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The Zacks Analyst Blog Highlights: Intel, Netflix, Facebook, SanDisk and Western Digital

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For Immediate Release

Chicago, IL - October 20, 2015 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Intel ( INTC ), Netflix ( NFLX ), Facebook ( FB ), SanDisk ( SNDK ) and Western Digital ( WDC ).

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Here are highlights from Monday's Analyst Blog:

Technology Stock Roundup

Last week brought earnings reports from Intel ( INTC ), AMD and Netflix ( NFLX ), Facebook's ( FB ) huge video update and speculations about a possible SanDisk ( SNDK ) acquisition by Western Digital ( WDC ).

Tech Earnings Push-Off with Intel, AMD

Intel : Intel topped estimates , with its PC business again coming in stronger than the market. Overall shipments grew 3% compared to IDC's and Gartner's estimated declines of 11% and 8% and pricing also improved. While the goal remains to stabilize this business while growing data center, IoT and memory, Intel introduced caveats this time, saying that enterprise spending and IoT are both subject to macroeconomic concerns although memory would continue to grow strongly.

Intel will also see increasing competition from Qualcomm in the data center as it tries to displace the ARM partner in mobile devices. Qualcomm is reportedly testing server SoCs developed in conjunction with Mellanox and Xilinx (FPGAs for acceleration as Intel is doing with Altera).

AMD : AMD missed the Zacks Consensus Estimate in the third quarter. This is a company battered by the PC market although management has been working on the non-PC side of things. That won't be enough to offset PC market weakness this year though. The main positives for the company are the continued semi-custom design wins, which may eventually pull it through this rough patch. AMD is also selling out its minority stake in a JV with Nantong Fujitsu Microelectronics, which will fetch $230 million and help its cash last a little longer.

Netflix : The popular streaming company met the Zacks Consensus Estimate as content costs continued to accelerate, currency remained a negative and U.S. customer churn increased. A large number of free international subscriptions added to the total subscriber base. Netflix tried to blame the customer churn on the EMV transition in the U.S., but not many are buying this story. The question is: is Amazon Prime with its attractive streaming deals and all-new devices stealing its lunch?

Facebook Tests Video Tab

Tech companies are determined to eat up your data plans. They force video into your activity and then publish numbers showing how you love them. Because after some time, it kind of becomes part of your experience, you tend to click more on them anyway. And the plan works. That's why we see more video ads on the net these days and now, increasingly, video programming (all a ploy to steal TV ad dollars).

Google's dedicated video channel YouTube will see some solid competition with Facebook getting deeper into video programming and ads. The company is now testing a dedicated video channel on some iOS users that you can save news feed videos to. It also serves up suggested videos including ads. Facebook has improved tools for video content providers, improved analytics for advertisers and introduced 360 degree viewing for users. In short, it's firing on all cylinders.

But the winner, and the reason all this is such a big threat to YouTube, is Facebook's social element, which can quickly help a video go viral as it is shared and liked across user networks. This is a powerful tool that Facebook will use to full advantage, but content creators are not yet lining up because of the difference in the way Facebook and YouTube count views. Playing a video for 3 seconds is a view according to Facebook (though it has also tested 10 seconds as well) whereas for YouTube it's about 30 seconds or when users actually start to engage.

PC Market Leaders Selling Us on PCs

Before long, tech leaders HP, Dell and Lenovo, chipmaker Intel and Microsoft will be launching a joint TV ad campaign titled "PC Does What". The ad will run for 6 weeks and show the advantages of using PCs in different situations. Since most users are already aware of the advantages or disadvantages of using PCs, it could be a tough sell. At any rate, they have to give it a shot because of the sluggishness in the PC market and the blow from the free Windows update this year.

Some media reports are saying that the ads, while not naming Macs are trying to highlight the benefits of using a PC over a Mac, but the differences aren't that great. It's interesting to see a bunch of companies come together because they have a joint interest against Apple. Same was the case with the launch of Android although that was more of a big deal because it was necessary to increase competition.

SanDisk Could Sell to Western Digital

Another week, another acquisition rumor. This time it's about memory chip maker SanDisk that is looking for a takeover by Micron or Western Digital (Bloomberg reports). Some are also saying that Chinese government-supported tech group Tsinghua Unigroup is also an interested suitor.

So first, SanDisk's interest in selling itself: poor execution, customer loss, late to develop 3D NAND and extremely competitive market. SanDisk is fabless, using Toshiba foundries (plus one it is building in joint ownership with Toshiba). It has IP sharing and development arrangements with Toshiba that requires it to sign off on any such deal.

Western Digital, Seagate and Micron all have a huge interest in the purchase because of competitive advantages, IP and facilities. And this is also the reason the deal will probably go through strict regulatory scrutiny.

Of WDC and STX, WDC is better equipped because of its positive cash position and recent cash infusion through Tsinghua. Whether WDC takes additional debt or distributes additional shares, it will be dilutive for shareholders, which is why share prices have plummeted (down 7.5% last week). But this will be a good move to charge into the SSD market where WDC has made other small acquisitions. STX also needs to raise its SSD game but WDC appears better-equipped financially.

Micron competes with Toshiba and SanDisk in memory chips so the deal will eliminate two of its competitors. Since it has facilities itself, it may not be interested in using Toshiba's, so the Japanese company will likely not bless this deal. Micron also has arrangements with Intel, developing competing memory chip technology, so that relationship could sour as a result.

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INTEL CORP (INTC): Free Stock Analysis Report

NETFLIX INC (NFLX): Free Stock Analysis Report

FACEBOOK INC-A (FB): Free Stock Analysis Report

SANDISK CORP (SNDK): Free Stock Analysis Report

WESTERN DIGITAL (WDC): Free Stock Analysis Report

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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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