The following are excerpts from Canaccord Genuity analysts' commentaries.
Apple (NASDAQ:AAPL): iReveal.
As you may know, Apple (AAPL) used its private financial data to great effect in its recent courtroom brawl with Samsung
(PINK:SSNLF), winning a $1.05-billion damages award. But it was not without some cost to the notoriously secretive company – namely, the public disclosure of that data.
AllThingsD reports US District Judge Lucy Koh late Thursday denied Apple’s request to seal many of the documents the company used to make its damages case, ordering it to release key financial information regarding “product-specific unit sales, revenue, profit, profit margin, and cost data.” Koh argued that Apple cannot both use its financial data to seek multibillion dollar damages and product injunctions, and keep that data secret. “Apple’s motion seeks to permanently enjoin the sale of 26 Samsung products that have already been on the market for varying lengths of time, and seeks an enhancement of $535 million on top of the $1.05 billion in damages awarded by the jury,” Koh said in her ruling. “Such remedies would have a profound effect on the smartphone industry, consumers, and the public.
As the extensive media coverage indicates, this is a truly extraordinary case of exceptional interest to the public. Apple’s reasons would have to be very compelling indeed to overcome the unusually robust public interest in access.” And, in Koh’s opinion, they’re simply not. Pending appeal, Apple may soon find itself forced to reveal important sales data that it has long kept private – a blow to the company, but great news for investors and analysts that have long guessed at what it might be.
Google (NASDAQ:GOOG): Even the best fat-finger things.
Google (GOOG) spent an uncharacteristic time deep in the red on Thursday after accidentally releasing a slightly disappointing earnings report. These results were made to look materially worse by pressure at its Motorola Mobility Holdings
(NYSE:MMI) unit, which came in much weaker than expected (not the worst thing as Canaccord Genuity Technology Analyst Michael Graham believes this business should decline and these results simply displayed a faster pace), while Google Websites was slightly below his expectations.
Google revenue missed Graham’s estimate by ~2% due to Fx, European weakness, and some mobile pressure on Google Sites. This flowed through to a mix-driven lower gross margin and pressured overall Google profit. Also, paid clicks grew 33% y/y and 6% q/q, while Cost-Per-Click (CPC) declined 15% y/y and 3% q/q. Absent currency movements, CPC would have declined only 8% y/y and 1% q/q. Graham believes the two primary factors causing CPC to decline sequentially are: 1) higher proportion of Networks revenue during the quarter, and 2) higher proportion of mobile revenue, which is now at an annual run rate of more than $8 billion (~17-18% of Google’s standalone revenue). Further he believes that although mobile CPCs have bottomed and are either flat or are on the rise, the increasing representation of mobile as a percentage of total will continue to exert downward pressure on blended CPC.
MMI revenue and profit were very
weak, which he believes was driven mostly by faster shrinkage in non-Android areas. Overall, Graham said he doesn’t mind this dynamic as it clears the decks for growth at Google to be more visible going forward. Graham trimmed his revenue estimates for Q4 and next year, mostly driven by MMI and to a lesser extent Google Sites, with similar cuts to his EPS forecasts. He also reduced target but remains bullish, noting that while the mobile transition is taking longer than anticipated, he believes the long-term opportunity is intact.
Microsoft (NASDAQ:MSFT): Is 8 enough?
Microsoft pulled the tech machine lower on Friday, after announcing its third-quarter profit fell a greater-than-expected 22% to $4.47 billion, as sales of computers running its Windows operating system dipped and some revenue was deferred ahead of upcoming releases of its core Windows and Office products.
The sharp decline surprised investors, who had underestimated the effect of weak personal computer sales. Sales fell 8% to $16.01 billion, largely caused by the dip in demand for personal computers running Windows, as consumers held off new purchases in the tight economy or opted to buy tablet devices instead. Indeed, sales of PCs are expected to fall this year for the first time since 2001, according to research firm IHS, due to the weak economy and inability of the latest crop of lightweight laptops to compete with Apple’s iPad. Microsoft is betting the release of touch-friendly Windows 8 will rev up sales of PCs, laptops and Windows-compatible tablets as soon as it launches this week.
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