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October 2017

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The Country Caller highlights whisper numbers for Commercials Metals Company and Global Payments before they release their results on Monday

Commercial Metals Company (NYSE:CMC) and Global Payments Inc. (NYSE:GPN) will post their financial earnings before markets open on Monday, January 9, 2017. Commercial Metals is expected to announce financial data for the first quarter of fiscal year 2017 (1QFY17) whereas Global Payments is projected to publish its 2QFY17 results. The Country Caller examines earnings whispers for both the companies and it appears that Global Payments is likely to exceed analysts’ predictions, both on its top and bottom lines.

Commercial Metals (CMC)

The company reported 22 cents in earnings per share for 1QFY16. Analysts expect its first quarter EPS to clock in at 17 cents, down 22.73% year-over-year). Interestingly, the company also posted an EPS of 22 cents for 4QFY16.

Commercial Metals also published $1.7 billion revenue for the same period last year. This season, Estimize.com and Wall Street analysts predict the company would report $1.16 billion in revenues. This indicates a 31.76% YoY decline in the top line. Furthermore, the $2.57 billion company reported $1.2 billion revenue last quarter.

Global Payments (GPN)

Global Payments is also expected to publish its earnings in pre-market hours Monday. The company is expected by the consensus to report 84 cents in EPS, indicating an expected 27.27% YoY earnings growth. Earningswhispers.com expects the Georgia-based company to exceed analysts’ bottom line expectations by four cents, with its EPS estimate of 88 cents. The company also declared 86 cents in EPS for 1QFY17.

Global Payments also has a consensus revenue forecast of $803.6 million, considerably lower than Estimize.com’s predicted number of $805.93 million. Furthermore, the $11.6 billion company posted $518 million revenue for the second quarter of last year. It also announced $939.5 million net sales for the quarter ended September 30, 2016.

Credit Suisse increases price target from $920 to $1,050 on Amazon stock due to potential upside to its already bullish AWS expectation

As Amazon.com, Inc. (NASDAQ:AMZN) continues to expand its offerings for the core e-commerce and cloud services businesses, the analysts at the Street keep hiking its price target ahead of its third quarter results. Credit Suisse joins the list of investment firms, which believe that Amazon stock is valued more than $1,000 mainly due to the young division, Amazon Web Services (AWS).

Stephen Ju, analyst at Credit Suisse, maintained Outperform rating on Amazon stock and increased the price target from $920 to $1,050 in a research note published on Monday. The price target was hiked after reviewing the latest quarterly performance, as the analyst rolls forward valuation parameter to include end of 2017.

Conducting its discounted cash flow (DCF) valuation, the research firm found that AWS is valued around $200 billion. The analyst thinks that the potential for margin expansion of AWS over the long term remains a “controversial topic” for the company.

Credit Suisse said that it models aggressive growth in selling, general, and administrative cash expensive of an additional $1.4 – $1.5 billion over the next five years, up from historical growth of $0.60-1 billion. Excluding any such dramatic and sustained decline in price, it thinks that the combination of moderating capital expenditure and growth in depreciation and amortization expense because of declining usage should eventually result in operating margin of 40% in the long term.

“This means that within five years, AWS will account for roughly 40% of our consolidated FCF estimate,” the sell-side firm noted. Taking the total addressable market for AWS of worth $1 trillion into account, Mr. Ju thinks that his decelerating estimates could eventually prove to be conservative, leading to an upside potential to his free cash flow forecast. “As we roll forward our valuation parameters for AMZN to contemplate 2017, our DCF for AWS now suggests that this asset is now worth $200b,” he wrote in the report.

Amazon has already received several price target hikes since the beginning of September and its stock trades at record-high levels. The investors weren’t too excited about the latest recommendation from Credit Suisse, as the stock edged down 0.82% to $816.20 as of 9:49 AM EDT.

The software giant may return with an upper hand this time

Microsoft Corporation (NASDAQ:MSFT) is strongly rumored to announce a new upgraded Xbox One sometime this year, alongside Sony Corp. (NYSE:SNE), which has similar plans for PlayStation 4. Speculation points toward an E3 2016 reveal, as the event is the biggest gaming convention of the year.

According to a new report by a blog named X-rays Insider (via Eurogamer Italy), the new version of Xbox One is in development and will be more powerful than Sony’s new console; 5-6 times more, if the report is to be true. It will be based on the new 14nm FinFET manufacturing process and powered by Advanced Micro Devices’ (NASDAQ:AMD) Arctic Island family GPU, based on Graphics Core Next 4.0. What’s more interesting is that the report claims it will skip the Polaris architecture and go for Vega.

Vega is AMD’s graphics architecture that will succeed Polaris in early 2017. It will feature High-Bandwidth Memory 2 and is going to replace the Fury series. The report indicates that it will feature the same next-gen memory.

It is quite hard to digest such rumors when they start playing with common sense. The report not only states that the new Xbox One version will be more powerful than PlayStation 4.5, it will be six times more powerful. The total computational power will be 10 TeraFLOPS.

While it all sounds really exciting and unbelievable, it is not practical by any stretch of imagination. Consoles are meant to stay in the affordable range and power like this is only going to raise the price to a $1000 at least. The blog mentions an anonymous person as its source, so it’s not exactly the kind of rumor worth taking into account given the astronomical claims.

Whatever happens, the upcoming E3 will provide a much clearer picture.

 

The latest move comes as part of the country’s plan to diversify energy supplies so as to fulfill the increasing demand

With positive sentiments being raised in the energy market, oil and gas companies are ramping up their production and exploration plans – something which they had kept at bay since long when the oil prices crashed from the highs of $115 per barrel to the lows of $27 per barrel around the beginning of this year.

As reported by Reuters, state-owned Saudi Aramco has outlined its aim on Sunday, to commission the wind turbine pilot plant by January, next year. The project is the first of its kind in the de facto kingdom of Saudi Arabia. The latest move comes as part of the country’s plan to diversify energy supplies so as to fulfill the increasing demand.

In a statement released on Sunday, the state-owned utility said: “The first electricity is expected to be supplied to the Saudi Aramco bulk plant once commissioning of the wind turbine is completed in January 2017.” The wind turbine would be dispatched by the General Electric (GE) that would give access to Aramco with provision of power to its Turaif project.

The latest move comes as quite good news for the green groups that have been pressurizing oil rich nations as well as energy giants to ban the use of fossil fuels. With the passage of time, awareness regarding the climate change threats are on a rise given that not only the human health but the burning of fossil fuels even detrimentally affect the entire planet.

Saudi Arab – a key player of the OPEC plays a very minor part when it comes to producing cleaner sources of energy, representing less than 1% of the entire production. However, now the kingdom aims to generate nearly 9.5 gigawatts from cleaner sources of energy as part of its Vision 2030 reform plan. The plan highly focuses on reducing the reliance of the kingdom on crude exports

The Country Caller takes a look at how Petrobras did well to achieve its objectives

Apparently, the new CEO of Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) is doing a fine job up till now at the state-run company. Petrobras was up 3.76% at $9.94 during trading on Tuesday as of 3:48 PM EDT. The company that saw its value decline mostly in the past two years would take a sigh of relief, as the new CEO aims to tackle the cost and debt problems simultaneously.

In the most recent efforts to cut costs, the Rio de Janeiro based company has finally succeeded in showing the exit door to some 11,704 employees. According to Bloomberg, these employees had decided to sign the voluntary layoff program on August 31.

Petrobras seems quite on track of its objective of cutting employees. The Brazilian state-run company had initially devised a plan of making 12000 workers redundant by the end of 2020, but with 11,704 workers already agreeing to a voluntary layoff, it seems the company might just easily achieve its target of the 12000 workers. The plan would bring in some $10 billion savings. The preliminary severance cost from the plan is expected to be around $1.21 billion.  

In other news, Petrobras has also made headwinds in its asset divestiture plans. According to Reuters, the company has managed to seal the deal of selling 90% stake of its natural gas pipeline unit. According to the anonymous source from Reuters, the assets would be sold to a group of investors belonging to Canada’s Brookfield Asset Management. The 90% sale in the stake is expected to fetch in $5.2 billion.

Petrobras currently is the most indebted energy company in the world with debt levels exceeding $26 billion. The company, amidst a crude oil price crash, finds itself in a financial turmoil. It is doing its utmost to regain prestige and strengthen its liquidity position.

Sony’s console continues to reign supreme everywhere

This generation has seen the most favorable results for Sony Corp. (ADR) (NYSE:SNE). The console gaming giant has sold more than 40 million PlayStation 4 units since the console’s debut in 2013. It is a major success story for the company and one that puts them far ahead of their rival Microsoft Corporation (NASDAQ:MSFT) who has thus far estimated to have sold around 20 million Xbox One units worldwide.

Historically, United States has been Microsoft’s home turf whereas Europe has remained loyal to Sony’s console. During this generation, Sony has managed to beat Microsoft month after month in its home turf. The situation is even more strongly in favor of Sony when we look closer to both consoles’ reception outside of the United States. A recent report by GFK (via Borse-Online) reveals that 460,000 PlayStation 4 consoles were sold between January 2016 and July 2016. The Xbox One on the other hand sold 105,000 units, making the difference ratio of 4:1 between the consoles.

A total sales figure presents an even bigger success for PlayStation 4. To date, Sony has managed to sell 3.2 million PlayStation consoles while Microsoft has sold just 710,000 units in Germany. This massive difference has earned Sony a 69 percent market share in the region. Microsoft’s 15.1 percent is superseded by Nintendo Co., Ltd.’s (OTCMKTS:NTDOY) 15.9 percent market share with the Wii U console.

PlayStation 4 has multiple major first-party exclusive launches impending in 2016 which is only going to push the console’s sales further.

The Jet Black iPhone 7 model is a huge fingerprint and scratch magnet

Apple Inc. (NASADQ:AAPL) has finally launched its much-awaited seventh-generation iPhones which have already broken the preorder record set by previous-generation iPhones. Interestingly, the new Jet Black version of the iPhone 7 and iPhone 7 Plus have managed to generate the greatest consumer demand in the market. Before officially selling its iPhone 7 and iPhone 7 Plus, the Cupertino-based tech giant announced that the Jet Black iPhone 7 models have been completely sold out, creating a shortage for the specific color. However, it turns out that you might just want to think really hard before purchasing this color which is being dubbed as a fingerprint and scratch magnet.

We all know that glossy materials are highly prone to fingerprint stains and scratches and it is no different for the Jet Black iPhone 7 models. Multiple reviews for the particular iPhone model reveal that the device easily gets scratched with everyday use. Also, the glossy finish on the smartphone means you will be in a constant struggle to wipe out those pesky fingerprint stains off your device. Furthermore, users can see the full extent of damage inflicted on their Jet Black iPhone 7 models by placing the smartphone under direct sunlight. It seems like the only way to keep your Jet Black iPhone model scratch or fingerprint free is to get a case for the device but you do not buy an expensive smartphone to keep it caged up.

If you are dead-set on purchasing the iPhone 7 or iPhone 7 Plus in Jet Black, then we would highly recommend that you either get a decent case for your device or consider another color option for the device. The new Matt Black iPhone 7 is a great option as it limits the visibility of fingerprints or scratches on the device.

The $110 level seems to be in sight, as the pre-market trading suggests

The recent bullish wave in Alibaba Group Holding Ltd. (NYSE:BABA) is accompanied by the rising optimism among the Street. That being said, TheCountryCaller has persisted on our bullish views even when the stock was trading near the $70 levels. Despite all the hurdles, the company has managed to improve its position in the recent times, as the stock prices crossed the three-digit-barrier and are heading to higher levels. Even today, $110 level seems to be in sight, as the pre-market trading suggests.

That being said, TheCountryCaller throws light onto a few factors that hint a correction may soon be on the cards. The recent short interest data suggests an increase in the number of shares short by over 5%, which hints that the bears might just pull back prices in the coming times. Moreover, the Street’s consensus PT is near the current market price.

However, as we’ve discussed, the Beijing-based retailer’s potential is not confined to price targets. The company’s growth on multiple fronts has been commendable. The company’s move into mobile gaming is an additional revenue stream, which can help in supporting its topline going forward. The Street’s optimism has been increasing every day, as brokerages have been raising their price targets. Although we do remain optimistic about the company’s future, but a correction may be on cards.

The Chinese retailer’s stock is being rated very highly by analysts, while a few reckon it to be on the same path as its rival Amazon.com. We, however, believe that the company is better poised than Amazon.com in its past, which reckons a higher potential for investors. We expect the stock to cross the $150 level by December; let’s see if it gets there sooner than expected.

Amazon has had to bow down to the pressure to provide same service to all areas

Online retailer Amazon.com Inc. (NASDAQ:AMZN) is now set to offer its Same-Day home delivery service in all areas of the 27 cities in the United States, following reports that suggested the retail company did not provide the same service in minority-based or under-privileged areas.

The situation regarding the poor quality in service, or the lack of it altogether, in some cases was observed and brought to the attention of Amazon’s higher management by the Congressional Black Caucus. The organization, which represents the members of the Congress of color, then called for an investigation into the matter from the authorities at the Federal Trade Commission.

Following further proceedings, Amazon released a statement that the company would make sure its Same Day Delivery service is available simultaneously and in full effect in all areas and Zip Codes of the 27 cities where it has been launched so far. Furthermore, the Same Day Delivery service will not be offered in any other city or even a Zip Code until the current cities are fully covered.

An analysis was posted by Bloomberg News which highlighted the lack of availability of the $99 per year Prime service in some areas of Boston, New York, Dallas, Atlanta, Chicago, and Washington, where people of color were in a majority.

Amazon’s prompt action upon the call for inquiry and investigation in to the matter by the Congressional Caucus has solved another case of modern inequality between races in everyday services. A classic case of racial inequality and discrimination has been observed and dealt with admirably which really begs the question; why let any such situation arise in the first place? Of course the question implies that it was all a misunderstanding and an honest bit of mismanagement.

Fitbit is well positioned to directly challenge Apple in smartwatch arena

On Wednesday, January 11, Apple Insider reported that Fitbit Inc. (NYSE:FIT) seeks to challenge Apple Inc. in the smart-watch market. For this purpose, the company has acquired two big companies recently, which reportedly position it well in the market to directly challenge the Cupertino-based tech giant. Consequently, Fitbit shares traded in green yesterday, gaining about 1.77% during active trading session.

According to Apple Insider, Fitbit purchased Indie watch company, Pebble, in December. With this deal, FIT has direct access to engineering talents, software, and patents, that it requires to challenge and fight Apple (NASDAQ:AAPL) in the wearables market.

Also, the $1.57 billion business recently acquired another European smartwatch business, Vector. The newly acquired company provides Fitbit with leadership expertise as it is led by former executives of big traditional watcher makers, such as Timex, Citizen, and Bulova. Moreover, the small startup has developed two luxury devices consisting of e-ink screens, a 30-day battery life, and proprietary operating systems.

While the wearables company has yet to reveal how it will use its acquisitions, it has the potential to create a new branded smart watch, far more advanced than its existing product, Blaze. Vector has already stated that it aims on leveraging Fitbit’s global market and experience, to produce new amazing products by incorporating the company’s unique technology, to provide better experiences and features.

Although Fitbit’s current product line holds certain similarities with Apple, it differs strikingly on functionality. However, it may face some difficulty in challenging Apple when it comes to App store and rich notifications feature. The company has already unveiled plans to roll out its own app store in the near future. But to compete with Apple, it has to develop world-class hardware platform that allows third-party apps to function efficiently. This is where Vector and Pebble are expected to help the company.