offerings of technology companies, suffering not just from a lack of volume but also a lack of excitement, with all the big names like Uber and Airbnb sitting out.
That could change -- or at least start to change -- on Wednesday when tech IPOs get back a little sexiness, literally. Among the deals expected to be priced after the market closes is Match Group, the IAC/Interactive Corp (IACI) spinoff that owns a bunch of popular dating sites as well as the hook-up app du jour, Tinder. The market also gets one of the more well-known Silicon Valley startups complete with charismatic-leader-who-may-be-the-next-Steve-Jobs in Jack Dorsey's Square.
"This could be a very telling week for the IPO market," says Kathleen Smith, principal at Renaissance Capital, which runs several IPO funds. "We're trying to find a level that works. This could open things up for 2016."
But that could all change if Square and Match Group hit the market with a solid debut.
Still, investors may not care. There looks to be plenty more cash coming in.
Aaron Pressman at Yahoo Finance 11 days ago
Online radio giant Pandora Media (P) is finally going after the on-demand music market, but buying the assets of failing Rdio is just a start -- the much tougher work lies ahead. Pandora announced Monday night that it would pay $75 million for most of the assets of bankrupt Rdio, a Spotify-like service that never caught on with listeners. The planned purchase includes technology, employees and intellectual property but not Rdio's critical license agreements with the major record labels. And until Pandora negotiates its own deals with the labels, it won't be able to offer much of an on-demand service. That's why Pandora shares have continued to fall, down 8% in morning trading on Tuesday to $12.36. The rollercoaster stock was as high as $22 just a few weeks ago, but Pandora's last earnings report showed a contracting user base, and investors panicked. Increasing competition from Apple (AAPL), Google (GOOGL) and Amazon (AMZN), among others, appears to be taking a toll. CEO Brian McAndrews said licensing agreements wouldn't ordinarily come along with an acquisition. "That's normal in the industry," he said on a call with analysts on Monday. "We will not be operating the business at this time, so we don't need licenses to operate. We'll be working on getting those licenses as we roll out the product."
Aaron Pressman at Yahoo Finance 15 days ago
Chuck Robbins was a continuity pick when he took over as CEO of Cisco Systems ( CSCO ) in July, and Cisco investors still have the same concerns and fears they've had for a while now -- concerns and fears that only grew stronger after Thursday's quarterly earnings report. Cisco shares, which had been unchanged for the year, initially dropped about 3% after hours on the report and are trading off 5% in pre-market dealing on Friday. The questions for Robbins and his team haven't changed from those that faced former CEO John Chambers the past few years. Are Cisco customers dumping their own data centers to move more and more computing to cloud providers like Amazon ( AMZN ) and Microsoft ( MSFT ) and, for whatever needs they still have, are they going to turn to commodity, open-source gear over the kinds of proprietary networking equipment that Cisco sells most profitably? The bears found more evidence for both issues in Thursday's report, even though Cisco slightly beat analyst expectations. Adjusted earnings per share of 59 cents exceeded the 56 cents expected and revenue of $12.68 billion just nipped the $12.65 billion expected for the quarter, Cisco's fiscal...
Aaron Pressman at Yahoo Finance 16 days ago
Buying men's razors is a drag -- and an expensive one at that. With most of the market dominated by a few huge players, prices are sky high. And if that's not bad enough, the high prices make the tiny packs of blades a top target for shoplifters, prompting pharmacies to lock up the merchandise behind wacky, hard-to-reach dispensers. It's an industry ripe for a little creative disruption -- and that may be on the way. Same goes for a couple of other unhappy market niches dominated by a few giant incumbents, such as eyeglasses and diapers. An elixir of online selling, lower prices and simpler products has created some breakthrough brands, according to a massive consumer survey done by marketing firm Siegel+Gale. Online razor seller Dollar Shave Club, eyeglass innovator Warby Parker and actress Jessica Alba's Honest Co. diaper supplier were among the highest-scoring "disrupter" brands in the survey, which polled some 1,750 U.S. consumers about their attitudes toward hundreds of brands. The survey measured major brands as well, with Alphabet's (GOOGL) Google, Netflix (NFLX), Publix Super Markets (PUSH) and Amazon.com (AMZN) coming out on top. The difference between the two lists was that the up and coming winners weren't ranked by national awareness, just positive attitudes toward their brands, products and communications. The new brands are gaining traction because "they address an existing consumer pain point and solve it in the simplest way possible, putting consumer experiences first," says Margaret Molloy, chief marketing officer at Siegel+Gale. "This focus on simplicity was directly reflected in their performance in the rankings." Not all of the top-rated "disrupter" brands were attacking staid, consolidated industry giants, however. Some aimed for staid, fragmented markets made of too many competing players instead. That included food delivery startups GrubHub (GRUB), Seamless (which is owned by GrubHub), and Blue Apron along with taxi replacement service Uber. Early success is no guarantee of eventual dominance, of course. There are plenty of challenges for small, fast-growing companies beyond attracting customers and crafting a winning brand identity. Some may continue to succeed on those marks while stumbling in other key areas with poor planning, overspending or botched inventory management. Aside from GrubHub, just two other publicly-traded companies are ranked on the top 10 disrupters list and both have had stumbles lately: sports camera maker GoPro (GPRO) and online radio service Pandora (P). Shares of GoPro have dropped 59% in the past three months as customers ignored its latest mini camera and sales growth plummeted. A surprise patent lawsuit from Polariod last week didn't help matters. Pandora was a screaming success for several years as it took on the tired traditional radio industry with more varied (and less advertising-laden) channels available online. But lately competition has intensified from all directions as everyone from Apple (AAPL) to Google to Amazon has come out with their own streaming music service. After almost hitting $40 a share early last year, Pandora shares have slumped to under $14 lately with user growth waning. Shares of GrubHub have cratered 40% in the past six months, as growth has slowed. The problem extends across the company's entire offering, as growth in the number of customers, average number of orders per day and order size have all slowed dramatically. Full "Top Ten Disrupters" list:
Aaron Pressman at Yahoo Finance 18 days ago
T-Mobile (TMUS) announced a new program on Tuesday to allow customers to watch many popular online video services on their phones without counting against their monthly data allowances. The new "Binge On" service, which will include HBO, Hulu, Netflix (NFLX) and ESPN among others, will show video in slightly lower quality, comparable to a DVD, not a high-definition TV picture, T-Mobile CEO John Legere said at an event in Los Angeles. The Binge On service starts Nov. 15 for new customers and Nov. 19 for all existing customers on monthly Simple Choice plans who pay for at least 3 GB of data per month, T-Mobile said.
Legere said the service will start with 24 partners but more will be added over time. Asked if a pornographic service could be added, Legere said: "yes, of course," adding that any legal video stream could be included eventually.
Similar to Music Freedom
Aaron Pressman at Yahoo Finance 18 days ago
Since Amazon (AMZN) started disclosing the results of its cloud service business back in April, the stock is up 68%, representing a $124 billion increase in stock market value. It seems Wall Street had previously failed to appreciate just how quickly big corporations were shutting down data centers and server farms in the move to outsourced cloud services. Now some analysts and investors are starting to consider the flip side -- what's surprisingly good news for Amazon and a few other cloud providers like Microsoft (MSFT) and Alphabet's (GOOGL) Google is probably the precursor to surprisingly bad news for traditional IT giants like IBM (IBM), Hewlett Packard Enterprise (HPQ) and others. And they say that they're starting to cut back on stocks and bonds of the lagging players, fearing an accelerating downward cycle. "Some of this is already priced in, but what's not priced in is how quickly all this is happening," Rahim Shad, tech analyst at fund manager Invesco, says. "The pace is going to surprise the HP's, the Dell's, the EMC's." "It's been going on for a while but it's definitely been accelerating for the past year," says Matt Sabel, manager of the MFS Technology Fund (MTCAX). Noting the rapid growth of the winning cloud companies, "it's all coming at the expense of the traditional IT companies out there," Sabel adds. Sabel's fund held Google, Facebook (FB) and Amazon as its top three positions, accounting for 22% of its assets as of the end of September. He increased all three positions slightly over the prior three months, according to the fund's disclosure statements. The fund held no shares of IBM, while EMC (EMC) and HP comprised about 4% of the fund.
Aaron Pressman at Yahoo Finance 22 days ago
Hyped payments startup Square on Friday announced pricing terms for its upcoming initial public offering that would value the company at up to $4 billion. There's only one problem -- Square raised venture capital last year at a valuation of $6 billion. The massive cutback signals that many more private startups may face problems when they eventually try to go public. Under CEO and founder Jack Dorsey, who also heads Twitter (TWTR), Square has followed the same path as most other highly-valued startups, growing revenue quickly while piling up huge losses.
Square declined to comment.
Square started out in 2009 by offering a small, plastic credit card reader that could run off of a smartphone, allowing small merchants like coffee shops to accept credit cards. Since then, Square has grown by attracting much larger retailers, like Godiva and Whole Foods Markets (WFM), and branching out to offer other services like short-term lending and payroll processing.