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Fly News Breaks for October 11, 2017
Oct 11, 2017 | 09:22 EDT
Credit Suisse analyst Michael Nemeroff notes that quarterly PC shipment data called out strength in Business PC demand driven by Windows 10 upgrades, and are consistent with the proprietary data he previously published that indicated 48% of enterprises plan to upgrade to Windows 10 within the next 12-24 months. The analyst expects continued strong growth in Microsoft's Office 365 Commercial products over the next few years, but over time he estimates that Windows-related revenue will decline as a percent of its business, giving way to a large and stable recurring revenue stream and strong cash flows. He reiterates an Outperform rating and $84 price target on the shares.
News For MSFT From the Last 2 Days
Mar 20, 2018 | 12:42 EDT
Welcome to "Game On," The Fly's weekly recap of the stories powering up or beating down video game stocks. NEW RELEASES: Among the major releases this week is Microsoft Studios' (MSFT) "Sea of Thieves," an open-world pirate-themed action game that launches today on Xbox One and PC. Also out this week is Electronic Arts' (EA) action-adventure game "A Way Out," which rolls out on Xbox One, PlayStation 4 (SNE), and PC on March 23. In addition, Bandai Namco's role-playing game "Ni No Kuni II: Revenant Kingdom" launches on PS4 and PC on March 23. MICROSOFT'S 'NETFLIX FOR VIDEO GAMES': Last week, Microsoft gaming cloud division chief Kareem Choudhry told The Verge in an interview that the company is working on a service that would function in largely the same way as a Netflix (NFLX) for video games. Choudhry said that the service would offer users access to games from a litany of developers, including Microsoft, and stream those games to the player's device of choice. stream those titles to the player's device of choice, according to Choudhry. "We're looking at ways to make that content available to anyone no matter what device they're on," he said, adding that there will eventually be "2B gamers in the world" and Microsoft's goal "is to reach every one of them." 'BATTLEFRONT II' LOOT BOX UPDATE: In a blog post last Friday, EA announced a progression update for "Star Wars Battlefront II," which includes a "complete re-design" of the in-game progression system. As part of the update, which will begin rolling out on March 21, players will no longer be able to spend real money on items that affect how the game is played. Players will not be able to purchase loot crates or ability-boosting Star Cards anymore, and instead will have to earn experience points and skill points for heroes, classes, and ships. "With this update, progression is now linear," the company said. "Star Cards, or any other item impacting gameplay, will only be earned through gameplay and will not be available for purchase." GOOGLE MAPS FOR DESIGNERS: TechCrunch reported last week that Google (GOOG, GOOGL) is making its Maps API more accessible to video game designers, providing them with access to the real world's geography and geometry, inserting 100M 3D buildings, landmarks, and more into developer's design repertoires. Game makes such as EA, Activision Blizzard (ATVI), and Take-Two (TTWO) can use these maps to serve as the foundation of their digital environments with all of the models turned into GameObjects in the Unity game engine that are ready to be adjusted, according to TechCrunch.
Mar 20, 2018 | 10:33 EDT
Shares of Oracle (ORCL) are sliding after the company reported better than expect third quarter results, but disappointed some Wall Street analysts with its guidance for cloud-computing revenue. Both Stifel and Bank of America Merrill Lynch downgraded the stock to Neutral-equivalent ratings in the wake of the quarterly report. However, not all were as bearish, as MUFG analyst Stephen Bersey was among those on the Street saying shares should be bought on the post-earnings selloff. RESULTS: Last night, Oracle reported third quarter adjusted earnings per share of 83c and revenue of $9.8B, both above consensus of 72c and $9.78B, respectively. The company also said Cloud Software as a Service revenues were up 33% to $1.2B in the quarter, while Cloud Platform as a Service plus Infrastructure as a Service revenues were up 28% to $415M. Total Cloud Revenues were up 32% to $1.6B. Additionally, Oracle reported third quarter adjusted operating margin of 44%, and announced that short-term deferred revenues were up 8% to $8B. For the fourth quarter, the company sees adjusted EPS of 92c-95c in USD, revenue growth between 1%-3%, and cloud revenue growth of 19%-23%, or 17%-21% in constant currency. MOVING TO THE SIDELINES: In a research note to investors, Stifel analyst Brad Reback downgraded Oracle to Hold from Buy, with a $53 price target, citing quarterly results. The analyst noted that he finds the "lackluster results/guidance concerning," especially in contrast to the strong results posted by Microsoft (MSFT), Salesforce (CRM), Adobe (ADBE), Workday (WDAY), ServiceNow (NOW), Splunk (SPLK), and Nutanix (NTNX). Overall, Reback argued that while Oracle has a strong cash engine from its installed maintenance base, the PaaS/IaaS business will remain in a "state of transition" in coming years, and the 18c Autonomous Database will likely not drive an upgrade cycle until at least 2020, and more likely 2021-2022. Meanwhile, his peer at Bank of America Merrill Lynch also downgraded Oracle to Neutral from Buy on the weaker than he expected quarterly results. Analyst Kash Rangan points out that while both partner and customer sentiment is improving, it will take longer for progress to impact the numbers than he had expected. Nonetheless, the analyst acknowledged that the long-term set up is positive. Rangan also lowered his price target on Oracle shares to $57 from $62. SELLOFF A BUYING OPPORTUNITY: Still bullish on the stock, MUFG analyst Stephen Bersey argued that Oracle had "solid" third quarter results and noted that he was "pleased to learn" that the business-software maker believes it is still taking market share in the cloud. The company's growth story is intact, but could have been better communicated on the earnings call, Bersey contended. The analyst recommended using the selloff as a buying opportunity, reiterating an Overweight rating and $58 price target on the shares. Meanwhile, his peer at Piper Jaffray argued that while Oracle's fourth quarter guidance for both revenue and cloud revenue was slightly below consensus, he remains confident that its Software as a Service revenues are set to accelerate in fiscal 2019. Analyst Alex Zukin noted that with shares trading 19% below the peer group, the valuation is attractive. The analyst lowered his price target on Oracle's shares to $55 from $57 but reiterated an Overweight rating on the stock. PRICE ACTION: In morning trading, shares of Oracle have dropped almost 9% to $47.41.
Mar 20, 2018 | 07:41 EDT
In pre-market trading the shares were last up over 5.8% to $13.46 on light volume. At that price next resistance is at the $14 area and then at the 52-week high at $14.55. Support is at the $13 area. As of the last available report, over 8.1% of the trading float was short.
Mar 20, 2018 | 06:01 EDT
Stifel analyst Brad Reback downgraded Oracle (ORCL) to Hold from Buy following last night's Q3 earnings report. The company's sales results were again "mixed" with cloud revenue near the lower end of constant currency guidance, Reback tells investors in a research note partially titled "Where's The Beef?" He notes Oracle's Q4 cloud and total revenue guidance missed consensus expectations. The analyst finds the results and outlook "concerning," especially when considering the strong results posted by peers like Microsoft (MSFT), Salesforce (CRM) and Adobe (ADBE). Reback has a $53 price target for Oracle shares. The stock in premarket trading is down 8% to $47.70.
Mar 19, 2018 | 17:21 EDT
HIGHER: Arena Pharmaceuticals (ARNA), up 24.6% after it said that its ulcerative colitis drug met its primary, secondary, and clinical remission endpoints in a Phase 2 trial... Finjan Holdings (FNJN), up 11.7% after Halcyon Long reported a 14.2% stake in the company and said it may seek talks with the company and its board... Endologix (ELGX), up 8.2% after it reported "positive" results from its ENCORE analysis with EVAR... Timken (TKR), up 6.2% after it raised its outlook for 2018... Marinus Pharmaceuticals (MRNS), up 5.9% after Mizuho initiated coverage of the stock with a Buy rating... Blackberry (BB), up 5.4% after it announced a strategic partnership with Microsoft (MSFT). DOWN AFTER EARNINGS: Oracle (ORCL), down 6.1%. ALSO LOWER: Proteostasis (PTI), down 7.4% after it filed to sell 9M shares of common stock... GlycoMimetics (GLYC), down 6.4% after it filed to sell 4.5M shares of common stock.
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