AllThingsD » Jeffries

Investors Spooked by China

Owen Fletcher and Dinny McMahon — Sun, 02 Oct 2011 15:15:59 +0000

BEIJING — Investors dumped the stocks of some of China’s biggest Internet companies, as scandals with some smaller Chinese firms have shaken Wall Street’s confidence in the country’s businesses.

U.S.-listed shares of China’s leading search engine, Baidu.com Inc., and Sina Corp., the operator of the country’s Twitter-like messaging service, plunged 16% and 18%, respectively, in the last two days of trading on the Nasdaq Stock Market even though these companies haven’t been accused of wrongdoing.

A series of alleged accounting frauds this year at little-known Chinese companies listed in the U.S. has triggered a sharp shift in sentiment among investors, who are now worried about hidden business risks or financial problems.

“If the whole sector’s sentiment is negative, then investors tend to be panicking, and then they sell the most liquid names, regardless of whether there are really any problems,” said Jeffries analyst Cynthia Meng. “We don’t think that the flagship [Chinese] Internet names have accounting issues.”

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First Day PlayBook Sales: Is 50,000 Too Big a Number?

John Paczkowski — Fri, 22 Apr 2011 11:30:31 +0000

The launch of Research in Motion’s BlackBerry PlayBook earlier this week may not have been quite the spectacle for which the company had hoped, but first day sales appear to have been respectable, just the same.

Jeffries analyst Peter Misek figures RIM sold about 45,000 PlayBooks Tuesday, with pre-orders accounting for about 25,000 of the total. RBC* analyst Mike Abramsky’s first day sales estimate is in the same range, but a bit higher: 50,000, including pre-sales.

“The launch appears to have been stronger than the launch of Motorola’s Xoom Tablet, or the Samsung Galaxy Tab, although it’s too early to judge sustainability,” he said in a note to clients, adding that, as of Wednesday, checks of 180 stores across 10 cities in the United States and Canada show rising PlayBook stockouts.

But some analysts I’ve spoken with feel those estimates are overly bullish, given the device’s limited availability. 50,000 sold seems an awfully big number when even the Broadway Staples store in downtown New York City had just 10 PlayBooks on hand at launch and a clerk at the Bay Area Best Buy I called described inventory as “a handful.”

“Those 50K estimates are likely a bit high, although there was reasonable demand at stores that actually had product,” said one analyst who declined to be named. “It definitely seemed more of a beta launch to me. A lot of the distribution partners didn’t have the product in stock yet, and there has been essentially no advertising.”

*Barbara Stymiest, Chief Operating Officer at RBC Financial Group, sits on RIM’s board of directors. RBC also makes a market in RIMM securities.

PREVIOUSLY:

PlayBook Launch Strategy Revealed: Delayed Gratification!

In Toronto, PlayBook Line Stretches…Wait, Do Two People Count as a Line?

BlackBerry PlayBook: Fail With Consumers, Fail With Enterprise

Research in Demotion: Critical PlayBook Reviews Weigh on RIM

Gloom, Doom Loom for Motorola Xoom?

John Paczkowski — Wed, 06 Apr 2011 17:50:05 +0000

When it debuted in February, Motorola’s Xoom was widely described as the first comparable competitor to Apple’s iPad. And while it may be that, it’s not proving much of a rival in the market.

Deutsche Bank estimates Motorola Mobility has sold just 100,000 Xoom tablets to date. And while that’s in line with its estimates of 50,000 units in the company’s first quarter and 150,000 in its second, it’s a hell of a long way off from what the iPad’s doing these days, and nowhere close to the sales numbers it posted when it first launched. Apple is believed to have sold 300,000 iPads on its first day at market.

Over at RBC Capital Markets, analyst Mark Sue describes Xoom sales as “slow”–so slow, in fact, that he lopped 25 percent off his current quarter forecast, dropping it to 300,000 units.

And at Pacific Crest, James Faucette says sales of the Xoom are “well below forecast.” Seems the debut of the iPad 2 immediately after the Xoom’s official launch knocked the legs out from under the device. Said Faucette, “Based on our checks, we believe overall sell-through trends for the Xoom…have been disappointing.”

These new reports underscore earlier concerns that Xoom was having trouble gaining traction in the market. Back in March, Jeffries cut its price target on Motorola Mobility largely because of the Xoom. “Xoom sales have been underwhelming,” it said. “While marketing has just started, we believe MMI will likely have to cut production if it already has not done so.”

Looks like Xoom may end up being the new Zune. That said, as Charles Arthur notes over at The Guardian, at least the Xoom is actually selling.

[Image Credit: David Lyle/Wooster Collective]

IPhone 5: LTE? NFC? Natural Language Voice Interface?

John Paczkowski — Fri, 01 Apr 2011 11:32:21 +0000

With the unveiling of the next iteration of the iPhone likely postponed until after WWDC, speculation has begun in earnest about what sort of enhancements Apple’s building into it.

On the software side, there’s the possibility of the natural language voice interface and navigation service I mentioned here earlier this month. Last April, Apple acquired Siri, developer of a virtual personal assistant supported by speech recognition, natural language processing and semantic Web search. (see video below). And in 2009 it purchased PlaceBase, a mapping outfit that specialized in enhancing maps with private and public data sets. Weave elements of those two acquisitions together and give them a 505,000-square-foot data center as a back-end and you’ve got a pretty compelling offering.

But what about the hardware side? An improved camera seems certain, as does a bigger screen and a faster chip. Support for near field communication (NFC), which would enable mobile payments through iTunes, is also a rumored feature, as is an increase to 64GB of internal memory. And, increasingly, it seems like an LTE chipset will be included as well. As I noted here Monday, a later-than-usual iPhone unveiling dovetails nicely with the expected launch of AT&T’s LTE network (Verizon’s is already up and running). It also would appear to coincide with the debut of an updated Qualcomm LTE chip.

“We believe Apple wants its next phone to be LTE capable and have a chipset compatible with both AT&T and VZ (with the LTE capability on AT&T turned on once their network is ready),” says Jeffries analyst Peter Misek. “Also, we believe the iPhone 5 could contain new chips from Qualcomm incorporating GPS and WiFi on the same chip (and in the future the socket could support Bluetooth and NFC).”

Misek, incidentally, is betting on a second-half 2011 launch for pretty much all the reasons cited above. “Our checks indicate Apple is aiming for a significant step forward with a strong focus on integrating cloud services into the operating system,” he concludes. “We believe this additional functionality is taking longer to incorporate than expected, leading to the next iOS launch being later this summer or fall.”

[ See post to watch video ]

Netflix: Upgrade-Palooza!

Eric Savitz — Thu, 28 Jan 2010 21:30:42 +0000

Netflix (NFLX) shares are skyrocketing today, after the company late yesterday posted strong Q4 results, with better expected forward guidance. The upside surprise has triggered a mass re-rating of the stock by the Street, triggering at least five analyst upgrades, plus a host of other estimate and price target revisions. At the core of the new enthusiasm: expanding gross margins, as more customers take advantage of the company’s streaming video service.

Here’s a look at the upgrades:

Youssef Squali, Jefferies: Upgrades to Buy from Hold, target to $65, from $52. “Q4 results show that Netflix’s momentum is stronger than ever, driven by excellent execution amid a very favorable competitive environment,” he writes. Squali says the company is seeing benefits from the popularity of its movie streaming service. He takes his 2010 EPS estimate up to $2.56, from $2.28.

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My Bing-a-Ling

John Paczkowski — Tue, 26 May 2009 18:51:35 +0000

What’s in a name? Apparently, the answer to Microsoft’s (MSFT) many search problems. As we previously reported, the software behemoth plans to debut its new search service at our D: All Things Digital conference later this week, and when it does it may have a new name.

Reports claim that Microsoft Live Search, once known as Windows Live Search and, prior to that as MSN Search, will henceforth be known as…

Bing.

Which is pretty much what we’ve expected all along. Just what form Bing will take is another matter entirely. Will it simply be Live Search updated and recast? Or will it involve something more? Like perhaps that long-rumored deal with Yahoo (YHOO) BoomTown’s been talking about? Or what if, ZDNet’s Mary Jo Foley speculates, “Microsoft and Yahoo announce some kind of jointly-managed company that will trade ad sales for search engine placement. This ‘MicroHoo’ won’t be a merged Microsoft-Yahoo. Instead it will be some kind of ad/search entity.” What if, indeed. We may find out later this week.

UPDATE: Interesting. ZDNet’s Larry Dignan points to a report from Jeffries analyst Katherine Egbert that suggests Microsoft is indeed preparing for some sort of joint venture or acquisition. A quick excerpt:

“It’s also possible that Microsoft could debut a partnership or make an acquisition of some type that will bolster its online search presence. The software giant registered an LLC Corp. in Delaware last week, a move often made in advance of acquisitions or joint ventures. The registration gave rise to widespread speculation that Microsoft would acquire Citrix since the name of the LLC is somewhat similar to Microsoft’s code name for Citrix. While that’s possible, the timing of the registration and recent debt raise indicate that it might be more likely Microsoft uses the LLC to form a partnership that will boost the amount of traffic flowing through its search engine, perhaps through a partnership with Yahoo! or others.”

IBM to Buy Red Hat…Someday…Maybe

John Paczkowski — Fri, 15 May 2009 18:00:54 +0000

Red Hat is destined to be acquired, most likely by IBM–according to Jefferies analyst Katherine Egbert, anyway. Noting that Oracle’s acquisition of Sun Microsystems is bad news for Red Hat, Egbert says the open-source outfit is going to need a partner sooner or later and that IBM may well volunteer for the position. After all, if Oracle found Sun’s Java software to be important enough to own, it’s conceivable that IBM would take a similar view of Red Hat. To acquire it would certainly be a savvy defensive move against Oracle. Her reasoning:

To date, much of Red Hat’s success has come because the software is relatively inexpensive, Unix applications port easily to Linux, and because Red Hat is not Microsoft i.e. they are not a large, integrated vendor that can lure customers in with low pricing but exploit their pricing power once the customer becomes dependent on the software. Most customers view Red Hat Enterprise Linux as a way to break free of large vendor lock in and the high economic toll it extracts.

However, with Oracle buying Sun, Red Hat now has two giant competitors, both of whom have virtually unlimited pricing power. We believe it will be increasingly difficult for Red Hat to compete over a sustained period as a small, standalone, independent vendor against the upcoming entry of Oracle, who could offer cheap hardware/software bundles, steep discounts to stay on or migrate to Open Solaris, or even pay customers to not use RHEL as they seek to stabilize the Solaris maintenance stream. Therefore, with Red Hat’s choice-based value proposition potentially pre-empted by a data center land grab among 2 giants, it seems to us that Red Hat needs a partner. A large partner. Someone with pricing power, C-level relationships, and a significant enough presence in the data center to combat the Oracle/Microsoft threat. IBM fits the bill.

So, caught between Oracle (ORCL) and Microsoft (MSFT), Red Hat (RHT) rushes into the waiting arms of IBM (IBM). Makes sense I Suppose, as Barron’s recently argued–though with a caveat: Unlike Sun (JAVA), which was fast slipping into the mud when Oracle acquired it, Red Hat is doing quite well for itself. And that could make it prohibitively expensive.

Savvis: Jefferies Downgrades to Hold; Sees Rising Capex

Eric Savitz — Tue, 23 Sep 2008 13:37:52 +0000

Jefferies analyst Jonathan Schildkraut this morning cut his rating on Savvis (SVVS) to Hold from Buy, citing “decreasing visibility and a belief the company will need to spend more in capex.” He notes that since the Web-hosting company reported Q2 results, its shares have appreciated 8 percent in period in which its peers have fallen by an average 14 percent.

Schildkraut says channel checks find that the market for large-scale managed hosting projects “remains lukewarm, as customers continue to drag out the sales cycle.” At the time, he said that based on conversations with other managed hosting providers, he now thinks his old capex estimates for the company were too low.

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Nortel: "We're Giving Up," Says Jefferies; Cuts Rating

Eric Savitz — Mon, 04 Aug 2008 21:30:25 +0000

Nortel Networks (NT) shares are trading lower today after Jefferies analyst George Notter cut his rating on the stock to Hold from Buy.

In a research report entitled “We’re Giving Up,” Notter writes that he is “increasingly concerned about the company’s ability to hit expectations and drive margin expansion in the face of an eroding CDMA revenue stream.”

Notter’s call follows the company’s Q2 results on Friday, which included some cautionary comments on its outlook for the rest of the year.

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