Tech Slide in Week of Upbeat Earnings Underscores Growing Unease

(Bloomberg) — Better earnings equals higher share prices, or so goes the customary thinking. For technology stocks during this reporting season, it’s the exact opposite.

Companies from Alphabet Inc. to Microsoft Corp. announced quarterly results that beat analyst estimates by a combined 7.7 percent, more than any other industry group in the S&P 500 Index. Yet their stocks posted the worst first-day reaction, falling an average 1.8 percent.

As tech megacaps from Facebook Inc. to Amazon.com Inc. and Google parent Alphabet reported earnings, the Nasdaq 100 Index ended a three-week streak of gains. The gauge finished the five-day period with a 0.2 percent loss and dropped 0.7 percent from a record-high Wednesday.

“Look at some of the businesses, whether it’s Apple or Google, their revenue and profit growth is staggering,” said Marshall Front, who manages $800 million at Front Barnett Associates in Chicago as chairman. “But over-concentration can lead to too much volatility on the downside.”

The S&P 500 slipped less than 0.1 percent over the five days. The Dow Jones Industrial Average gained 1.2 percent as robust results from Boeing Co., Verizon Communications Inc. and Caterpillar Inc. were rewarded with weekly share gains exceeding 7 percent.

The disconnect highlights the challenge for high-fliers such as Apple Inc. and Nvidia Corp. still due to announce results and poses a risk for a sector that has been whipsawed by price swings since June. Good profits aren’t proving to be enough for investors who have already held a record-high percentage of tech stocks in their portfolios.

Bank of America Corp. strategist Savita Subramanian flagged the potential for lackluster returns earlier this month, warning that the bar had been set higher for tech companies after investors crowded into stocks with the highest growth potential.

“Positioning risk may be an overhang to performance despite solid fundamentals,” she wrote in a July 7 research note.

And too much love can prove perilous when momentum reverses. In June, after investors had flocked to tech stocks anticipating faster earnings growth in a move that pushed the Nasdaq 100 Index to rise twice as fast as the S&P 500, they rushed for the exit all at once, sparking the worst selloff since 2008 relative to the rest of the market.

The vulnerability was on display again Thursday as tech stocks bore the brunt of a selloff triggered by a note from JPMorgan Chase & Co. quant strategist Marko Kolanovic that cautioned investors about the risks of record-low volatility in the equity market.

In another sign that folks are on edge, about $2.5 billion was pulled out of the largest exchange-traded fund tracking the Nasdaq 100 over the week, the most since 2007.

While tech stocks as a whole are trading at valuations similar to the broader market, anxiety is growing over prices for the industry’s leaders. The five biggest American companies by market capitalization, all involving Internet or software, have rallied an average of 32 percent since December, accounting for almost one third of the S&P 500’s advance in 2017.

The cohort, also known as FAAMG, fetched a price-to-earnings ratio of 62, almost triple the S&P 500. Apple, the largest, is due to announce results Tuesday and analysts predicted an 11 percent increase in profit.

“The earnings reports, however strong, don’t boost the sentiment toward tech stocks when valuations are this rich,” said Ilya Feygin, senior strategist at WallachBeth Capital. “There is scope for a pullback in the sector.”

[“Source-bloombergquint”]

Samsung Earnings Are Rebounding as Flurry of New Biz Tech Appears

One of the stories somewhat lost in the headlines earlier this month, is that of an impressive comeback. After almost two years of lagging performance, Samsung operating profits rose 80 percent during the last quarter over the same time last year.

Reuters reports much of the cause of declining profits was due to losing part of the smartphone market share to Apple.

While the Wall Street Journal attributes, much of the third-quarter increase to the popularity of Samsung computer chips and display screens.

The company has remained optimistic during that time, offering incentives for new customers in order to improve their smartphone market share. And this competitive spirit has brought flurry of new tech useful to the small business market.

For example during the last quarter, Samsung announced two new big screen devices, the Galaxy 6S Edge+ and the Galaxy Note 5 both with useful improvements.

The Galaxy 6S Edge+ has a larger screen than the previous model with a 5.7-inch Quad HD Super AMOLED display and bigger RAM by 1GB at 4GB.

The Galaxy Note 5 also has increased the RAM to 4GB. The screen is the same size, but Samsung claims that making the back of the phone curve makes it more comfortable to hold, more ergonomic.

The Galaxy Note series has featured a pen that allows the user to jot notes in a way reminiscent of writing on paper. And the Galaxy Note 5 has aimed to deliver on a promise to make that pen easier to use.

Some of the drawbacks are the lack of a slot for SD card extra memory and the inability to remove the battery. Other changes include a a new location for the headphone jack at the bottom of the device. There is, however, reportedly a problem with inserting the S-Pen of the Galaxy Note 5 backwards which may cause damage to the device.

Kwon adds: “We continued strengthening core competencies in our technologies and brand power, and launched innovative products based on our advanced technologies.”

Samsung also introduced the SmartThings Hub v2.0. This is the company’s answer to the Internet of Things (IoT). The Hub is the central exchange point that coordinates devices around your household with WiFi and your smartphone.

Small businesses will find this a reasonably priced alternative to professional security systems. These IoT systems can link video through your smart phone, automatically record the video when triggered by disturbances noted by motion sensors, and notify you when fire or water leak sensors detect a problem.

The Hub can connect up to 200 devices, managed by a free SmartThings app. SmartThings offers storage services for the video for $4.99 a month.

Samsung Photo via Shutterstock

More in: Samsung

[“source-smallbiztrends”]

Facebook Hits 1.86 Billion Monthly Active Users as Earnings Surge

Facebook Hits 1.86 Billion Monthly Active Users as Earnings Surge

Facebook Hits 1.86 Billion Monthly Active Users as Earnings Surge
HIGHLIGHTS
Facebook said it made a net profit of $3.7 billion
Daily active users went up to 1.23 billion
India was a hot market in the fourth quarter
Facebook shares bounced Wednesday with word that profit more than doubled in the final quarter of last year, coming back down after a vow to spend heavily on the future.

In earnings that topped most forecasts, Facebook said it made a net profit of $3.7 billion (roughly Rs. 24,943 crores) on revenue of $8.6 billion (roughly Rs. 57,979 crores) in the fourth quarter, as compared with profit of $1.6 billion on $5.6 billion in revenue in the same period a year earlier.

Meanwhile, the number of people using the leading social network monthly increased 17 percent to 1.86 billion. The ranks of people accessing Facebook from mobile devices each month grew to 1.74 billion, an increase of 21 percent from the same period a year earlier. Daily active users went up to 1.23 billion, up 18 percent year on year, while mobile daily active users went up to 1.149 billion, up 23 percent year on year.

Money taken in from ads on mobile devices accounted for about 84 percent of the social network’s overall advertising revenue in the final quarter of last year.

“We believe concerns over user engagement and other social competitors are likely overblown, as few companies share Facebook’s combination of scale, strong technology orientation, and platform breath/diversity,” Baird research analyst Colin Sebastian said in a note to investors.

Facebook saw strong growth in Asia, with India being a hot market in the quarter. The social network still hopes to get into China, where the service is not allowed.

“Our mission is to connect everyone in the world and it’s hard to do that over the long term if we don’t find a way to serve the more than billion people who live in China,” Zuckerberg said while answering questions from analysts on an earnings call.

“But one of the big things that we need to think about here is of course we’re only going to do this in a he way that we’re comfortable with over the long term.”

Facebook shares jumped more than two percent in after-market trades, returning to 15 cents above the closing price of $133.23 after chief financial officer David Wehner reminded analysts that the social network has essentially run out of spare room for ads and plans to invest “aggressively.”

“Our business did well in 2016, but we have a lot of work ahead to help bring people together,” said Facebook co-founder and chief executive Mark Zuckerberg.

“Our mission to connect the world is more important now than ever.”

Tackling hoaxes
Under pressure to stymie the spread of fake news, Facebook last month modified its system for showing trending topics.

The change was intended to surface topics more quickly, capture a broader range of news, and help ensure that trends reflect real world events being covered by multiple news outlets.

Zuckerberg has sought to deflect criticism that the social network may have been used to fuel the spread of misinformation that influence the outcome of the 2016 US presidential race.
“We don’t write the news that you read but we want to be a place where people can access information and have meaningful conversations,” Zuckerberg said.

“In the past, we’ve taken steps to reduce spam and click-bait and now we’re you approaching misinformation and hoaxes the same way.”

Facebook executives expected spending on investment and hiring by the California-based company to leap 50 percent or so from last year.

Company priorities include data centers, virtual reality, search and artificial intelligence.

AI has the potential to help figure out and find videos or other content people might like at Facebook, and to quickly recognize and remove posts that violate community standards, according to Zuckerberg.

“There’s an increasing focus on objectionable content and a lot of unfortunate things that people share on Facebook,” Zuckerberg said, stressing that it was a small piece of what was is shared at the social network.

“AI is both going to be great for showing people content that’s really good and helping us enforce the community standards that we have to make sure that everyone has a good and fair experience.”

ALSO SEEFacebook CEO Mark Zuckerberg Posts Video of Jarvis Robot Assistant at Work

Stolen tech suit
Zuckerberg described virtual reality as a long-range investment and asked investors to be patient.

“We are going to keep making big investments in VR content and I’m excited about what’s coming they 2017, from new games to more immersive educational experiences,” Zuckerberg said.

A Texas jury Wednesday ordered Facebook and creators of its Oculus Rift to pay $500 million to gaming software firm ZeniMax in a lawsuit that claimed the virtual reality technology was stolen.

The lawsuit claimed Oculus founder Palmer Luckey and his colleagues developed the virtual reality gear using source code illegally obtained from the gaming firm.

ZeniMax had sought $4 billion in damages in the case, in which Zuckerberg testified to defend his company.

Facebook acquired Oculus in 2014 for more than $2 billion and last year began selling the Rift headsets as part of the social network’s push into virtual reality.

Tags: Facebook, Facebook Earnings, Facebook Users, Social, Apps, Oculus ZeniMax Trial

[“Source-Gadgets”]

Samsung Earnings Are Rebounding as Flurry of New Biz Tech Appears

samsungbldg

One of the stories somewhat lost in the headlines earlier this month, is that of an impressive comeback. After almost two years of lagging performance, Samsung operating profits rose 80 percent during the last quarter over the same time last year.

Reuters reports much of the cause of declining profits was due to losing part of the smartphone market share to Apple.

While the Wall Street Journal attributes, much of the third-quarter increase to the popularity of Samsung computer chips and display screens.

The company has remained optimistic during that time, offering incentives for new customers in order to improve their smartphone market share. And this competitive spirit has brought flurry of new tech useful to the small business market.

For example during the last quarter, Samsung announced two new big screen devices, the Galaxy 6S Edge+ and the Galaxy Note 5 both with useful improvements.

The Galaxy 6S Edge+ has a larger screen than the previous model with a 5.7-inch Quad HD Super AMOLED display and bigger RAM by 1GB at 4GB.

The Galaxy Note 5 also has increased the RAM to 4GB. The screen is the same size, but Samsung claims that making the back of the phone curve makes it more comfortable to hold, more ergonomic.

The Galaxy Note series has featured a pen that allows the user to jot notes in a way reminiscent of writing on paper. And the Galaxy Note 5 has aimed to deliver on a promise to make that pen easier to use.

Some of the drawbacks are the lack of a slot for SD card extra memory and the inability to remove the battery. Other changes include a a new location for the headphone jack at the bottom of the device. There is, however, reportedly a problem with inserting the S-Pen of the Galaxy Note 5 backwards which may cause damage to the device.

Kwon adds: “We continued strengthening core competencies in our technologies and brand power, and launched innovative products based on our advanced technologies.”

Samsung also introduced the SmartThings Hub v2.0. This is the company’s answer to the Internet of Things (IoT). The Hub is the central exchange point that coordinates devices around your household with WiFi and your smartphone.

Small businesses will find this a reasonably priced alternative to professional security systems. These IoT systems can link video through your smart phone, automatically record the video when triggered by disturbances noted by motion sensors, and notify you when fire or water leak sensors detect a problem.

The Hub can connect up to 200 devices, managed by a free SmartThings app. SmartThings offers storage services for the video for $4.99 a month.

Samsung Photo via Shutterstock

More in: Samsung

[“source-smallbiztrends”]