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January 2017

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New report shows Xbox sales have been in a decline past quarter

Microsoft Corporation (NASDAQ:MSFT) released earnings report for fiscal year 2016 Q4. The report has revealed interesting details about Microsoft’s gaming division and how it fared through the last quarter.

The report states that gaming revenue fell by 9%, making up for a $152 million decrease in revenue. Microsoft has attributed the decline to lower Xbox hardware sales which decreased by 33% due to lower consoles sold and lower prices of consoles sold. On the other hand, Xbox Live revenue saw an increase by 4% due to higher number of transactions and revenue per transaction. Xbox Live’s monthly active users grew by 44% to 49 million during the same period compared to last year.

Microsoft has once again not reported individual sales of Xbox One and Xbox 360. For all we know, the decline could largely be in part of Xbox 360. Since the console is now over 10 years old, it is only natural that year-on-year interest will gradually decrease. Xbox One could be facing some decline as well due to the upcoming Xbox One S rumors (now confirmed) which began months ago. Microsoft is also planning an Xbox One model dubbed “Project Scorpio” which is essentially a much more powerful version of the existing system. The new console is aimed at bringing native 4K gaming and is officially scheduled to arrive in holiday season of 2016.

Xbox hardware sales are much likely to increase during Q4 2016 due to a number of first-party game releases such as Forza Horizon 3, Gears of War 4 and ReCore. The new price cut and slim revision are also going to reflect renewed interest in the next earnings report.

RBC Capital’s Mark Mahaney reveals strong viewership level and lowering churns in Brazil, the UK, and the US

Netflix, Inc. (NASDAQ:NFLX) shares jumped 1.78% over the past week on the back of optimistic reports from William Blair and Cantor Fitzgerald, as well as positive commentary from RBC Capital Market’s Mark Mahaney with CNBC where he chose his three top tech stocks. Following the appearance, the analyst published a report on Friday maintaining his Outperform rating with price target of $130.

The research firm took surveys in Brazil, the UK, and the US and all of them showed strong viewership level domestically and internationally. With hot weather outside, people prefer staying at home and binge-watch their favorite TV series.

Domestic Survey

RBC Capital’s 20th quarterly survey in the US was really encouraging to Mr. Mahaney, as it revealed record-high consumption level of 54% for Netflix subscribers, 47% for YouTube, on-demand video sharing site of Google Inc, and 30% for Prime Instant Video, streaming platform of Amazon.com, Inc.

Additionally, the survey suggested that consumer satisfaction levels were “modestly” improved with somewhat declining possibility for churn rates, which is the biggest fear for investors amid the on-going un-grandfathering.

International Surveys

The investment firm’s 5th annual survey in the UK demonstrated that the global SVoD leader’s penetration is increasing robustly. While the respondents’ consumption increased from 30% in 2015 to 42% in 2016, customer satisfaction rates remained lofty.

“UK may still have elevated churn due to price increases, but we believe this problem is solvable – offer more content, especially original content,” Mr. Mahaney noted, similar to the solution he provided at CNBC – increase in value proposition.

The analyst’s 2nd annual survey in Brazil also high usage level of 71% for Netflix, compared to 60% last year. Moreover, the churn rates seem to be getting better.

Mr. Mahaney believes that Netflix’s penetration rates can hit 30% in several international markets, as well as pumping up profitability. He highlighted Netflix is on course to produce contribution profit of $500 million in ‘Pre-2015 International Markets’ with contribution margin of 20% which is in-line with the company’s profitability ramp in the US in 2012 and 2013. The sell-side firm concluded that investors are underestimating international earnings potential of Netflix.

The app is available for iOS devices as well

Alphabet Inc.’s (GOOGL) Android phone owners that are not entirely satisfied with their stock alarm app will be pleased to know that they can get things done with the help of Dwayne ‘The Rock’ Johnson’s motivational alarm clock app available for free on the Play Store.

The idea behind the app is simple, The Rock wants to aid all those who have a hard time getting up early, which is why ‘The Rock Clock’ does not come up with a snooze button.

The app is designed to help people reach their goals, which can be set accordingly. So if you wish to lose weight, you can set the goal; timed or indefinite, that is your choice.

The Rock will sing and motivate you through the app for those times when you may lose hope. Additionally, the app has 25 different ringtones that have been created by The Rock himself, which should keep things interesting.

On the other hand, The Rock sends inspirational videos through the app as well. But the most interesting feature of them all is ‘Rock Time’. Basically, the app will synchronize your alarm time with Johnson’s once enabled.

That being said, the app is available for iOS devices as well, and it will serve brilliantly for all those people who either can’t wake up on time in the morning or are unable to meet goals.

Latest beta update for MacOS Sierra points to the incorporation of USB 3.1 Gen 2 on MacBook Pro 2016

Apple Inc. (NASDAQ:AAPL) has incorporated the first generation flavor of USB 3.1 in both of its current generation and 2015 MacBook release. Unfortunately, USB 3.1 Gen 1 is actually a rebranded model of the original USB 3.0 model which is also refereed as the SuperSpeed USB. What this means is that the latest USB 3.1 Gen 1 manages to offer users a maximum transfer speed of 5 Gbps which is not that different to what its predecessor model offered. However, the latest beta update of MacOS Sierra has indicated that the upcoming MacBook Pro could feature the next generation model of USB 3.1 which should offer users significantly faster transfer speed as compared to USB 3.1 Gen 1.

An interesting aspect of the seventh beta update of the upcoming MacOS is that it includes text strings which indicate that the tech giant could potentially be planning to incorporate USB 3.1 Gen 2 on its upcoming MacBook Pro 2016. Interestingly, additional Super_Speed_Plus strings in the latest beta update of MacOS Sierra point to a significant boost in the speed of the transfer activity through the hardware of the next-gen MacBook Pro. Theoretically, the incorporation of USB 3.1 Gen 2 should offer a minimum transfer speed of 10 Gbps on the next generation MacBook Pro. However, it is worth mentioning that nine of Apple’s current generation devices feature USB 3.1 Gen 2, so the MacBook Pro could be the first device to offer such a feature.

Even though the latest beta update of MacOS Sierra only manages to paint a bleak picture of what the upcoming MacBook Pro 2016 will manage to offer but it does indicate that Apple is placing significant attention to the hardware capabilities of its upcoming device. If such a feature is being planned for the expected refresh of the current generation MacBook Pro, then the upcoming device could also incorporate other significantly upgraded hardware, such as a Thunderbolt 3 display. Only time will tell if the Cupertino based tech giant has planned such significant changes for its next generation MacBook Pro model. Watch the space!

Saudi Arabia hints at further reducing crude supplies, which is expected to add to the already-rising oil prices

There have been massive developments in global energy markets since last month due to high oil price environment. Amid all the happenings, Chesapeake Energy Corporation (NYSE:CHK) stock rose by 72 cents since the organization of petroleum exporting countries (OPEC) announced its decision on November 30.

The November 30 meeting of OPEC concluded with the decision to cap oil production levels and it simultaneously resulted in a boom for crude prices. The non-OPEC members have also started joining the oil supply-cut plan and oil prices have been responding to every new producer setting its production limit.

In latest news, oil prices jumped today when Saudi Arabia hinted at decreasing its supply even further. The country’s energy minister, Khalid Al-Falih, said on Saturday that they will “cut substantially to be below” the agreed target in the OPEC meeting. An agreement has also taken place between countries such as Russia and Mexico to come together with OPEC and cut oil supplies by 558,000 barrels a day next year.

The prices for West Texas Intermediate (WTI) Crude as of 3:11 AM ET have risen 5.36%, trading at $54.26. Similarly, Brent crude has crossed the $56 mark after rising 4.84% with a per barrel cost of $56.96. The prices are further expected to rise today following this news.

The implication for companies such as Chesapeake Energy will be beneficial in the short run considering that the rising oil prices will hike its stock price. The current price environment has resulted in a revival of investor confidence in the energy sector. On Friday’s session, the CHK stock gained 1.58% and closed at $7.72. Its 52-week high price stands at $8.15, which appears achievable if the same environment continues to exist.

Bill Miller thinks Tesla is overvalued and highlighted three main issues that it faces

Tesla Motors Inc (NASDAQ:TSLA) has been time and again linked with a potential takeover by the world’s most valuable company, Apple Inc. (NASDAQ:AAPL), given both the companies’ game-changing roles and innovation in their respectively industries, as well as to give a financial boost to the loss-making, Californian EV maker. While the possibility of such a move seems highly unlikely, investment legend, Bill Miller, sees it as an interesting buying opportunity for the iPhone maker.

Speaking at the Investor Podcast, Forbes reported that the former Morngingstar’s fund manager of the decade gave his view about darlings of Wall Street: Amazon, Apple, and Tesla. While believing Tesla shares to be overvalued, he said it would be an interesting opportunity for Apple to purchase Tesla, as it has the financial backing to support Tesla’s ambitious projects and accelerate its launches in new markets.

Despite the ingenuity of Elon Musk, chief executive at Tesla, Mr. Miller thinks that Tesla’s current stock price is very unattractive. As of 11:24 AM EST, Tesla shares were trading up 0.50% at $203.51 and 1.70 million shares were traded compared to average daily trading of 4.45 million.

The investor highlighted some of the main issues he sees at Tesla: SolarCity acquisition, the Trump administration, and competition.

Tesla says that it was essential to acquire SolarCity for its mission to accelerate the world’s transition to sustainable energy, as it plans to develop integrated solar and storage products with the solar installer and empower its customers with the entire energy cycle from generation and storage to consumption.

While a few Tesla bulls and shareholders agree with Mr. Musk’s vision, Mr. Miller believes that the merger only significantly complicates the business analysis. There are several analysts who believe the same, calling the merger a SolarCity bailout and an unneeded distraction.

He also thinks that the Trump administration will likely repeal the incentives on alternative energy and electric cars once they take over the White House. While there is a significant likelihood for this, Mr. Musk believes that it would only improve Tesla’s competitive position.

Lastly, he highlighted that traditional car manufacturers with much more resources and funds are gearing up to produce more competitive EV models. These companies are also willing to make losses on their battery-powered cars just to meet emission standards.

The headset is carrying immense hype since the price announcement

Sony Corp.’s (NYSE:SNE) PlayStation VR headset bundle was finally made available for preorder on Amazon but to the surprise and unfortunate luck of many, the preorder button didn’t even see the light of the day for five minutes. As spotted by Releases.com, the headset sold out within four minutes of availability, which is insane.

Even though it was previously announced as to exactly when the preorders would open up and we had assumed as much that the headset would sell out quickly, but four minutes? That’s breaking expectations. PlayStation VR’s launch day shipments also sold pretty quickly at EB Games Australia, soon after preorders opened up.

Sony dropped the bomb this month at the Game Developers Conference when it unveiled that PlayStation VR is going to cost $200 cheaper than the Oculus Rift, making it the cheapest virtual reality headset option there is. Despite the fact that PlayStation Camera is essential for the headset to work and is not included in the $400 version, it is still a cheaper alternative. For those looking for a complete package, the PlayStation Bundle includes the headset, PlayStation Camera, two Move controllers and a copy of PlayStation VR Worlds; all for a $499 price tag.

There is, however, good news. Only the PlayStation VR bundle was made available for preorder on Amazon and the standalone version will be available March 29. So there is yet another opportunity for you to get your hands on the headset. But it is advised that you train your hands to act fast once preorders begin at 10 a.m. ET. Since it costs cheaper, it is expected to sell out just as fast, if not more.

Indian government has provided a reprieve of 30% source requirement to Apple

According to Times of India, the government of India has provided Apple Inc. (NASDAQ:AAPL) with a 2-3 year exemption for opening its own retail outlets across the country without any kind of sourcing requirement mandatory for the company.

As per the agreement, the waiver of sourcing requirement has been made with an agreement that Apple would make use of local purchases once it has made strong foot holding in the country.

Last year, the government had carved out a window for foreign companies for setting up shops country wide via single-brand retail route. It was decided that companies which are opting to set up their stores under the single-brand retail format would have to source 30% from the local vendors. The decision was made to give support to local vendors.

However, the government made the decision to provide the waiver to Apple and relax the agreement after country’s commerce and industry minister, Nirmala Sitharaman announced at a press conference.

Times of India quoted an anonymous source that it is fair enough to insist someone for local production for a two-three year period, but bounding someone for five years is a long period. Apple had also mentioned to the government that it has started purchase of chargers from the country which are also being used for exports.

The Apple specific shops and retail outlets is key for tapping the market as this would prevent the iPhones sales, which are sold at lower prices by the competitors.

As of 02:37 PM EDT today, Apple stock is up 1.96% and trades at $78.12. The news would definitely push the stock northwards as investors would get aware of it. Average Price Target for the Apple stock by analysts at Street is of $123.98, with most bullish and bearish estimates of $185 and $102 respectively.