24/7 Wall St. » ORCL

Media Digest (2/10/2012) Reuters, WSJ, NYT, FT

247wallst — Fri, 10 Feb 2012 11:40:34 +0000

The U.S. and state attorneys general reach a $25 billion settlement with five banks over mortgage abuses. (Reuters)

The Hong Kong division of Alibaba may go private as part of a refinancing and a buyback of Yahoo!’s (NASDAQ: YHOO) shares. (Reuters)

Financial backers of Greece say they are concerned about whether a deal to lend the company more money will hold. (Reuters)

Economists concerned about the U.S. economy a few months ago change their opinions. (Reuters)

A fall off in investment bank activity hurts Barclays (NYSE: BCS) earnings. (Reuters)

China’s imports fall, raising demand concerns. (Reuters)

The new CEO of Sony (NYSE: SNE) will try to marry hardware and software for many of the firm’s products, just as he did with the PS3. (Reuters)

The head of Xstrata is under pressure to get a better deal for a Glencore merger. (Reuters)

A new settlement between banks and the government could help one million homeowners. (WSJ)

Google (NASDAQ: GOOG) to launch a home entertainment system as it moves into the hardware space as Apple (NASDAQ: AAPL) has. (WSJ)

An insider trading bill is broadly supported by Congress members. (WSJ)

Oracle (NASDAQ: ORCL) expands its use of web-based software products. (WSJ)

The FDA will speed the approval of biosimilar drug treatments. (WSJ)

An Alcatel-Lucent (NYSE: ALU) reorganization could cost 1,800 jobs. (WSJ)

Weekly unemployment benefits numbers improve steadily. (WSJ)

Greek unemployment rises to 20.9%. (WSJ)

The head of the European Central Bank pushes banks to take inexpensive loans to stabilize eurozone financials. (WSJ)

Canada will allow uranium exports to China. (WSJ)

A Hasbro (NASDAQ: HAS) and Zynga (NASDAQ: ZNGA) partnership to marry physical games with online ones. (WSJ)

Southern Co.’s (NYSE: SO) plan to build a reactor in Georgia receives NRC approval. (WSJ)

Apple’s market cap passes that of Google and Microsoft (NASDAQ: MSFT) combined. (WSJ)

New research suggests the education gap between rich and poor has widened. (NYT)

German officials are worried that the ECB has cut lending standards too much. (FT)

Douglas A. McIntyre

Filed under: 24/7 Wall St. Wire, Press Digest Tagged: AAPL, ALU, BCS, GOOG, HAS, MSFT, ORCL, SNE, SO, YHOO, ZYNG

After Taleo, Looking at Other Cloud M&A ‘Hopefuls’ (SKYY, TLEO, ORCL, EQIX, AKAM, RAX, TDC, NTAP, CRM)

Administrator — Thu, 09 Feb 2012 16:03:57 +0000

It is a bit surprising that First Trust ISE Cloud Computing (NASDAQ: SKYY) is not trading higher than it is after a ‘cloud acquisition’ even if it is a thinly traded ETF compared to other technology funds. After the Taleo Corporation (NASDAQ: TLEO) acquisition by Oracle Corporation (NASDAQ: ORCL) and with the market still holding gains, it would seem likely that investors and speculators would say “more cloud mergers and buyouts are coming this way.”

What is interesting is that Taleo was not even part of this cloud ETF, and many of the ETFs components are not exactly all cloud space players. Is it fair to lump in all cloud players as targets when one is software and one is hardware? Be advised, there are some stocks which have had buyout rumors in the past listed below but there are no current rumors we have heard.

Here is the weighting of the cloud ETF’s more cloud-centric companies, with the most recent weightings and some commentary on some of the names:

Equinix, Inc. (NASDAQ: EQIX) 3.80%…probably too expensive to acquire now on valuation metrics and with a $6.1 billion market cap.

Akamai Technologies, Inc. (NASDAQ:: AKAM) 3.72%… surged after earnings, now unlikely to be bought on the cheap by would be acquirers.

Rackspace Hosting, Inc. (NYSE: RAX) 3.39%… has been called a buyout candidate before but the company’s line is that it wants to remain independent.

Teradata Corporation (NYSE: TDC) 3.35%… still considered a special situation by some investors but no buyout rumors have proven true, and shares are up big after earnings.

NetApp, Inc. (NASDAQ: NTAP) 3.22%… “The one that got away.” This used to be a buyout dream stock, but valuation got in the way. Now at over $14 billion the time may have come and gone.

Salesforce.com, Inc. (NYSE: CRM) 3.08%… way too expensive to acquire on a valuation basis. Cloud is everywhere here in effect as a great benefit, but this one is diversified into CRM and SaaS.

Where this gets interesting is that Taleo is a human resources software maker and perhaps not just cloud software as some of the media headlines would have suggested. The 18% premium also suggests that paying up for the cloud players is only a limited value.

Just because one buyer buys a loose cloud play in software does not translate to buyouts in hardware.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Mergers and Buy Outs, Rumors, Software Tagged: AKAM, CRM, EQIX, NTAP, ORCL, RAX, SKYY, TDC, TLEO

360-Degree Cisco Earnings Preview (CSCO, ORCL, JNPR, ALU)

Administrator — Wed, 08 Feb 2012 17:44:37 +0000

Cisco Systems, Inc. (NASDAQ: CSCO) reports earnings after the close. Our guess is that Main Street is going to either really reward or really punish the stock. All companies in telecom and communications are on guard for this report. A poor earnings report from Oracle Corporation (NASDAQ: ORCL), a weak Juniper Networks, Inc. (NYSE: JNPR) and a dismal trading cycle in Alcatel-Lucent SA (NYSE: ALU) have Cisco investors nervous. If you just looked at the recent performance you would think that everything was going great in this turnaround and post-restructuring.

Lower compensation and SG&A may offset discounting in bundled product offerings as Cisco is seeking more and more of an enterprise’s total technology budget. Our fear is long-term lower margin compression after years and years of being technology’s envy in gross margin.

Cisco is down ahead of earnings but still just above this $20.00 mark against a 52-week trading range of $13.30 to $22.15. Analysts have a consensus target of $21.66, but we just saw one target on Tuesday morning from Credit Suisse at $26.00.

As far as expectations… Thomson Reuters has consensus estimates of $0.43 EPS and $11.23 billion in sales. For the quarter we are already in, the estimates are $0.45 EPS and $11.46 billion in revenues. For the July year-end, the estimates are $1.77 EPS and $45.83 billion in revenues.

Cisco trades at an implied 11.4-times current year earnings estimates, and maybe even a tad less if you factor in the wasted billions used for share buybacks.

Chart analysis is not worth much here today in all honesty. Cisco is at a post-reorganization high and back over $20.00. The 50-day moving average is $18.92 if there is another blow-up, but here are the shorter moving averages… 5-day at $20.08, 10-day at $19.88, and the 20-day is at $19.71.

Options traders appear to only be pricing in a move of up to $0.60 or even a tad less using the monthly options which expire in a week and a half. For whatever this is worth, options traders are much more heavily involved in at-month Call options over Put options with at least a 2.5:1 ratio if you combine weekly and monthly trading volumes.

Cisco has pledged to raise its quarterly dividend of $0.06 ‘in time.’ It has now had four consecutive payments of that rate of $0.06 per share per quarter and that yield comes to only about 1.2% for new investors. Longer-term, that dividend needs to go over 2% if it wants to entice income-oriented investors. It is possible that we will get a dividend hike. If not this quarter, we expect one soon.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Earnings, Technology Companies Tagged: ALU, CSCO, JNPR, ORCL

All of Tech/Comm Bracing For Cisco Earnings… Dividend Too (CSCO, JNPR, ALU, ORCL)

Administrator — Tue, 07 Feb 2012 16:52:32 +0000

Cisco Systems, Inc. (NASDAQ: CSCO) is set to report earnings on Wednesday after the closing bell and all companies in telecom and communications will be watching handily. After a poor earnings report from Oracle Corporation (NASDAQ: ORCL) and after a lack of recovery from Juniper Networks, Inc. (NYSE: JNPR), the bar is set low even though expectations remain hopeful. Alcatel-Lucent SA (NYSE: ALU) remains under $2.00 per ADR due to its own failed turnaround.

And speaking of turnarounds, this is the second full report after the restructuring efforts have taken effect for Cisco. It is a leaner company and operating costs (at least compensation in SG&A) should be lower now. The problem is that Cisco has been wanting to win back much business and to lock out other competitors as it goes after every penny spend of the network (now including datacenters too). Translation: we just expect longer-term margin compression.

In this last leg of the rally, Cisco is back above $20.00 against a 52-week trading range of $13.30 to $22.15. Thomson Reuters has consensus estimates of $0.43 EPS and $11.23 billion in sales. For the quarter we are already in, the estimates are $0.45 EPS and $11.46 billion in revenues. For the July year-end, the estimates are $1.77 EPS and $45.83 billion in revenues. In short, Cisco trades at an implied 11.4-times current year earnings estimates.

Cisco unfortunately wastes more money than it should buying back stock and that price level on the buyback plan is probably still just slightly above breakeven. Analysts have a consensus target of $21.66, but we just saw one target on Tuesday morning from Credit Suisse at $26.00. Chart and options trading analysis will be made in much more detail on Wednesday ahead of the report.

One last note… Cisco has pledged to raise its quarterly dividend of $0.06 ‘in time.’ It has now had four payments of that rate of $0.06 per share per quarter and that yield comes to only about 1.2% for new investors. Longer-term, that dividend needs to go over 2% if it wants to entice income-oriented investors. It is possible that we will get a dividend hike. If not this quarter, we expect one soon.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Dividend, Earnings, Technology Companies Tagged: ALU, CSCO, JNPR, ORCL

Short Sellers Increase Bets Across the Board

247wallst — Thu, 26 Jan 2012 11:33:04 +0000

For the first time in a long time, short sellers have increased their bets that the stock prices of most large companies and in most large sectors will fall. The NYSE and Nasdaq released their figures for short positions as of January 13.

Short sellers increased their positions in all four of America’s large banks. The short interest in Bank of America (NYSE: BAC) rose 18.5% to 186.1 million. The price of its stock, and most other bank stocks, have risen as it appears that the worst of their balance sheet problems have faded some. Shares sold short in Citigroup (NYSE: C) rose 19.1% to 50.3 million. The short interest in Wells Fargo (NYSE: WFC) was up by 11.4% to 47.1 million. Shares sold short in JP Morgan Chase (NYSE: JPM) were up by 21.5% to 40.6 million.

Shares sold short in the two big car companies also rose. The short interest in Ford (NYSE: F) was up by 14.7% to 147.1 million. Shares sold short in General Motors (NYSE: GM) were up 13.7% to 62.3 million.

The short interest in almost all major tech stocks was up as well. Shares short in Microsoft (NASDAQ: MSFT), which posted relatively good earnings, were up 49.8% to 101.5 million. Shares sold short in Intel (NASDAQ: INTC), which also posted strong numbers for the fourth quarter, rose 12.2% to 131.8 million. The short interest in Dell (NASDAQ: DELL) was up by 6.1% to 69.9 million. Shares sold short in Oracle (NASDAQ: ORCL) were up by 40.8% to 27.4 million.

Douglas A. McIntyre

Filed under: 24/7 Wall St. Wire, Short Interest Tagged: BAC, C, DELL, F, GM, INTC, JPM, MSFT, ORCL, WFC

Media Digest (1/26/2012) Reuters, WSJ, NYT, FT, Bloomberg

247wallst — Thu, 26 Jan 2012 11:29:50 +0000

Ben Bernanke says the Fed is prepared to buy more bonds. (Reuters)

NEC to cut 10,000 workers. (Reuters)

Nintendo posts poor earnings and cuts forecasts. (Reuters)

Warren Buffett says higher taxes on the rich are a way to bring the burden on Americans back inline. (Reuters)

George Soros criticizes efforts to put austerity over growth in Europe. (Reuters)

Netflix (NASDAQ: NFLX) shares rise on news its subscriber base rose sharply. (Reuters)

Tokyo Electric Power will get a $13 billion bailout. (Reuters)

George Soros buys Italian bonds because of high yields coupled with deflation. (Reuters)

U.S. officials are looking at HSBC (NYSE: HBC) for money laundering. (Reuters)

German consumer morale reaches a 10-month high. (Reuters)

Creditors may accept a lower yield on Greek bonds to end negotiations to keep the nation out of default. (Reuters)

The International Monetary Fund says a halt to Iran’s oil flow would push crude prices up 30%. (Reuters)

Nintendo will have the new Wii in markets before the end of the year. (Reuters)

Strategy Analytics says Google (NASDAQ: GOOG) Android-based tablets have narrowed the sales gap with Apple’s (NASDAQ: AAPL) iPad. (Reuters)

SAP (NYSE: SAP) says it will do more to target Oracle (NASDAQ: ORCL) customers. (Reuters)

Public pensions have increased their investment in private equity, according to the Wilshire Trust Universe Comparison Service. (WSJ)

Roche’s offer for Illumina (NASDAQ: ILMN) is based on the belief that doctors will use genetic products on a more regular basis. (WSJ)

U.S. bond yields reached near record lows. (WSJ)

The U.S. Department of Agriculture releases data that show winters have been warmer recently. (WSJ)

A new Wall Street Journal poll shows better results for Obama. (WSJ)

Merkel says labor reforms and closer ties among EU nations were key to the success of austerity programs to close national deficits. (WSJ)

A drop in output shows the UK is closer to recession. (WSJ)

U.S. auto makers have returned to U.S. labor because of foreign exchange rates and low wages. (WSJ)

Samsung’s chip business is growing even faster than its cellphone division. (WSJ)

Farmers are planting more wheat despite droughts. (WSJ)

The Fed’s message is that a recovery may be years away. (NYT)

There is an oversupply of freighters, in part because it takes so long to make them. (NYT)

Citigroup (NYSE: C) says EU banks have raised $52.8 billion in new capital since the third quarter to meet regulatory demands. (NYT)

Hedge funds are dumping Greek debt. (NYT)

Apple thinks the Chinese market could sharply increase its sales. (FT)

Iran may block oil exports ahead of sanctions. (FT)

As EU-based banks keep cash on their balance sheets, more companies may default because of lack of capital. (Bloomberg)

Geithner says he will leave office after Obama’s first term. (Bloomberg)

Airbus begins to fix cracks in wings of its A380. (Bloombeg)

Ford (NYSE: F) may post its largest profit since 1998. (Bloomberg)

Douglas A. McIntyre

Filed under: 24/7 Wall St. Wire, Press Digest Tagged: AAPL, C, F, GOOG, HBC, ILMN, NFLX, ORCL, SAP

24/7 Wall St. Closing Bell (AAPL, GS, SBUX, ORCL, RF, ZNGA, AMD, ALTR, YHOO, COP, PX, WLP, LCC, XRX, ILMN, RBCN, INCB, GNOM, NUVA)

Paul Ausick — Wed, 25 Jan 2012 21:08:16 +0000

Markets opened mixed this morning, with the DJIA and S&P 500 opening lower and the Nasdaq Composite opening higher. The Nasdaq was getting a big push from the very strong earnings report out of Apple Inc. (NASDAQ: AAPL). The FOMC’s announcement that interest rates would remain near zero until late 2014 started a Fed rally and pushed the S&P into positive territory where they spent the rest of the day. Oil prices were lower this morning, but the weekly status report from the US Energy Information Administration led crude prices to a gain. WTI crude oil is up 0.72% at $99.66/barrel and Brent crude is up 0.16% at $110.21. Gold closed up 2.61% at $1,707.90.

The unofficial closing bells put the DJIA up more than 83 points to 12,758.85 (0.66%), the NASDAQ rose nearly 32 points (1.14%) to 2,818.31, and the S&P 500 rose 0.87% or more than 11 points to 1,326.06.

There were several analyst upgrades and downgrades today, including Goldman Sachs Group Inc. (NYSE: GS) cut to ‘neutral’ at JPMorgan; Starbucks Corp. (NASDAQ: SBUX) raised to ‘outperform’ at Oppenheimer; Oracle Corp. (NASDAQ: ORCL) cut to ‘neutral’ at Macquarie; and Regions Financial (NYSE: RF) raised to ‘outperform’ at RBC Capital and cut to ‘neutral’ at BofA/Merrill Lynch. Znyga Inc. (NASDAQ: ZNGA) gets starting calls from four brokers: ‘overweight’ at Barclays and JPMorgan; ‘buy’ at Goldman Sachs; and ‘neutral’ at BofA/Merrill Lynch.

Earnings reports since markets closed on last night have led to some price changes as of the last half hour of trading today: Apple is up 6.4% at $447.17, after posting a new 52-week high this morning of $454.45; Advanced Micro Devices Inc. (NYSE: AMD) is up nearly 3% at $6.72; Altera Corp. (NASDAQ: ALTR) is up 1% at $40.54; Yahoo! Inc. (NASDAQ: YHOO) is down -0.6% at $15.60; ConocoPhillips (NYSE: COP) is down -0.9% at $70.01; Praxair Inc. (NYSE: PX) is down -2.8% at $106.05; Wellpoint Inc. (NYSE: WLP) is down -4.9% at $66.01; US Airways Group Inc. (NYSE: LCC) is up more than 18% at $7.59; and Xerox Corp. (NYSE: XRX) is down nearly -10% at $7.81.

Other standouts from today include the following stocks:

Illumina Inc. (NASDAQ: ILMN) is up more than 46% at $55.16. The genetic testing instrument maker is the target of a $5.7 billion hostile takeover offer from Roche Holdings AG.

Rubicon Technologies Inc. (NASDAQ: RBCN) is down nearly -12% at $10.66. The LED lighting maker was downgraded from ‘buy’ to ‘hold’ at Needham yesterday on low demand.

Indiana Community Bancorp (NASDAQ: INCB) is up about 44% at $20.90 after posting a new 52-week high of $21.34 earlier. The bank holding company has agreed to be acquired by Old National Bancorp (NYSE: ONB) in an all-stock transaction.

Complete Genomics Inc. (NASDAQ: GNOM) is up 19% to $2.98. The DNA-sequencing company is getting a boost from the hostile takeover bid for Illumina.

NuVasive Inc. (NASDAQ: NUVA) is up about 19% at $16.31. The medical device maker had its shares stopped today following a report that it would not receive an injunction against selling a disputed product.

Stay tuned for Thursday. We have noted the following events on the schedule (all times Eastern):

8:30 a.m. – Durable goods orders
8:30 a.m. – New claims for unemployment benefits
10:00 a.m. – New home sales
10:30 a.m. – EIA weekly natural gas storage report
4:30 p.m. – Fed balance sheet and money supply reports

Paul Ausick

Filed under: HI/LOW, Market Close, The Day Tagged: AAPL, ALTR, AMD, COP, GNOM, GS, ILMN, INCB, LCC, NUVA, ORCL, PX, RBCN, RF, SBUX, WLP, XRX, YHOO, ZNGA

Top Analyst Upgrades & Downgrades (DVA, DNDN, GS, HGG, KEY, MCD, MS, ORCL, RF, SBUX, ZNGA)

Administrator — Wed, 25 Jan 2012 13:15:28 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street brokerage and research firms this Wednesday morning.

DaVita, Inc. (NYSE: DVA) Raised to Outperform as Bull of the Day at Zacks.
Dendreon Corporation (NASDAQ: DNDN) maintained Neutral with $14.00 target at Zacks; Started as Hold at Cantor Fitzgerald.
Energy Partners Limited (NYSE: EPL) named as value stock of the day at Zacks.
Goldman Sachs Group Inc. (NYSE: GS) Cut to Neutral at JPMorgan.
hhgregg, Inc. (NYSE: HGG) maintained Underperform as Bear of the Day at Zacks.
KeyCorp (NYSE: KEY) Cut to Underperform at Keefe Bruyette & Woods.
McDonald’s Corporation (NYSE: MCD) Cut to Perform from Outperform at Oppenheimer (valuation call).
Morgan Stanley (NYSE: MS) Cut to Neutral at JPMorgan.
Oracle Corporation (NASDAQ: ORCL) Cut to Neutral at Macquarie.
Regions Financial (NYSE: RF) Raised to Outperform at RBC Capital; Cut to Neutral at Bank of America Merrill Lynch.
Starbucks Corporation (NASDAQ: SBUX) Raised to Outperform at Oppenheimer.
Zynga, Inc. (NASDAQ: ZNGA) Started as Overweight at Barclays; Started as Overweight at JPMorgan; Started as Neutral at Bank of America Merrill Lynch; Started as Buy at Goldman Sachs.

If you enjoyed the top analyst calls, you can sign up in the box below to join our morning email list to receive news directly in your inbox each morning. We include major analyst upgrades and downgrades, IPO and M&A news, special situation developments, observations on Warren Buffett and key market gurus, as well as special exclusive feature stories.

JON C. OGG

Filed under: Analyst Calls Tagged: DNDN, DVA, GS, HGG, KEY, MCD, MS, ORCL, RF, SBUX, ZNGA

SAP Regains Ground on Oracle with Preliminary Record Results (SAP, ORCL)

Administrator — Fri, 13 Jan 2012 14:03:52 +0000

If you have tracked enterprise software for long, you know that Oracle Corporation (NASDAQ: ORCL) has been taking market share from SAP AG (NYSE: SAP) for years and years. It has been taking it by acquisitions and often organically. The problem is that Oracle’s latest earnings were disappointing enough that many investors found it far enough off-base and out of character enough that they have started to lose faith. Now a preliminary earnings and revenue report from SAP this morning may further add some question.

SAP reported record software revenue up 16% in the quarter to 1.74 billion euros, and up 22% for the year 2011. More important is that the company is claiming to have beaten its annual guidance in non-IFRS software and
software-related service sales. It is also claiming to have exceeded its earnings guidance on higher margins.

SAP is planning to release more detailed quarterly and annual financial data on January 25 but this was called by the company as having been its “best ever full-year and fourth quarter” in the release.

After closing at $53.25 in New York against a 52-week range of $47.39 to $68.39, the pre-market trading has shares up just over 2.5% at $54.57 in active trading.

Shares of Oracle are indicated down 0.4% at $27.05 against a 52-week range of $24.72 to $36.50.

JON C. OGG

Filed under: ADR, Earnings, Software, Technology Companies Tagged: ORCL, SAP

LG Agrees to Meet Microsoft’s Royalty Demand (MSFT, GOOG, AAPL, MMI, ORCL, NOK)

Paul Ausick — Thu, 12 Jan 2012 17:21:09 +0000

Korea’s LG Electronics has agreed to pay a licensing fee to Microsoft Corp. (NASDAQ: MSFT) for the right to use Microsoft claims it owns and that is required for all makers of smartphone handsets using the Android operating system from Google Inc. (NASDAQ: MSFT). Apple Inc. (NASDAQ: AAPL) and its iPhone are so far exempt from Microsoft’s claims.

The world’s largest software company has now signed agreements with handset makers Samsung, HTC Corp., LG, and eight other makers, which together manufacture about 70% of all smartphones using the Android operating system. So, while Google may give away Android, the operating system is no longer free. But Google doesn’t get any payment — checks are made out to Microsoft.

Microsoft has been pressing smartphone makers for months to pay up, and most have been doing so. Google has spoken out against all the patent lawsuits over mobile hardware and software, but the company is hedging its bets with its acquisition of Motorola Mobility Holdings Inc. (NYSE: MMI). Apple has been particularly aggressive in pursuing what it believes to be Google’s patent infringements. Another aggressive actor is Oracle Corp. (NASDAQ: ORCL), which acquired the patents and copyrights on the Java programming language when it acquired Sun Microsystems.

Google may end up having to compensate handset makers for the Microsoft fees, especially if the new Windows Phone operating system starts to encroach on Google’s lead in mobile platform software. Nokia Corp. (NYSE: NOK) is not the only smartphone maker that will be using the new Microsoft mobile operating system.

One thing that might happen is that Microsoft could agree to license Windows Phone at a lower price if a handset maker agrees to replace Android with the new Microsoft operating system. Google, which derives virtually all of its revenue and profit from advertising, must be able to grow its mobile advertising base and to do that it needs Android out there on as many smartphones as possible. It’s a jungle out there.

Paul Ausick

Filed under: Industry, Software, Technology, Telecom, Wireless Tagged: AAPL, GOOG, MMI, MSFT, NOK, ORCL