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July 2017

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The Country Caller takes a look at the latest earnings of Schlumberger

Schlumberger Limited. (NYSE:SLB), the world’s largest oil services provider, disclosed its much awaited financial results on Thursday. The results for the third quarter of the fiscal year 2016 were under immense anticipation by investors because they were keen to know whether the company managed to bring some positives in the latest quarter.

Looking from the perspectives of revenue, things seemed to be even worse for Schlumberger. The company’s revenues clocked in at $7.02 billion, which were down 2% when compared to the preceding quarter. The revenues also missed the analyst’s expectations who had anticipated the number to come at $7.62 billion. Revenues were down 17% when compared to last year’s financial results.

As mentioned in the press release, the main reason attributed to the decline in the company’s revenues was lower activity at Cameron. If the company manages to exclude Cameron out of the picture, then Schlumberger’s revenues rose 1% instead of falling 3% sequentially.

While looking from the perspective of shareholders, the company did well as it managed to report adjusted earnings per share (EPS) of $0.25. The EPS managed to surpass the consensus expectations of $0.22.

In addition to the solid EPS, the company also managed to raise some $699 million in free cash flow (FCF). The increase in the FCF came following a robust inventory and capital expenditure management system at the company.

Paal Kibsgaard, CEO of Schlumberger, was satisfied with the results. He indicated in the press release that this quarter has proved to be beneficial for the company in terms of revenue stabilization. The company had already called it the bottom of the oil cycle, which had helped in stabilizing the output.

Mr. Kibsgaard is further bullish on the prospects of the oil market claiming the supply and demand fundamentals to be adequately balanced. The US inventory levels have remained under check and if OPEC manages to cut production, things will likely turn in favor of the industry.

Leave it to the modding community to do the developer’s job

An open-world game from Bethesda Softworks that releases with a minimal count of bugs, is definitely something to surprise everyone with. The studio’s engine is notorious for leaving behind hundreds of bugs, affecting gameplay, quests, assets, NPCs; and pretty much everything. On the same note, we’ve come to witness an abundance of hilarious bugs as well; apparently the studio’s game engine has also racked up a sense of humor with time.

Fallout 4 also received the same treatment. Released in November last year, the post-apocalyptic game is still plagued with numerous bugs that need fixing. The developer has seemingly given up on attending to each and every issue. The modding community, however, is not willing to let this go.

An unofficial Fallout 4 patch has been made available on the web for everyone to download. It promises to fix over a hundred bugs across the game, amending quests, audio, visual and so much more. The full monstrous changelog can be read here, while the patch itself can be downloaded from here. Note that the patch requires your game to be updated to version 1.5 or later.

A similar unofficial patch was released for The Elder Scrolls V: Skyrim in similar manner. That patch is of the utmost importance if you’re planning on playing through the game without any hitches. Such was its importance that Bethesda later on even admitted to its value.

It’s a pity that the modding community has to step in every time to clean up the developer’s mess, and that too for free. Let’s hope that the developer improves its engine in the future to release more stable and bug-free games.   

 

 

 

Really, why is it called the Stockton Slap?

Electronic Arts Inc. (NASDAQ:EA) has released a new update for UFC 2, bringing plenty of tweaks and balance for existing characters and overall gameplay, as well as adding new fighters and the signature “Stockton Slap” made popular by Nick and Nate Diaz.

Thanks to the April Update, the UFC 2 roster has been expanded to feature Patrick Cote and Louis Smolka. In addition to that, there are several tweaks for UFC Ultimate Team, including the ability to edit appearances at any time. EA Sports has also introduced a new “Exchange” program for UFC Ultimate Team where players can exchange five items for a new higher level item. The better the items you choose to replace, the higher the chance to gain rare items.

In terms of gameplay tweaks, a block will no longer activate automatically following a mistimed parry. The AI has been improved to perform better submissions; clinching now has a slight delay, those deadly uppercut combos now have increased damage, and the bottom fighter will now gain grapple advantage in a sprawl to help him escape easier. This is based on time; the longer the hold, the easier it is going to be to escape. The update attributes and moves for multiple fighters; some of which are just minor tweaks.

For the complete patch notes you can visit the official website.

The Country Caller throws light into each of the two companies and discusses the updated ratings, target prices, and the possible reasons for the brokerage’s stance

Evercore ISI has updated its coverage on E-commerce giants, Amazon.com Inc. (NASDAQ:AMZN) and Alibaba Group Holdings (NYSE:BABA), the brokerage has a bullish stance on both the stocks. Alibaba has remained in the bullish books of analysts, while it has generally been neglected by investors amid the controversies that emerged against the company. Meanwhile, Amazon may not be in a strong financial position as its Chinese rival, yet analysts are weighing high on the e-commerce giant, while some have even given four-digit target prices. The Country Caller throws light into each of the two companies and discusses the updated ratings, target prices, and the possible reasons for the brokerage’s stance.

 

Amazon.com Inc.

Evercore ISI has maintained its Buy rating on the e-commerce giant with a price target of $820, which previously was not given by the brokerage. The brokerage seems a lot more optimistic than Street, where its consensus TP stands at $813.87. Amazon is the hot pick from the e-commerce industry, as analysts feel that the company has a significant potential for the future. Apart from e-commerce, Amazon has diversified into other areas such as cloud computing and web services, while the company is also heading towards emerging markets. CEO Jeff Bezos has been making relentless efforts to expand the reach of Amazon. All these positive points combined, portray a very bright future of the company.

 

Alibaba Group Holdings

Evercore ISI has continued its Buy rating for the Chinese e-commerce giant stock, with a price target of $98. The recent coverage seems to be in line with the Street consensus TP of $95, while a few brokerages such as Morgan Stanley and Credit Suisse reckon higher upsides. Alibaba is one of the most promising e-commerce companies with strong fundamentals, while Founder Jack Ma has a very different vision than competitors. He wants to integrate e-commerce with virtual reality to re-shape the entire industry. Moreover, a positive outlook for other segments including cloud computing may have added to the brokerage’s optimism on the stock.

Mizuho Securities analyst Betty Chen reiterates Buy rating on shares following the September comp beat representing +3% vs. +9% LY

Mizuho Securities weighed in on L Brands, Inc (NYSE: LB) stock soon after the comp report for the month of September came in. The firm reiterated a Buy rating on the stock along with a price target of $85, which suggests the stock has a potential upside of 19.44% over the closing price of $71.16. While the company reported comp results ahead of the consensus, growth was lesser in Sept comp 2016 compared to last year.

Mizuho Securities analyst Betty Chen said, “We reiterate our Buy rating on shares of LB as the September comp beat with sequential acceleration at both brands should provide investors with further comfort around Q and FY16 guidance.” L Brands reported 3 percent growth in September comps versus last year’s 9 percent growth. However, the Sept comps came in well above the consensus estimate of 0%. Ms. Chen noted, “Inventory was clean exiting the month, up +2% psf, and in-line with guidance for +L-MSD at 3Q-end.”

The analyst additionally noted American fashion retailer’s strategy “to skew the assortment toward higher-margin growth categories appears to be making progress, evident by the +2% comp in go-forward categories.” Also, based on the LB management’s track record of strong control over operating expeditures, Ms. Chen believes a valuation of approximately 17 times the price to earnings ratio of fiscal 2017, remains highly attractive.

L Brands, headquartered in Columbus, Ohio, has a total market capitalization of $20.40 billion. The stock has a 52-week high price of $101.11 and a 52-week low price of $60. LB shares currently have a 17.44 price to earnings ratio. Out of 23 analysts who cover L Brands stock, nine rate it a Buy, 13 rate it a Hold, while one rates it a Sell.

The Seattle company aims to build small brick-and-mortar stores that would sell perishable items that customers can take home

Cowen & Co. offered commentary on Amazon.com, Inc. (NASDAQ:AMZN) on earlier reports from the Wall Street Journal that unveiled the company’s plan to set up brick and mortar stores. The WSJ reported earlier that the e-tailer is pursuing to establish smaller format brick and mortar stores including online grocery pickup stores as well as convenience stores for selling perishable items and taking orders for non-perishable items. The firm has maintained a $960 price target and an Outperform rating on the stock. The price target implies an upside potential of 15.52% over the closing price of $831.

According to John Blackledge, Cowen analyst, both the offerings should contribute to increase the adoption of online grocery ordering. The online retailer seeks to simplify ordering process for its customers, especially to those who hesitate to place an order online. In his view, the WSJ report “follows the decision last week to lower the price of Amazon Fresh, its online grocery offering, to $14.99/month compared to $299/year prior, which makes the additional cost for the service more digestible and should lead to increased adoption.”

As of the latest WSJ report, this new development implies Amazon’s plans to push deeper into grocery business. According to people familiar with the matter, the grocery stores would be slated exclusively for users of Amazon’s Fresh subscription service, which promises to deliver food the same day. Last Week, the company dropped the $299 annual price for Fresh subscription and introduced a $15 monthly fee for members of its $99/ year Prime program.  

The target audience of physically present grocery stores, known internally as Project Como, would be people who prefer to pick out products or bring home groceries while returning from work. Amazon seeks to compete on the forefront with other retail stores that offer discounted groceries, including Wal-Mart Stores.

Apple is set to introduce big changes on its next flagship iPhone

Apple Inc.’s (NASDAQ:AAPL) tenth-anniversary iPhone model easily promises to represent the most revolutionary smartphone released by the tech giant. There has been consistent speculation regarding the possible upgrades implemented by the Cupertino giant in its upcoming flagship smartphone device.

For those who don’t know, Apple has implemented an IPS LCD panel in every one of its iPhone models, including its current iPhone 7 and iPhone 7 Plus. However, the next flagship iPhone model, dubbed as the iPhone 8 is highly expected to sport an OLED display instead. If this is true, then the upcoming iPhone 8 will offer a significantly brighter and more power efficient display panel compared to its predecessors.

There have been numerous rumors linking an overhauled designed for the upcoming iPhone 8. The next flagship iPhone model is tipped to arrive with an edge-to-edge display screen which could mean that the upcoming device will not feature either a home button or any bezels on its side. Hence, the tech world expects the iPhone 8 to represent a considerably thinner and lighter design compared to its predecessor version.

Rumors strongly believe that Apple is looking to incorporate an all-glass look in the iPhone 8. Such a significant overhaul in the next flagship iPhone model could be possible if the device sports a stainless-steel chassis, designed to hold both of the front and back glass panels of the smartphone. It might be a long shot but the upcoming iPhone 8 promises to look significantly different from its predecessor variants.

Apple is expected to formally announce its tenth-anniversary iPhone model during September 2017. Stay tuned for the latest rumors and speculation regarding the Cupertino company’s upcoming projects.

Tesla’s Elon Musk believes that General Motors and other automakers are not serious about EVs

Tesla Motors Inc. (NASDAQ:TSLA) chief executive Elon Musk is out on a mission to accelerate the world’s transition to sustainable energy and transport; therefore, he should be supportive of traditional carmakers who are taking initiatives in the EV game. In fact he recently criticized General Motors Company (NYSE:GM) over its new Chevrolet Bolt EV program.

GM Authority reported that Mr. Musk believes that the automaker is hurting itself by keeping the production volume of the world’s first mass-market vehicle with over 200 mile-range. During the shareholder special meeting over SolarCity merger on November 17, he shared his view over hesitation of General Motors and other car manufacturers for not going big with the EV program. Mr. Musk said: “I am a little concerned about the pace and volume of what they’re doing since they seem to be mostly aiming mostly to just target whatever the incentive threshold is, and then not really do serious volume beyond that.” Except Volkswagen, he does not think any competitor is not working on “serious volume” in EVs yet and merely wants to “stay within the volume constraints of the incentives.”

Interestingly, Detroit News reported yesterday that General Motors is losing up to $9,000 on every Bolt EV sold before the zero emission credits (ZEV). If the report is true, it should be because of lack of control over all the expensive components in the vehicles. While LG Chem provides the battery packs for the vehicle, its divisions supply other major components like the HVAC system, instrument cluster, and powertrain, according to Electrek. He added that General Motors’ target sales for the Bolt EV is in a range of 20,000-50,000 and he thinks the nation’s largest automaker should aim for 300,000-500,000 units per year to actually make a difference.

Bolt EV production is currently underway at the Orion Township assembly plant in Michigan and its deliveries are expected to start in California and Oregon, with a nationwide release next year. While electric cars are gaining traction in today’s world, it is still difficult to build them while making a handsome profit.

Tesla actually makes money through sale of its higher-end vehicles. It would be interesting to see other German automakers do the same with their planned EVs.

Apple iOS 10 is not revolutionary and has few downsides

Apple Inc. (NASDAQ:AAPL) announced iOS 10 during its Worldwide Developers Conference (WWDC) event last week. Although, the new operating system has a few improvements over its predecessor, it fails to truly impress and offer revolutionary features or a significant step up from the previous offerings. The new operating system only provides a few moderate upgrades to the iOS 9, which turned out to be the biggest let down from Apple itself. Here is The Country Caller’s take on why Apple’s newly announced operating system fails to impress enthusiasts.

The first downside to Apple’s latest operating system was its lack of Dark Mode, which was highly anticipated by its users. Many were confident that Apple would bring its Dark Mode operating system to the iPhone with its next iOS but the company had other plans in mind. The most confusing aspect of this decision was its announced about Dark Mode for its TvOS, which should have been followed for its iOS too.

Another let down from iOS 10 is that it adds widget support to device’s lock screen, in addition to a few application icons for those devices that include 3D touch capabilities. However, the new operating system really lets itself down as it removes these widget icons from the notification center. Even though, notification center looked messy and unorganized due to widget icons, it did make widgets easily accessible from anywhere on the device.

Another significant let down from iOS 10 was that it does not provide a keyboard with one hand functionality or swipe to text functionality. This is a confusing move from Apple, as both these features exist on rival smartphone’s keyboards for years. However, the tech company has once again taken a solo journey in the smartphone industry. Although users can live without a swipe to text functionality in their iPhones, but the iPhone 6s Plus owners would have been significantly left down by not implementing one handed mode.

It is important to remember that Apple has only released a Beta version of its iOS 10, so we can expect significant improvements in the operating system until its ready to hit the market. The next generation iPhone is not expected to release until September. Hopefully, it might succeed in making iOS 10 a significant improvement over iOS 9 by then.

Growth to be under expectations as the investments offset benefits from technology sector

Starbucks Corporation (NASDAQ: SBUX) has been under observation by analyst David Palmer, who conducted a consumer panel survey to gain insight regarding fundamentals and same store sale trends. The outcome of the meeting suggested a 7% growth in same store sales, slightly, below the Street’s estimate of 7.2%. Mr. Palmer is an analyst at RBC and has maintained an Outperform rating on the stock along with a price target of $68.

Starbucks has adjusted its consumer sided loyalty program to drive customers towards adopting mobile ordering system over conventional methods. The statistics for the last quarter show 21% of orders in the last quarter were paid using mobile payments. Given the recent trends, the analyst expects 23-26% payments to be made by mobile in the current quarter as the company has put forward several incentives upon usage of mobile payment and ordering mechanism. The company’s revised policy regarding Gold Status is likely to drive incremental mobile adoption. Starbucks strives to drive majority of its consumer base to use mobile ordering and payment methods as the statistics suggest that mobile consumers purchase frequency is 3 times that of conventional consumers.

The Starbucks investment project led to purchase of stock worth $45 million in associates and as per an estimate by the management, $275-$300 million will be invested by the end of the year. The reinvestment plan and foreign exchange headwinds combined with expenditures in technology sector may confine the EPS growth within the range of 18-20 percent for the year 2016.

The company’s current price target reflects 30.5x FY 17 expected EPS multiple at $2.23, slightly above the consensus of $2.18. The analyst ratings are 13 Strong Buys, 10 Buys and four Holds. There are no Underperform or Sell ratings on the stock. The stock is currently traded at $57.16 at the conclusion of second hour of trading on Friday.