Tuesday, April 26, 2011

Tech Currents 4/26/11

Amazon (AMZN) is getting more serious about creating a tablet ecosystem as it gives Verizon (VZ) Android customers $25 worth of credits at Amazon's Appstore. With 7,500 apps, Amazon remains a dwarf compared to Apple's (AAPL) 350,000 app App Store. But Amazon has many of the pieces needed to gain tablet market share -- customer count second to iTunes' 200 million, great content and recommendation tools, and a leading cloud computing infrastructure. Building its Appstore could turn Amazon into a tablet contender.

Oracle (ORCL) shifts Safra Catz back to her old role as CFO. This move, if she accepts it, could clear the way for former Hewlett Packard (HPQ) CEO, Mark Hurd, to succeed Larry Ellison as Oracle's CEO. This is good news for Oracle holders because it means that Oracle will continue on its path of acquiring business tech vendors like EMC (EMC) whose costs Hurd could cut as he keeps Oracle's quarterly earnings train running on time.

After announcing that it would miss by between 3 and 25 cents analysts' quarterly earnings forecast of $1.18 while beating expected revenues of $767 million by 4%, Netflix (NFLX) stock is down 5.3%. As it shifts from mailing DVDs to online streaming, investors should consider whether Netflix financials will be squeezed by higher costs for licensing digital content even as it faces price competition from Hulu and others with more favorable access to that content.

Hedge Fund SAC Capital Advisors raised his stake in Coinstar (CSTR) from 1.2% to 6.5%. Coinstar is expected to report earnings Thursday with a new digital strategy. But Coinstar missed earnings estimates in the fourth quarter and its stock is down 10.5% in 2011. Yet at a Price/Earnings to Growth (PEG) ratio of a reasonable 0.9 on a P/E of 24.9 to 25.9% earnings growth to $3.47 in 2012, SAC's investment could be a vote of confidence.

Carl Icahn, an 8.7% holder of Lawson Software (LWSN), benefited from a sale of the business software company to private equity firm, Golden Gate Corp. for about $2 billion. This deal gave Lawson shareholders a 19% premium over its March 2011 price in the days before its announcement that it was entertaining an unsolicited bid from Golden Gate and Infor. Icahn has a 15% stake in Mentor Graphics (MENT), which might enjoy a similar pop if he wins a May 12 vote to oust some board members possibly leading to a sale of the company. 

Nintendo misses sales expectations for its 3DS glasses-free 3D gaming machine -- moving 3.6 million units, 10% short of its 4 million March-end sales target. While Nintendo claims that customer demand will be strong, it hints that gamers are waiting to buy until the most popular games are available on the 3DS.  The popular "The Legend of Zelda: Ocarina of Time 3D" is due out in June and that could boost sales. But the 3DS has been plagued with technical problems -- not all game players can identify 3-D images with equal ease or handle the intensity of the 3-D effect. Meanwhile Nintendo's net profit plunged 66% to Y77.62 billion in fiscal 2010 on slow sales of its DS hand-held and Wii home console.


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