Yahoo (YHOO), which competes with Google (GOOG) and AOL (AOL) in the search business, is seeing a relatively stable profit margin of 42% since 2008 by our estimates, and we expect the margin to rise slightly over the coming years as Yahoo benefits from its partnership with Microsoft (MSFT). In 2009, Yahoo and Microsoft signed a deal whereby Yahoo will not only use Microsoft's search technology on its websites but will also keep a majority of the ad revenues. Yahoo is also making efforts to control costs by cutting its workforce, which should improve profitability in the short term.
- SINA (SINA) to overweight from neutral at Piper Jaffray.
- Texas Instruments (TXN), ON Semiconductor (ONNN), Xilinx (XLNX) and Valassis (VCI) to overweight from neutral at JPMorgan.
- Salesforce.com (CRM) to buy from hold at Canaccord.
- Peet's Coffee (PEET) to buy from neutral at Janney Capital.
- Invesco Mortgage (IVR) to overweight from equal weight at Barclays.
- BTU International (BTUI) to buy from hold at Wunderlich.
- Coca-Cola Femsa (KOF) to overweight from neutral at HSBC.
- Chipotle (CMG) to market perform from underperform at Morgan Keegan.
The latest transaction was announced Tuesday: a $42 million round in Weatherbill. The other investor in the deal is Khosla Ventures.
Google (GOOG), which competes with Microsoft (MSFT), Yahoo! (YHOO), Aol (AOL) and Facebook in the search advertising market, has been working to increase its penetration in social networking. It started with Google's foray into social applications like Google Wave and Buzz, which did not meet initial expectations. Google then made a number of acquisitions for the development of its major upcoming social networking project named Google Me.
Google's (GOOG) Android smart phone operating system has seen tremendous adoption over the past year as its market share has increased from a mere 6% in 2009 to around 24% by 2010. This has come at the expense of smart phone operating systems from Nokia (NOK), Research in Motion (RIMM) and Microsoft (MSFT). The other main competitor, Apple's (AAPL) iPhone OS, saw a slight increase during this time period from 26% to 28%.
We believe that Android's success has to do with the fact that it partnered with smart phone makers like Motorola Mobility (MMI), Dell (DELL), LG and Sony Ericsson (SNE) in providing its OS. Higher Android adoption helps Google by enabling more mobile searches from Google's platform as Google is the default search engine on Android phones.
Lately, Research In Motion (RIMM) has been ramping up its dealmaking. Some of the recent transactions include QNX, Dash Navigation and Torch Mobile.
Tthe latest deal came this week: RIM agreed to buy Gist (the price tag was not disclosed). The company develops a service that prioritizes incoming messages. It even provides the user with helpful research information on contacts, such as from social networks and blogs. The app is currently for Apple's (AAPL) iPhone and Google's (GOOG) Android devices.
The company is on the move again -- and Google's Android is leading the way. Google sees the next leg of the Internet revolution in the smart phone, tablet and e-reader market -- and there's already a fierce battle raging. Google's Android is making inroads into the iPhone turf. How deep is the penetration? Singapore research firm Canalys said, "Google shipped twice as many devices as Apple's iPhone. in the fourth quarter," capturing 33% of shipments, up from 8.7% a year ago.
Apple, Inc.'s (AAPL) gibe at Google Inc.'s (GOOG) Android OS is that it was not designed for tablets. Google answered that challenge last week with the launch of Honeycomb. Motorola Mobility's (MMI) Xoom, due out later this month, will feature Honeycomb and should make a splash in the tablet market as competition heats up among tablet manufacturers and affiliated operating systems.
Even with the older version, Android has already started to dent iPad's market share due to the success of Samsung's Galaxy Tab, and we expect that Xoom could improve Android's position intensifying the showdown between Android and Apple's iPad OS.
First we had the iPhone revolution. Now, The Financial Times reports that Apple (AAPL) is planning to expand the iPhone to handle mobile commerce, giving the company access to the multibillion-dollar transaction industry.
You are probably wondering what and how this will be done. The iPhone 5, due out this year, likely will incorporate technology called Near Field Communication (NFC). NFC incorporates financial account information and ties the data to specific devices.
That's the big question, though, isn't it? How will the stock react after the numbers hit the web? Everyone is talking about it. Oh, if I only had a crystal ball. All I have is a gut feeling, to tell the truth, and I have to say, it doesn't feel too good.
Google (GOOG) gave investors some Q4 numbers to digest after the bell on Thursday, but that news may have been overshadowed by a surprise change in management. As I'm sure everyone has heard by now, Larry Page will be taking over CEO duties from Eric Schmidt.
But let's have a look at the numbers anyway. On a reported basis, the search-engine business made $7.81 a share, good for a 27% year-over-year growth rate. On an adjusted basis, per-share profit came out to $8.75, comfortably ahead of the $8.06 projected by Wall Street. The top line also put in a strong showing.
A Peek Into the Global Markets
Positive sentiment ruled the European markets today. STOXX Europe 600 Index has gained 0.78% and London's FTSE 100 Index moved up 0.57%.
U.S. stocks dropped Wednesday, with the Dow Jones Industrial Average dropping 12.64 points, or 0.11%.
Economic data on weekly jobless claims will be released at 8:30 a.m. ET. Data on existing home sales, leading indicators for December and the Philly Fed index for January will be released at 10 a.m. ET.
Google (GOOG) is projected to report Q4 EPS of $8.07 on revenue of $6.05 billion.
UnitedHealth (UNH) reported its Q4 EPS of 94 cents, beating the consensus of 84 cents. UNH reported its Q4 revenue at $24 billion, versus the estimates of $23.75 billion.
As equity markets return and investors warm up to the risk trade, it looks like IPOs are poised for a strong 2011, especially in the tech sector. For example, according to a New York Times report, it looks like Groupon is in the process of talking to various Wall Street bankers to prep for a public offering.
Founded just a couple years ago, the company has grown like a weed. The website provides daily deals, which are at steep discounts. But Groupon actually gets half of the cut. Yes, it's a lucrative business as revenues reached $1 billion last year. Already Groupon is in 35 countries.
But what's good for Verizon is mostly bad for AT&T (T), which will lose its exclusivity on the iPhone. Yet, investors have been anticipating this for awhile. Besides, AT&T has had much time to prepare for this transition.