Here are some things going on today in the world of tech :
It's a big morning for earnings, and a few of them are not doing so well.
Seagate Technology (STX), the hard-disk-drive maker, is down $5.95, or over 10%, to $51.94, after the company reported revenue and profit that was slightly better than consensus. Its outlook for sales to be about the same this quarter as last, $2.8 billion, is better than the consensus estimate for $2.62 billion.
On the call with analysts following the report, there was some dissatisfaction with the company's gross profit margin, 30.2%, which was up only slightly from the prior quarter, even though Seagate sold a richer " mix " of drives of the high-value enterprise class.
CFO David Morton noted that the company had some production constraints that reduced the number of units the company could build of drives. "You think about absorption loss from that, that added some headwinds," said Morton.
Shares of GrubHub (GRUB) are down $8.62, or almost 9%, at $92.52, after the company topped expectations for revenue and profit, and also forecast revenue this quarter ahead, projecting $228 million to $236 million versus the consensus estimate for $227.9 million.
However, the all-important metrics may have been not enough for this high-flying stock: the total " active diners " was 15.1 million, merely in line with consensus. And " Daily average grubs " was just 436,900, below consensus for 442,500.
Shopify Falls, II-VI Surges
Among other reports this morning, Shopify (SHOP), the cloud e-commerce operator, is down $9.997, or 7%, at $123.66, after it also delivered higher-than-expected profit and revenue, and forecast this quarter's results higher. However, the year revenue outlook, $1 billion to $1.01 billion, while higher than the average estimate of $998 million, may just not be enough.
Remember, the cloud stocks -- including GRUB and SHOP -- have been heavily bid up so far this year, as I wrote yesterday, raising expectations. Instructure (INST), the education-software maker that forecast revenue just a tad lower than expected this quarter, is down $1.10, or 2.7%, at $39.45.
One bright spot is II-VI (IIVI), maker of fiber-optic components, which is actually up $3.45, or 9%, at $41.55, after delivering $294.7 million in revenue, easily topping the average $278 milli, and forecast revenue this quarter about in line with consensus.
Big Fiber Spending
Speaking of fiber optics, Jun Zhang with Rosenblatt Securities this morning writes that the cloud giants such as Facebook (FB) are going to spend 30% more on components for their data centers this quarter, a "strong" ramp.
One beneficiary of this rise in spending could be Applied Optoelectronics (AAOI), thinks Zhang.
"We believe AAOI shipments to Facebook could grow more than 50% QoQ, off-setting further shipment declines at Amazon.com (AMZN) in Q2," he writes.
The one point of concern is gross margin, writes Zhang, which was under pressure last quarter.
Applied's shares today are down $1.42, or 4.4%, at $30.54.
Apple's Numbers Still Getting Cut
For Apple (AAPL), which reports fiscal Q2 results this afternoon after the closing bell, the metrics keep getting tweaked. After I wrote yesterday afternoon about analysts cutting their estimates further, Mike Walkley of Canaccord Genuity, who has a Buy on the stock, cut his view for the June quarter's iPhone sales, to 34.5 million units, down from 39.4 million units previously.
Walkley cites discussions with contacts in North America are suggesting to him, "slow iPhone sales will likely persist until new products launch in September."
Apple's got the wrong product, he writes: "For the mature North America market, we believe the price point above $1,000 has been a greater deterrent for broad market appeal than anticipated. In China, we believe the 5.8-inch iPhone X screen size is not large enough for the high-end segment of this market."
Walkley also cuts his estimate for this year's average selling price for iPhone to $749 from $754, as he thinks the company will have to adjust down the "mix" of iPhones it sells to appeal more to the cost-conscious.
Apple shares are up $2.56, or 1.6%, at $167.82.
Qorvo Can Rebound
Shares of wireless-chip maker Qorvo (QRVO), a big supplier to Apple, are up $4.14, or 6%, at $71.54, after Barclays's Blayne Curtis raised his rating to Overweight from Equal Weight, while keeping his $87 price target, writing that he expects the company will win back some share in the iPhone for its "bulk accounting wave" device.
"We still don't believe share between Broadcom (AVGO) and QRVO is determined for this year," he writes, "but it is starting to become clearer that QRVO will pick up some."
The stock is "washed out," he notes.
Mind you, there's some risk in the June quarter : "Clearly, the AAPL supply chain is weak and should be a headwind into June," he writes.
"But we do believe QRVO could see a better Android tailwind given less share at Samsung and some growth sequentially from China."
"Either way, we believe the focus will move to the 2H regardless of where June guidance shakes out."
He also thinks Skyworks Solutions (SWKS), Qorvo's main competitor, can see stock price appreciation in the next iPhone cycle.
Spotify Needs to Grow the Pie
Shares of streaming music pioneer Spotify Technology (SPOT) are up $2.01, or 1%, at $163.68, after Buckingham Research's Matthew Harrigan this morning started coverage with a Neutral rating, and a $175 price target.
"Breakout upside on the stock even with enviable subscriber growth may require Spotify to gain further muscle relative to the'frenemy' major music labels through more mindshare primacy with both consumers and artists," writes Harrigan.
They need to grow the pie, he concludes. Spotify will remain the "global leader in music streaming," he thinks, "but we feel that it will have to accelerate growth in the global music business for its stock to command upside from current level."
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