Here are some of the things going on today in the world of tech:
Trust and Microsoft's GitHub Acquisition
Wall Street has been steadily reacting to Microsoft's (MSFT) announcement it will purchase software development-tools startup GitHub for $7.5 billion in stock.
The response is generally favorable. For example, Credit Suisse 's Brad Zelnick- reiterating an Outperform rating and a $115 price target-writes that the purchase "brings a sizable developer base that can become a meaningful driver of cloud adoption" for Microsoft's cloud computing services such as Azure.
He also likes that Microsoft plans to let GitHub keep going along as its own independent operation. "Microsoft's decision to keep GitHub open and operationally independent follows the company's previous success in this approach with acquisitions of LinkedIn and Minecraft, and we see this as an important decision in retaining GitHub's large developer community," Zelnick explains.
Not everyone is so confident in Microsoft, however. In a long post yesterday defending the buy, Ars Technica's Peter Bright acknowledges that many developers maintain their long-term mistrust of Microsoft when it comes to open-source software. Citing comments about the deal on Slashdot and Reddit, Bright notes that there are "not any specific concerns but a widespread lack of trust, at least among certain developers, of Microsoft's behavior, motives, and future plans for the service."
Microsoft stock today is up 19 cents at $101.86.
Apple Keeps the Faithful
Analysts have also been digesting Apple's (AAPL) annual developer conference presentation yesterday, which featured things such as controls to limit one's app usage and steps to eliminate "fingerprinting," a process by which data companies try to track people across the Web by profiling their computers.
The reaction to all that is rather mixed: Apple bulls take these as smart moves to enhance Apple's "ecosystem," and thereby retain users, Apple bears take it as rather neutral to the company's prospects in a time of much slower iPhone sales.
The stock is up $1.27, or 0.7%, at $193.10.
Longtime smartphone observer Richard Windsor wrote in his daily missive today that Apple is in "maintenance mode," and that its "latest platform releases focus more on keeping users and driving stickiness than they do about encouraging people to buy a new device."
Ben Schachter with Macquarie Research reiterates an Outperform rating, and a $197 price target, writing that "the bottom line is that" the show "was a relatively low-key event, as there were no big surprises that are going to make investors dramatically alter their view of the company or stock."
A "clear takeaway" is that Apple is "committed to the idea that it is different from its competitors in terms of its outlook on privacy and user'wellness'," he writes.
"It also seems to be very focused on augmented reality as a key driver for the future, he continues, "though we continue to be underwhelmed by current offerings."
"If AR is every going to really be a new computing platform, we think that the hardware and software will need to improve dramatically from today's offerings."
Rob Cihra with Guggenheim, reiterating a Buy rating, thinks that Apple is getting more "social" with its software, with things such as making "group" video calls on FaceTime and adding the "walkie-talkie" feature for voice chat on the Apple Watch.
He also takes as significant Apple's introduction of the " CreateML " language for doing artificial intelligence. "Although not explicitly called out by the company, our own belief is that Apple will increasingly pursue more on-device EDGE processing of AI/ML as a unique differentiator vs. the strengths of most of its competitors being in cloud-based services."
Less exuberant is Jeffrey Kvaal with Instinet, who reiterates a Neutral rating, and a $175 price target, writing that it was all "interesting though incremental and unlikely to shift either estimates or the narrative."
He is, however, appreciative of CEO Tim Cook's disclosure that 81% of users are on the latest version of iOS, a "big positive for developers. The lengthening smartphone upgrade cycle has eroded this advantage, but only marginally."
Broadcom on Tap
Analysts are gearing up for wireless chip giant Broadcom's (AVGO) fiscal Q2 report this Thursday, after the closing bell.
The Street is, on average, modeling revenue of $5.002 billion, and $2.04 per share in net income. The historical numbers are not a big part of the report, as Broadcom already warned on April 30th its results for the April-ending quarter as well as the current quarter would come in below what was the consensus estimate at the time, thanks to the weaker trends in smartphones.
KeyBanc analyst John Vinh reiterates an Overweight rating today, reminding investors that the company is making accelerated purchases of its stock through its $12 billion buyback plan, which can add as much as $2.08 per share to next fiscal year's earnings.
That has the potential to ultimately bring upside to earnings, and the stock is only trading at 12 times earnings, he notes, but investors will have to have "patience," he counsels.
"The potential for more meaningful catalysts are unlikely until FY19," he writes, given some loss of chip share this year in Apple's likely lower-priced "LCD iPhone," as well as what he deems "limited ability for AVGO to pursue M&A given its announced buyback and the blockage of the Company's attempt to pursue the acquisition of QCOM."
"We anticipate AVGO will resume pursuing acquisitions in FY19."
Broadcom shares are up 44 cents at $258.81.
Gaming's Big Week
Piper Jaffray analyst Michael Olson surveys the video game terrain in advance of next week's annual gaming fest, "E3," in Los Angeles. He finds the video gaming sensation Fortnite continues to be on fire.
"We conducted a survey of >300 gamers in the U.S. via Google Surveys asking: What video game are you most interested in playing over the next year?" writes Olson.
The answer: "Fortnite holds the top spot, but Black Ops 4 was a close second, with Red Dead right behind," Olson says, referring to games by Activision-Blizzard (ATVI) and Take Two Interactive (TTWO), respectively.
Speaking of Take Two, its stock is down 70 cents at $112.98, after BMO Capital's Garrick Johnson this morning cut his rating to Market Perform from Outperform and his target to $116 from $135. He thinks investors are getting ahead of themselves in their expectations for "Red Dead Redemption 2."
Don't Get Carried Away With Okta
Shares of identity and security management software vendor Okta (OKTA) were downgraded by Needham's Alex Henderson, who cut his rating on the stock to Hold from Buy in advance of the company's fiscal Q1 earnings tomorrow afternoon, after the closing bell. The stock sold off by $2.14, or almost 4%, at $55.22.
Henderson thinks the company can beat the consensus of $78.8 million, and a loss of 30 cents per share, and probably also forecast higher, but he's concerned, "Will it be enough?"
"We think the risk of a beat that isn't enough to inflated expectations could cause more downside than the upside potential of a strong beat and raise offers."
"If estimates for the full year edge up 5%, the stock is still over-extended to the upside. Any shortfall could cause a more articulated correction."
Twitter's S&P Bounce
Shares of Twitter are up $1.93, or 5%, at $39.81, after it was announced yesterday the stock will be added to the S&P 500 index. The stock is on course to its highest close since April 28th of 2015, when it ended the day at $42.27, according to Dow Jones's data gurus.
This was no surprise to Aegis Capital analyst Victor Anthony, who reminds clients this morning he raised his rating on Twitter to Buy from Sell back on January 16th precisely on the premise of inclusion in the index.
Now, Anthony sees more "catalysts" in store for the stock.
One is the start of the World Cup next week, which "should lead to higher International revenue contribution from video ads," he argues; another is media partnerships with Disney/ESPN, Viacom, and NBC Universal, which should "drive higher engagement on Twitter and drive incremental ad revenue, helping to partially offset tough 2H comparisons," he thinks.
Also, his "checks" of the ad market for Twitter "are positive and unique visitor and time spent data have been healthy."
That may mean upside to the Q2 estimate for Twitter of $697 million in revenue and $261 million in Ebitda.
A Relic of the Future
Shares of software tools developer New Relic (NEWR) are up $3.31, or 3%, at $108.55, after the company yesterday held its analyst day meeting, which was generally well received, with price targets rising at several shops. Key at the meeting was management describing its strategy for reaching $1 billion in revenue come 2022. That would be a greater than doubling of the $458 million the Street is estimating for the fiscal year ending next March.
R.W. Baird's Rob Oliver, raising his price target to $116 from $93, thinks that goal is "conservative," given what he expects is New Relic's ability to keep adding new products, a sentiment that many analysts are echoing this morning.
Slow Posting Ahead
On a personal note, I'll be in jury duty the next couple days, so there may be some reduced volume of blogging from me.
Sign up to Review & Preview, a new daily email from Barron's. Every evening we'll review the news that moved markets during the day and look ahead to what it means for your portfolio in the morning.