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VIDEOPredicting Great Things for Oracle
By
Justin Sharon
Sep 07, 2010 4:20 pm
Mark Hurd, formerly with Hewlett Packard, has joined the tech titan, prompting an upgrade from Goldman Sachs.
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See also, The Kids of Business Icons: David and Megan Ellison
Nokia (NOK) may have closed its flagship Fifth Avenue store earlier in the year but it's on Easy Street today after Morgan Stanley took it up an unusual two notches to Overweight. Analyst Patrick Standaer, although noting it still has “plenty to improve,” nonetheless says Nokia’s N8 product is “off to a good start.” Telecoms were actually the stock market’s top performing sector this summer and while there are literally more mobile phones than people in some cell-saturated nations, new growth could come from one unexpected source -- see Cuba: The Next Hot Telecom Market? Shares could get a further catalyst from the unveiling of new smartphones including the E7 at next week’s Nokia World in London on September 14 to 15. Nokia is still the world’s biggest cell phone maker by volume but remains extremely under penetrated in the US and is under attack from both Apple (AAPL) and Android (GOOG). Moreover the company recently reported its lowest-ever profitability and doesn't look like returning to its pre-iPhone pomp any time soon. Only a month ago Nokia’s research head, channeling his best 'enry ‘iggins line from My Fair Lady, said “Just you wait.” However investors who have been waiting for forever and a day to see the stock back to its 1990s heyday may need to be patient for a while longer.
This afternoon Starbucks (SBUX) is anything but good to the last drop, declining approximately 1% even after announcing plans to sell its VIA Ready Brew to groceries in Britain, Japan, and Canada. Some stateside cynics may say it’s down because of the news, but Americans are ironically much more snobby about instant coffee than are some of our cousins even in continental Europe. It carries considerably less stigma elsewhere, amounting to more than 60% of overall Japanese coffee sales for example. The United Kingdom figure is even higher, exceeding 80% -- indeed, in the 1980s soluble java even spawned an advertising campaign that achieved iconic status across the pond. Via has outperformed expectations -- by fair means or foul -- in the US since its launch a year ago and for reasons already alluded to ample opportunities exist in both England and the Land of the Rising Sun. (Canada, where nothing comes between a hoser and their cup of Tim Horton’s (THI), could be a tougher sell.) But Starbucks does have issues to address. In recent times the firm successfully scaled back from its overly aggressive expansion efforts and a subsequent loss of focus on its core customer experience. The market, however, has already rewarded its shares with a hefty 150% increase in the past 18 months so the stock is primed to hit a valuation-induced air pocket here. Moreover, prices for the underlying commodity are near 13-year highs, which is already starting to generate heat, political and otherwise. Any attempts to pass on price increases to consumers in an iffy economy may send some running to cheaper rival offerings from Dunkin’ Donuts and McDonald’s (MCD). Indeed, the fast-food outfit stands atop yet another all-time high today, and its mad men aren’t exactly shy about advertising how its vastly improved coffee offerings compare favorably to Starbucks on price. (“Four Bucks Is Dumb”.) To see additional analysis check out Supply Shock May Bolster Coffee ETFs and How Green Mountain Coffee Roasters Stays Hot in a Tough Market.It’s been a dark week at the home of Shark Week. Discovery Communications (DISCA) was downgraded this morning, doubtless disappointing shareholders although employees know what true trauma is after the hostage situation at its headwaters last Wednesday. The cut from Caris & Company, to Average from Above Average, was actually a fairly benign one based on valuation with its stock having outperformed the market all year. Its per-share estimates on the broadcaster, which also owns Animal Planet and the Science Channel, remain intact for this year and next at $1.81 and $2.12, respectively. Looking at the bigger picture, Discovery does derive more than 40% of its revenue from advertising, which represents a potential red flag should the economic outlook worsen. Still, the key number to keep in mind may be 50%, which represents its interest in the upcoming goldmine that is the Oprah Winfrey Network. With the continuing popularity of Kate Plus 8 et. al., the company’s long-term future looks assured. See also Media Companies’ Stellar Earnings Mean Little to Stocks.
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