Canaccord Genuity on Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and Vivus (NASDAQ:VVUS)

By Canaccord Genuity  SEP 24, 2012 11:25 AM

Apple supplies enthusiasts, Microsoft files complaint, and Vivus treads water.

 


The following are excerpts from Canaccord Genuity analysts' commentaries.

Apple (NASDAQ AAPL): Why Wait?

Apple enthusiasts around the world lined up to get their hands on the iPhone 5 Friday morning, reinforcing estimates that the iPhone 5 could be the largest consumer electronics debut in history. One New York resident spent three days waiting for the debut, while Apple co-founder Steve Wozniak also waited in line in Australia. Analysts speculate as many as 10 million iPhones could be sold over the weekend, although Barclays speculates that Apple may have trouble keeping up with initial demand due to a supply shortage of certain components.

The new iPhone has a bigger screen, is lighter, and has a faster processor to help power upgraded software features. Roughly two-thirds of Apple’s profit is generated from the iPhone, so a successful launch for the iPhone 5 is key, especially in the face of rising competition from devices powered by Android and Windows operating systems.

Microsoft (NASDAQ:MSFT): Ruh Roh.

According to sources close to the matter, Microsoft has filed a complaint against China National Petroleum (CNPC) and three other state-owned companies asking them to stop using pirated versions of its Office software. CNPC, China Post Group, China Railway Construction Corp, and Tavelsky Technology are the targets of the complaint. Microsoft is alleging that more than 40% of Office and Windows server client software used by CNPC and 84% of China Railway Construction’s Office software is unlicensed. A PR rep for China Railway Construction said the estimates “greatly exaggerated” the use of unlicensed software. The statement read, “We do not rule out the possibility some subsidiary units may have used unauthorized software, but it certainly is not such a large proportion. The company attaches great importance to this matter, and we are holding an internal inquiry.” According to a report by the Business Software Alliance released earlier this month, China’s illegal software market was worth almost $9 billion last year, versus the legal market of less than $3 billion.

Vivus (NASDAQ:VVUS): Shedding Market Cap.

Shares of Vivus were deeply under water after the company stated that European regulators were leaning against approving its new diet drug Qsiva, formerly known as Qnexa. A formal decision is expected in October. Vivus said if European regulators recommend against approval at that time, it will either resubmit its market application or appeal the decision. Qsiva was finally approved by US regulators in July after initially being rejected over safety concerns.

Vivus's President Peter Tam said the committee raised questions on both the drug's safety and efficacy, as well as the company's risk minimization plans. Commenting on the news, an analyst at Cowen and Co. stated, "The largest impact on Vivus is that it may remove at least some of the acquisition premium assigned by some investors, since a lack of ex-US revenue makes an acquisition by a large pharma less likely, albeit possible."

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