Tech/Media/Telco
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News and Views
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Macro/Technicals
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Active Names
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Earnings
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Sector News, M&A, Capital Raises
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Research Away
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Cantor Research
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News and Views
Tech underperformed again yesterday with SOX almost testing a 347.95 support level (200-day moving average) but managing to bounced off. Semi cap names (AMAT -1.6%, MTSN -4% and NVLS -2.8%) contributed most to the decline after UBS downgraded AMAT and issued a cautious view on the semi cap equipment space.
RIM’s introduction of new Blackberry Torch and updated Blackberry OS 6 failed to lift shares (RIMM -2.5%) as some reviewers said that the new Blackberry can do everything iPhone can but iPhone does it better.
After the close LEAP disappointed investors by reporting weak quarterly results. This morning shares are defended at Auriga. Expect to see volatility in wireless space (PCS & VZ, T to a lesser extent).
Motorola is reportedly working on a tablet PC tied closely to Verizon’s FiOS digital TV service and running Android OS, we’ll see if device is going to be an iPad killer.
Macro/Technicals
S&P Futures : 1116; -.15Resistance: 1125, 1150;
Support: 1100,1077;
SOX: 351.25; -1.04
VIX : 22.63; +2.82
Leaders: IPGP +19.6%, OPLK +14%, GUID +11.7%, ORBC +10.7%
Laggards: TNS -19.6%, ACTU -14%, KOPN -13%, BGC -8.4%
Active Names
Enterprise/Service/ SW: BR, CIEN, MSFT, RNWK
PCs/Devices/Net: BIDU, DELL, ADCT, YHOO, MOT
Semis/Circuits: Storage: IDTI, MU, VLTR, WFR, TQNT
Network Products: CSCO, BRCD, PLCM, FTR
Telco: CVC, GNCMA, ETM, VZ, T, TWX, ROIAK, LEAP
Electronic components: APH, TNB, ENS, AVX, ENTG
Media: AOL, CVC, SIRI, PLA, VMED
Smaller Caps: BDE, ADPT, LNET, RTEC, ORCC, VTSSD
Earnings
LEAP- disappointing Q2 and net adds were lower. Q2 is usually a seasonally weak Q for LEAP, but the results this Q still disappointed. LEAP mgmt announced changes to pricing plans for voice and data services, and LEAP is adding Android to its handset lineup.
Acer- Very strong Q with Asian PC demand driving the good numbers. Acer saw FX headwinfds in the Q, but the strong demand more than offset the lsoses. Shipments rose 45% in the Q vs market avg of 36%.
STEC- better Q2 and looks as though SSD demand is growing quickly due to Automated Storage tiering technology, which STEC has a virtually monopoly in for the time being. This upswing in demand could help drive Qs to come. Q3 guidance is higher, and could still have room for upside.
LBTYA- mostly in line Q2. Rev, subscriptions, and capex were all better, but EBITDA was slightly worse. Liberty continues to buyback shares aggressively. In RGUs; The Netherlands and Chile performed very strongly while the rest of Western Europe (Especially Romania) saw some mixed trends. Telenet performed especially well in Q2.
CBS- better Q2 across the board on a strong advertising environment. The CBS network, Television stations, domestic outdoor, and cable net revs all outperformed helping to drive the beat. The better domestic outdoor segment is a positive for CCO who reports 8/9. Radio was the one concern in the Q. Management indicated that advertising trends continue to improve.
OPEN- better Q2 due to revenue growth and cost controls. Operating metrics in the Q were strong showing acceleration in seated dining growth.
SMCI- mixed Q4. top line is better, but EPS misses. Q1 guidance looks mostly in line
MRCY- slightly better Q4. Backlog in the Q decreased, but Q1 guidance looks disappointing.
NVTL- mixed Q2with EPS a slight miss and revs slightly better. Rev guidance is mixed.
KNXA- in line to slightly better Q2. Q3 and FY guidance looks better.
ELON- better Q2, but Q3 guidance looks disappointing.
BBOX- Q1 looks to be better. Q2 and FY11 guidance both appear to be much higher.
Sector News, M&A, Capital Raises
APKT, CHL China Mobile deploys Acme Packet for China's largest IMS Network
INTC FTC to announce settlement with Intel on Wednesday (4-Aug) morning- AP
BR Broadridge increases quarterly dividend by 7.1% to $0.15 from $0.14
PLA Playboy Enterprises announces formation of special committee of board - Reuters
Infineon could be an attractive takeover target after it has sold its wireless solutions unit- Frankfurter Allgemeine Zeitung
EMMS: Offer by chairman/CEO Jeffrey Smulyan to acquire Emmis Communications for $2.40/shr extended through 6-Aug- SA
TEF to Pay EU80 Million for Tuenti Stake- Economista
TRB Tribune report unsealed, bankruptcy exit delayed- Reuters
StatusNet: Twitter for Businesses? StatusNet Gets $1.4 Million- Dealbook
Solar: market set to continue expansion in 2011- iSuppli
Research Away
SWI initiated buy at ThinkEquity
INTU initiated overweight at JPMorgan, px tgt $47
LEAP downgraded to Neutral from Buy at SunTrust
LEAP upgraded to buy from hold at AURIGA
Cantor Research
ITRI: Initiating Coverage: Attractive Entry Point: BUY
Itron provides a wide range of utility meters (electric, gas, & water) to customers throughout the world. We estimate that Itron has an approximate worldwide meter market share of 10%. In particular, Itron estimates that it has a 38% share of the electric meter market in North America and a 41% share of the gas meter market in Europe.
We estimate that Itron's core meter business has a unit growth rate of approximately 5.8%, assuming the company maintains current market share. Adjusting for currency fluctuations and price competition, we expect this business to be flat over the next couple of years.
Thus, an investment in Itron is a play on the growth of the AMI market and Itron's ability to capture market share. The AMI market is forecast to show a 46% CAGR over the next several years and Itron has already won four major contracts for approximately 14 million meters.
In spite of a challenging regulatory and competitive environment, we estimate that Itron will need to book only 5 million more AMI meters over the next eighteen months to meet our estimates for 2011 and 2012.
We expect the shares of Itron to be volatile based upon news flow surrounding AMI deployments and contract wins/losses. Therefore, we recommend that investors accumulate shares on weakness. We establish a 12 month target price of $84 per share.