|Day's Range||71.25 - 71.25|
With oil prices on the rise and companies reporting their 2019 Q1 earnings, there are some signs that economic growth is better than expected. Edward Jones Investment Strategist Kate Warne joins Yahoo Finance's Julie Hyman, Adam Shapiro, Brian Sozzi, and Sylvia Jablonski, Direxion Managing Director of Capital Markets to discuss.
Wedbush managing director Daniel Ives and Axios markets editor Dion Rabouin discuss the upcoming release of big tech earnings and what companies investors should be focused on.
SEATTLE (AP) — Looking back at her time as an early Microsoft employee, Melinda Gates said the brash culture at the famously tough, revolutionary tech company made her want to quit.
Tech companies are about to hit competition they can’t shake: Their slightly younger selves. Get ready for the phrase “tough compare” to be muttered by dozens of executives and analysts as earnings season hits high gear this week, because growth was so strong in 2018 that 2019 is bound to look bad by comparison. The first quarter for tech is often slower after the holiday rush, but not last year, when semiconductor companies flourished selling suddenly scarce memory and crypto-mining chips and profit was easy to find even in the famously profit-averse internet sector amid the tax-cut windfall.
Microsoft's (MSFT) third-quarter results are likely to benefit from enterprise strength, robust Office 365 & Azure adoption.
Dow Jones futures: Earnings reports will tackle key stock market questions this week. Can chips keep running and software rally? Will Facebook grow? How costly is the Boeing 737 Max mess?
So far 2019 has been spectacular for Cisco Systems (NASDAQ:CSCO). Cisco stock has risen 30% this year. That's the best performance in the Dow Jones Industrial Average, narrowly ahead of Apple (NASDAQ:AAPL). Among the 27 stocks with a market capitalization over $200 billion, only Facebook (NASDAQ:FB) has outpaced CSCO stock YTD.Source: Shutterstock The optimism makes some sense. Cisco's legacy networking business long has struggled with growth, but the company is shifting into areas of better growth. It's becoming more of a security play, giving it exposure to that hot sector. Growing recurring revenue from increasing software sales add to the case, and 5G offers yet another catalyst for Cisco stock.Again, the optimism here makes some sense. Indeed, I laid out the potential bull case for CSCO ahead of its fiscal first quarter report. But with Cisco stock up 25%+ since then, the concern is that even that bull case now is priced in.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 5 Dividend Stocks Perfect for Retirees The Cisco Stock RallyFrom a broad standpoint, there are four key drivers of the big gains in Cisco stock. First, the company's Catalyst 9000 switches have launched well, driving double-digit revenue increases. For a company that has struggled to increase sales (fiscal 2018 revenue was basically equal to FY16 levels) the new product is welcome, to say the least.Second, Cisco is adding more software to its legacy hardware products, including the Catalyst switches. That shift improves margins and adds the recurring revenue tech investors seek these days. It also allows Cisco to continue to monetize its hardware after installation, instead of receiving just a one-time sale.Third, the company continues to move into security. Like more focused players like Palo Alto Networks (NYSE:PANW), here, too, Cisco has built out its software offering instead of focusing on just hardware. Cisco has integrated its SD-WAN products with cloud-based software, which drove double-digit growth in the second quarter.Finally, 5G is on the way, and that represents a real profit driver going forward. The adoption of that technology should help revenue, but Cisco already is investing in its development at the moment, meaning incremental costs should be lower.Obviously, there are other factors at play; this is a company that generates revenue of roughly $50 billion a year. These areas are where Cisco has an edge and an opportunity to accelerate revenue growth. Smaller rival Juniper Networks (NYSE:JNPR) hasn't had the same success, and while CSCO stock has soared, JNPR has been flat for basically four years now. Cisco's moves explain much of the outperformance of its stock. The Concerns with CSCO StockIn sum, the moves make Cisco sound a bit like Microsoft (NASDAQ:MSFT) earlier this decade. Microsoft had similar growth questions, and relied on a legacy market (personal computers) that seemed to have little room for growth.Then new businesses like its Azure cloud platform, a go-to-market change for Office and Windows, and smaller efforts in gaming and hardware have dramatically changed the story. MSFT has more than quadrupled since 2013, thanks to earnings growth and multiple expansion.That said, there are two concerns here. The first is whether the Microsoft model actually is in play here. While there are growth opportunities going forward (perhaps most notably in 5G) the legacy business still is flat, if not shrinking. Security was just 6% of revenue in fiscal 2018, according to figures from the 10-K. Cisco itself is guiding for just 4-6% revenue growth in the third quarter.Growth might be improving, but it's not exactly torrid and certainly not yet. Meanwhile, Cisco stock's big rise has notably changed its valuation. As recently as last year, CSCO was pricing in basically zero growth.Now, Cisco stock trades at over 18x FY19 consensus EPS. Even with the Street projecting 10% growth in FY20, that's not a hugely attractive multiple. It suggests, at the least, that Cisco's recent success will continue for years to come. And it's worth noting that Cisco stock now has outrun the average analyst target.To be sure, that doesn't mean CSCO's run is definitely over or that the stock is a sell. Strong Q3 earnings, likely due next month, can lead those estimates and price targets up. The advent of 5G probably starts contributing next year, and its growth won't end any time soon.Still, the upside looks thinner, and Cisco really can't stumble back at a high-teen P/E multiple. Investors sticking with CSCO at this price had better be sure the transformation will continue.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 5 Dividend Stocks Perfect for Retirees * 7 Reasons the Stock Market Rally Isn't Over Yet * 10 S&P 500 Stocks to Weather the Earnings Storm Compare Brokers The post After an Impressive Run, Cisco Stock Is Starting to Cool Off appeared first on InvestorPlace.
First-quarter revenue at Huawei rose 39 per cent from the previous year to Rmb179.7bn ($26.8bn), an increase that suggests US efforts to persuade countries to ban the Chinese group’s telecoms equipment from their 5G networks have not tempered growth. Washington’s bid to sway other countries to join it in blocking Huawei on the grounds the company’s equipment creates a security risk has only been partially successful: while Australia and Canada have joined the US in blocking Huawei kit, several European countries have rolled back on initial hardline stances. Quarterly results on Monday indicated a minimal impact on Huawei’s finances.
Site plans reveal multiple buildings on the southeast corner of the largest of two parcels of land purchased by the tech giant in the West Valley city.
The plans and renderings come after months of speculation over what sort of massive development Jay Paul Co., which has a reputation of building high-quality buildings and attracting big-name tenants, would put together for a key site in the middle of San Jose’s growing downtown.
Sony and Microsoft have been walking the same path for nearly 20 years, when it comes to gaming hardware. Instead of leaves, shiny silver game discs dangle from the trees, while black and white boxes of varying sizes line the underbrush, covered in decades of debris and Doritos dust. Both companies know this trail well -- but it's about to split in two.
A slew of dividend exchange traded funds (ETFs) have recently been hitting all-time highs, including the SPDR S&P Dividend ETF (NYSEArca: SDY). SDY is up just over 13% this year. SDY, one of the largest ...
Microsoft (MSFT) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.
“Many women simply aren’t cut out for the corporate rat race, so to speak, and that’s not because of ‘the patriarchy,’” a Microsoft employee wrote.
Virtual reality can be a rush to the senses, but not if you have vision problems. Microsoft researchers are trying to solve that problem via a tool kit for Unity VR developers to help players with low vision. Since vision problems vary by individual, the research team at Microsoft decided on a tool kit approach so players can customize their experience.
Microsoft (NASDSAQ:MSFT) has been on a winning streak given its diversified business portfolio and ability to deliver growth and financial results in a timely manner. Analysts continue to rally around the stock heading into its earnings announcement on April 24, which makes sense given the momentum on the charts, and sustained interest for a variety of Microsoft’s products both for consumers, and within the enterprise as well.The growth narrative tied to Azure Cloud drives much of the upside commentary among analysts despite the growth rate from Azure is expected to decelerate over the next couple-years. MSFT still trades at a fairly reasonable valuation at 31.35x earnings. The company’s current market capitalization is $934 Billion, with psychological resistance at $1 Trillion, or $130.37. Chances are Microsoft can reach $130 within the next couple months, assuming the stock market rally continues, and investors chase stocks at higher valuations.Despite multiple expansion adding to the recent stock price gains, software companies tend to trade at a bit a premium multiple given the defensiveness plus recurring revenue of the business model. Just look at Adobe for example, which trades at 49x earnings right now, despite EPS growth expectations of 20%. Microsoft trades at 30x earnings with consensus expecting 14.1% earnings for FY’19. So, there’s definitely some room for Microsoft to trade at a higher when compared to other software companies in the segment.UBS analyst Jennifer Swanson Lowe remains optimistic on Microsoft heading into Q2’19:> Microsoft shares had a slow start to the year as concerns about slower hardware purchasing from hyperscale providers and tough compares in the transactional portions of the company's weighed on sentiment. However, our checks point to sustained demand for Azure and ongoing Windows upgrade activity as Win7 end of life looms, while a reset in expectations post Q2 should improve the setup into Q3. Stock performance has perked up in recent weeks, but valuation at ~21x EV/CY19 FCF still looks defensive, and MSFT remains one of our favorite names for CY19, offering a balance of top-line growth, margin expansion, and FCF-based valuation support.The analyst has maintained her $125 price target on MSFT, and anticipates commercial cloud revenue growth of 39% in the next quarter:> We forecast Commercial Cloud rev. growth of 39% YoY to $9.6B on the back of 66% growth in Azure and 26% rev growth in Office 365 Commercial. Our checks continue to highlight strong demand for Azure as the platform underpinning digital transformation (growth is partially impacted by relatively mature per-user business while consumption-based business continues to remain healthy. We expect Commercial Cloud gross margin to improve 100 basis points quarter-on-quarter at 63%, based on improvements in Azure partially offset by lower-margin consumption-based services.The stock clearly wants to trend higher, and Microsoft does have a fairly solid track-record of meeting or beating consensus expectations. While Microsoft is a mature growth stock, the current consensus still anticipates the stock to trade at $129 currently, which implies that the stock could reach $1T in market valuation over the next 12-months.Microsoft will need to deliver some pretty solid results and raise financial outlook to get the stock trending up to $130. It seems doable given the stock’s momentum, and the valuation comparisons to some of its other software peers. Despite the catalysts tied to earnings, the summer months should also be interesting, as there’s a number of game software companies riding on this summer’s E3 conference like Electronic Arts and Activision Blizzard.At this year’s E3 2019 Conference, Microsoft is expected to announce the Xbox 2, which will launch next year, but the preview announcement could add some excitement to the stock, as it looks to renew interest in its gaming franchise. Microsoft’s gaming business produced $10.35B revenue in FY’18 making it a big enough of a business, for Microsoft to start pouring resources into it. With the opportunity to refresh its console line-up, it would be a big opportunity for Microsoft to announce more exclusive titles developed in-house to regain momentum versus Sony, and also build a larger installed base of Xbox Live subscribers from 57 million, which has grown fairly stagnant in the past four quarters.Bottom Line:Improvements in gaming related announcements along with the announcement of earnings on April 24th will add some positive sentiment to the stock. Analysts seem relatively optimistic on the company and it’s hard to mess up on the announcement of a next-generation console this year, so the buzz generating commentary will keep Microsoft relevant in the minds of consumers this year. Disclosure: The author has no position in MSFT stock.Read more: Is Microsoft (MSFT) Stock Still a Strong Pick for Growth? 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