Technology Stock Roundup: MSFT/GOOGL Have Cloud-y Plans - Analyst Blog

With earnings season drawing to a close, new products like Amazon ( AMZN ) Echo, cloud initiatives from Google ( GOOGL ) and price cuts by Microsoft ( MSFT ) and Google caught the headlines again last week.

Earnings Highlights

Alibaba : Alibaba's ( BABA ) second-quarter results reflected the ongoing investment across the ecommerce market, so those expecting anything different would have been surprised. Investors didn't seem to care that the company intended to go on investing and instead cheered the surge in revenues.

And those certainly didn't disappoint: Alibaba saw strong double-digit revenue growth in both the international and domestic Chinese businesses. And it wasn't just the business volume that grew so significantly; both active buyers and sellers also grew strongly, especially on mobile devices. Even its cloud infrastructure segment, which remains under 2% of total revenue, jumped 50% from last year.

Priceline : Priceline's ( PCLN ) business is a little different from Expedia's since it is stronger internationally while Expedia's strength is the domestic market. Some international markets are not conducive to high prices, so Expedia's ADRs are often stronger. But this shortcoming is often overcome with increasing volumes (although in the last quarter it was attributable to the addition of OpenTable, which didn't have any cost of sales).

Both companies have increased marketing spending in an attempt to pick up share in what is still a relatively fragmented market. Competition is heating up however as the companies look to expand in Asia where there are a number of strong home-grown players.

TripAdvisor : Shares of this travel information provider plunged after the company's disappointing earnings report despite revenues that beat expectations. CEO Steve Kaufer, however, attributed the miss to lower-than-expected click-based revenue, which he said was because of seasonal factors and TripAdvisor's transition to the meta search model. But full-year revenue growth guidance of high 20s to low 30s percentage rate was reiterated.

ActiVision, King Digital and Zynga : Of the three gaming companies that reported last week, ActiVision ( ATVI ) was the strongest based on its strong gaming portfolio (newly-launched Destiny, highly popular Diablo III and Hearthstone: Heroes of Warcraft), which helped it beat our estimates on both top and bottom lines. While King Digital also beat , its results were overshadowed by the continued decline of its hit Candy Crush franchise. Non-Candy Crush games made up 49% of revenue in the last quarter. The absence of new titles led to Zynga's declining revenues that also missed the Zacks Consensus Estimate.

Some other technology companies that reported last week were Symantec , NVIDIA and Stratasys , all of which beat our estimates.

Another Device from Amazon

The last device was a smart phone called Fire that pretty much went up in flames. But this time round it's something rather interesting that Amazon is likely experimenting with. It's a cylindrical thingy that can hear your requests even in a crowded room by filtering out background noise including music. And it's supported by a virtual assistant that jumps to obey every time you say the word.

But you have to call it Alexa if you want a response, so hopefully there are no other Alexas in the vicinity. At the moment, it can improve your general knowledge, feed you news and weather info, or help you find and play music. But chances are there are a few things it will do better, like helping you buy what you need from Amazon by simply asking Alexa.

Company Last Week Last 6 Months
AAPL +0.99% +30.32%
FB +0.81% +32.07%
YHOO +5.42% +43.81%
GOOG -3.23% +4.29%
GOOGL -2.83% +4.79%
MSFT +3.66% +23.08%
INTC -1.26% +27.67%
CSCO +3.50% +10.02%

GOOG = Class C shares (new, non-voting)

GOOGL = Class A shares (old, 1 vote per share)

Other stories you might have missed -


Apple Bond Offering : Apple ( AAPL ) is raising funds for share buybacks, dividends and other corporate purposes. In order to avoid U.S. taxes and take advantage of the low yields, it is not repatriating any offshore cash but instead issuing euro-denominated 8 and 12-year notes. Activist investor Carl Icahn has been pushing for increased payout to investors for some time and this isn't the first time the company raised debt for the purpose. Apple holds most of its cash offshore.

Twitter to Open Greater China Office : Twitter has said that its new Greater China office will open next year in Hong Kong. Local company Weibo is the primary micro-blogging company in China. While Twitter has many more subscribers all over the world, it remains blocked in China. Weibo listed on the Nasdaq in April this year. Alibaba and Sina are its controlling stakeholders.


Facebook Report on Government Data Requests : Facebook has reported a 24% increase in government data requests in the first six months of this year compared to the last. Of the nearly 35,000 government data requests in the first half of 2014, the U.S. government made more than half (15,433) and more than three times the number of requests made by India, which was second.

Germany topped the list of "number of requests per million users" at 115, followed by Italy, the U.S. and France at around 100 per million. Data requests granted were however highest for the U.S. at 80% followed by Britain at 71%. So Facebook essentially handed over more data to the U.S. government than anyone else. T

akedown/censorship requests increased 19%, most of which were made by India, Pakistan and Turkey.The number of Foreign Intelligence Surveillance Act (FISA) orders and National Security Letters (NSL) were less than a thousand, which is all it is legally permitted to say at the moment.

New Technology/Products

Microsoft Office 365 Now Free

Intel Announces "Make it Wearable" Winner : Intel's Edison appears to be making some headway. The company launched the tiny computer with the intention of fostering creative software development around it by do-it-yourself outfits and individuals. The size and packaging made it suitable for the wearables market.

So last week, Intel paid out $500,000 to a group who won its "Make it Wearable" contest. The group created a wrist mounted camera-equipped drone for rock climbers that snaps up to take a picture from hard-to-reach places, then hops back into place and syncs with the user's smartphone.

In the meantime, Intel Capital announced an investment of $62 million in 16 startups with products ranging from aerial drones to eye tracking technology. The group head, Arvind Sodhani has said that Intel plans to invest in the entire technology spectrum from wearables and IoT to big data analytics.

Google's Cloud Offerings for Enterprises : Google wants to grab enterprise customers, so it has announced some new services especially for them. In consideration of the need for speed of financial services, media and entertainment companies, Google is offering its "container engine." This is a mechanism that could help enterprises move applications around quickly either within the data center or to and fro their private clouds.

Google is also providing software to create virtual private networks (VPNs) between customers. A third offering intended for very big companies involves direct access to Google data centers from more than 70 sites across 33 countries.

Amazon Prime Customers Get Unlimited Photo Storage

M&A and Collaborations

Google/LG In Patent Cross-licensing Deal : Google has entered into a patent cross-licensing deal with LG for existing and new patents over the next 10 years. The company had earlier announced a similar agreement with Samsung. Cross-licensing is a positive for manufacturers of mobile devices because it eliminates potential legal hassles and creates mutual dependence and collaboration. Google and Samsung have not been the best of allies in recent years and the search company has been building relationships with other hardware makers (it chose HTC for its latest Nexus tablets).

Google Maps Adds OpenTable Restaurant Reservations : Google is closely integrating OpenTable restaurant reservations with its Maps app, such that the user can make book tables without leaving the app. This eliminates the hassle of clicking through to the OpenTable mobile website first. Google has said that neither OpenTable owner Priceline (which currently buys a ton of advertising from Google) nor OpenTable itself is paying for the integration, but it's a good guess they'll start once they see the volumes going up. This could be bad news for Yelp, which like Google, integrates OpenTable reservations in addition to reviews, photos and phone numbers.

Google to Harness Equinix Collocation : Google and Equinix have announced that Google will be using Equinix data centers to host its applications and cloud infrastructure in some markets. Equinix has 100 data centers across 32 metropolitan areas and Google will be using its capacity in 15 markets including New York, Atlanta, Frankfurt, Germany and Hong Kong.

Some Numbers

Google Cloud Tools Now Cheaper : Google announced massive price cuts at the Cloud Platform Live summit. The market is growing increasingly competitive with both Amazon and Microsoft already established and growing players with Google being the challenger. Last week's cuts included 47% for network egress, 23% for BigQuery storage and 48% for persistent disk SSD. Google said that price cuts would continue as it continued to fight for market share.

Cisco Global Cloud Index Report : Cisco has released the annual Global Cloud Index report, which predicts very strong growth in cloud traffic, workloads and storage. Accordingly, data center traffic is expected to grow at a CAGR of 23% (cloud to be 76% of total data center traffic, up from 54% in 2013). By then, 53% of the global population will use personal cloud storage and the amount of storage per head will more than quadruple. Cisco intends to be in the market for hardware cost reduction and virtualization, which is where its future growth will come from.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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