September 2018


Trump’s dissatisfaction is quite concerning as Lockheed’s F-35 represents key sales generator for the company

Lockheed Martin Corporation (NYSE:LMT) CEO Marillyn Hewson announced on Friday, Wednesday 23, that she has committed to President-elect Donald Trump to work on driving down costs of F-35 – company’s fighter jet. The move followed Trump’s recent tweet regarding F-35 costs.

Trump had tweet on late Thursday that Boeing Co’s (NYSE:BA) older aircraft provides a cheaper alternative to Lockheed’s F-35. He stated, “Based on the tremendous cost and cost overruns of the Lockheed Martin F-35, I have asked Boeing to price-out a comparable F-18 Super Hornet.” According to Reuters, CEO Hewson talked to Trump on Friday afternoon, assuring him that she heard his message loud and clear regarding reducing cost of F-35.  mn

Ms. Hewson also stated that she gave her personal commitment to the new president to drive down costs aggressively. Consequently, Lockheed Martin shares traded in red, closing down about 1.3% on Friday, almost hitting their lowest levels since the recent US elections. Reuters report also indicated that LMT shares were the biggest drag on defense-related stocks basket.

Moreover, Reuters suggested that it was impossible to dissect what Donald Trump meant by his tweet. This is because Boeing’s F-18 lacks stealth capabilities possessed by F-35, which are vital to counter advanced defenses of near peer states, such as China or Russia. The report cited a US official who questioned Mr. President regarding his plans to confront China while lacking necessary aircraft capabilities. Additionally, most of the defense analysts consider the two jets incomparable. Nonetheless, Trump’s dissatisfaction is concerning because F-35 is a critical sales generator for Lockheed.

Lockheed’s consensus price target stands at $276.76, indicating 10.9% upside potential over last close. Furthermore, of 21 analysts covering the stock at Wall Street, 9 rated it as Buy, 1suggested Overweight, and 11 recommended holding the shares for longer term.

Axiom Capital’s Victor Anthony highlights three main concerns that will impact Netflix’s ability to meet estimates

Netflix, Inc.’s (NASDAQ:NFLX) bears have several reasons to be cynical over the stock, including surging competitive environment at home, high cost for programming, and a slow start in new, promising international markets. For the same reasons, Axiom Capital is the new Netflix bear in the market.

In premarket trading on Monday, Netflix shares edged down 0.57% to $97.02, hinting towards a deceleration in the stock price.

Victor Anthony, analyst at Axiom Capital, initiated coverage on the world’s largest online TV network today with a Sell rating and price target of $80, which represents potential downside of about 18% from its last closing price.

The analyst highlighted three main reasons for his negative view on Netflix: increasing competition, declining pricing power, and accelerating content costs. These concerns are expected to impact the company’s plans to add more subscribers during the last two quarter of 2016.

“We see rising competition, diminishing pricing power, and rising content costs putting pressure on Netflix’s ability to meet consensus longer-term subscriber growth and profit estimates,” Mr. Anthony noted.

The research firm believes that “competition is now real” and the ongoing price hikes will lead to more and more churn, in contrast to what analysts at BTIG Research, Cantor Fitzgerald, and RBC Capital think.

It also highlighted the lack of original content in local languages in the new Asian and European country, which is impacting growth. While Netflix doesn’t have sufficient content to cater local languages needs, Mr. Anthony believes that the demand for more original content in local languages will continue to increase over time.

He added, “Investors are paying a super-rich multiple that, in our minds, calls for near flawless execution, an expectation we believe will be hard to achieve.”

Mr. Anthony’s suggestions have led to average return for investors of about 13%, making him one of the top 100 analysts at the Street, according to TipRanks. Of 41 analysts covering Netflix stock, FactSet shows that only five rate the stock as a Sell and the rest either mark it as a Buy or a Hold.

A look into the mechanism of FLYR and how it could help JetBlue succeed

JetBlue Airways Corporation (JBLU) stated that FLYR, the travel and data company based in Silicon Valley, has been selected as its very first investment. The news was first disclosed at new venture capital event.

JetBlue Technology Venture’s President, Bonny Simi stated that FLYR was chosen as the first investment because of similar belief sets. FLYR believes that predictive analytics is the key to providing value to customers. The key is to change the travel experience in a completely new way.

The company further believes that partnering with new ventures is the key to bolstering relationship building with new startups. It will further boost innovation and new ideas in the field of travel as well as promote the company’s brand to newer markets.

FLYR, which is a data science company, uses the technique of predictive analysis in travel industry; with the help of data it develops, price forecasts, and other innovative products especially to online customers. The main goal of FLYR is to improve the accuracy of fare prediction as much as it can. This could help give JetBlue an edge over its competitors when it comes to pricing.

The additional color offering rumors were first made public by Japan-based Apple Blog, MacOtakara which later stated that the color suggested by reports (deep blue) was not true

Apple Inc. (NASDAQ:AAPL) is expected to unveil the successor of the iPhone 6S in September, less than 3 months from today. It is expected to be a larger upgrade than usual in addition to the 2-year form factor upgrade model that Apple currently uses for its flagship smartphone. A wide slew of cosmetic upgrades have been talked about and speculated including a waterproof OLED display, the absence of a headphone jack, an iPhone Pro model as well as a non-moving Home button that will now feature Force Touch to allow Haptic feedback in addition to Touch ID.

Apart from CPU, GPU and RAM upgrades to the platform, one can expect significant cosmetic changes as well, along with the rumored dual lens cameras and possibly a slightly larger screen in tow. However, there is another thing that currently rules the roost when it comes to rumors surrounding the next generation iPhone which is the Space Grey color. This will be essentially replaced by a Space Black Theme instead, something that will be much closer to the back color used for the original iPhone 5.

The source of this leak is a contact of reputed Apple news website, 9to5mac. It must be noted that the source, despite being near the Apple HQ as per the IP address it had, has essentially no track record of the sort when it comes to leaks, especially regarding the new iPhone. The source also confirmed claims of the home button essentially becoming an immovable button with Touch ID and Haptic support.

The black colored iPhone is a popular choice for consumers if the iPhone 5 is any indicator and while Space Grey as a replacement was considered equivalent, a change in color, in line with a small cosmetic change to the actual body of the next generation iPhone might be something that could drive sales for Apple. The Cupertino-based tech giant needs a silver lining amidst growing concerns regarding its reliance on a potentially hostile Chinese market for revenue and growth in addition to slowing demand for its other products such as the iPad and the Mac according to its last quarterly earnings report, causing significant concern for its consumer base.

The oil company is seen to have taken increased interest in lucrative strategic assets in Brazil and Mexico

Coming ahead of the depleting crude oil environment since the past two years, where crude prices traded near half their levels in June 2016 from the peak of $115 per barrel in June 2014 when the oil crisis first struck, energy giants are now taking a sigh of relief. Similar is the case with Chevron Corporation (NYSE:CVX). After going through a fierce period of implementing cost controls, it is finally moving towards in line with the global revival in the upstream investment. 

As the oil industry carries out the analysis of its risks and rewards combined with the rampant growth in US shale, where Chevron is headquartered, the oil company is seen to have taken increased interest in lucrative strategic assets in Brazil and Mexico. Furthermore, having recently announced its capital expenditure program, the energy giant is likely to come up with a new tender for Rosebank FPSO. The move comes ahead of Chevron dissolving its order with Hyundai Heavy Industries (HHI) in December.

Last month, Chevron dispatched a cancellation notice for the order was valued at around $1.85 billion. Discovered around a decade ago, the Rosebank field has the capacity to hold 240 million barrels of oil equivalent.

With the rising oil prices, both West Texas Intermediate and Brent crude trading above $50 per barrel, oil companies including Chevron are boosting up production levels to make up for the loss in revenues amid the oil downturn. Spokesman for Chevron North Sea Limited stated: “The Rosebank project is continuing through Front End Engineering and Design (FEED). Chevron is committed to working with its project joint venture participants and stakeholders to make improve project value and make the right decisions for the Rosebank development.”

Cowen currently has a $3.50 price target on Zynga stock

Zynga Inc (NASDAQ:ZNGA) shares jumped by 3.5% in trading today after investment firm Cowen & Co upgraded its rating on the company’s stock from a Market Perform to an Outperform. This is the first time the firm that has covered the stock for a long while has issued it a positive rating. Cowen has a $3.50 price target on Zynga’s stock.

Cowen analyst Doug Creutz attributed the upgrade on the remarkable response for CSR Racing 2 from consumers. The analyst also listed the increasing demand being witnessed by the company’s casino franchises on mobile along with its valuation. Mr.Creutz however noted that he is cautious over Zynga’s management; however, at the same time he believes that it is already factored in the company’s current stock price.

“CSR Racing 2 has been a steady top 15 grossing title since its launch a little over a month a go’ said Mr. Cruetz. Based on the assumption that the CSR 2 continues to witness positive response, Mr.Cruetz predicts that revenue run rate per year would fall in the range of $175 million – $190 million with this taking into account proceeds from advertising. In terms of bottom line the analyst projects that operating margins would come in the range of 40%-45%.” With the game sustaining strong performance through a full month, we feel good about its ability to continue strong revenue generation into 2017,” said Mr. Creutz.

Additionally the analyst believes that CSR 2’s growing popularity implies good things for Dawn of Titans. Mobile strategy game Dawn of Titans that is developed by NaturalMotion is set to make its debut in the fall of this year. The analyst notes that he has had certain reservations with regard to the success the game could see. He notes that it stands to witness a variety of obstacles. At the same time however, Mr. Cruetz notes that considering NaturalMotion already rolled out a successful title CSR2, it could very well deliver a second one as well.

Indonesian tax office claims Google’s tax percentage to be unfair and small compared to the revenues, requests answers for the arising discrepancies

Alphabet Inc. (NASDAQ:GOOGL) could face investigations for Google in Indonesia. According to a senior finance ministry, the Indonesian tax office would conduct these investigations. The investigations would be for suspected unpaid taxes amounting to billions of dollars resulting from advertising revenues. Following this, the head of special cases branch in the Indonesian tax office, Muhammad Hanif stated that Google did not cooperate when it was sent a letter earlier in FY16 in April. This raised the suspicions of the agency multiple folds when the company refused to let the agency examine its tax reports. It was also stated that the investigations would not be carried out till the end of the month at the earliest, thus launching of probes could take even longer.

The Indonesian counterpart of Google, which was incorporated in FY11, defended itself by stating that it had complied with the government. In an email, one of its spokesmen stated: “We continue to cooperate fully with local authorities and pay all applicable taxes.” However, the Mountain View-based organization remains under examination in the Southeast Asia’s biggest economy.

Along with Google, three other companies were sent similar notices. These included Facebook Inc, Twitter Inc, and Yahoo! Inc. Along with this, the officials have stated that the other three companies cooperated with their request. Twitter and Facebook operate as branches in the Asia Pacific regions whilst Google and Yahoo have formed limited liability subsidiaries in the region. According to the tax office, the four businesses owe income tax along with value added tax on billions of dollars that they generate from their advertising segments in Indonesia.

Moreover, Mr. Hanif had stated that Indonesian Google was only allocated approximately 4% in taxes from the generated revenues. He believes that this tax rate was unfair and too small for such a big giant. This is because the digital advertising industry is worth around $800 million in FY15 and remains largely untaxed, according to the country’s communication ministry. He also believes that there was no explanation for the huge discrepancy between the estimates of the two agencies for the digital advertising revenues.

The news came amidst increasing trouble faced by Indonesia in terms of revenue. It has been facing considerable shortfall in its revenues. This is because it can no longer depend on commodity related income. Not only is Google expected to be a part of this investigation, but Ford Motor Company is also facing similar investigations in the region. Ford’s troubles were a result of its report modifications in Everest model vehicles to escape taxes and to pay a lower tax rate in the region. According to the laws of the resource-rich country, if proven guilty, the automaker would have to pay four times the amount it currently owes. The Michigan-based business also claims to have complied with the government.

Initial launch was made in Australia and New Zealand generating great hype and interest

Recently-launched augmented reality Pokemon game, Pokemon Go, is now available for download in the United States for the two biggest mobile operating system platforms Apple Inc.’s (NASDAQ:AAPL) iOS and Alphabet Inc.’s (NASDAQ:GOOGL) Android.

Pokemon Go was initially launched down-under in Australia and New Zealand after which the game generated massive hype and general interest among users. Speculation was later made that the game would be made available in a major market like United States sometime during the week, and that speculation was topped by a launch in the country on the very next day.

At the time of release in Australia and New Zealand, possibly the two biggest markets of Japan and United States were told to wait a little while for the official launch in the two countries, and it seems Nintendo and GameFreak didn’t want to hold the users up in the countries for two long. Pokemon Go was launched on the App Store before the Android Play Store, and after initial complaints regarding the unavailability, the Play Store link for Pokemon Go is now up and running.

Pokemon Go is developed by Niantic for iOS and Android that allows users to catch, train, trade, and battle pokemon with other users. The game was first announced in September, 2015, that it would be free to play with an option to purchase more options and content through the in-app purchases. Initial response for Pokemon Go has been widely encouraging, as pokemon trainers of all ages have taken to their iOS and Android devices to catch and train their favorite pokemon and later pit them against fellow pokemon trainers in exciting battles.

A huge following of Pokemon games exists around the world and users would, no doubt, be waiting anxiously for the game to be released in their countries. Unfortunately, there is no word yet on that front and it seems it is a cruel waiting game yet for everyone else. For those in United States as well as Australia and New Zealand, go out there and catch ‘em all!

The Microsoft Studios website adds Lionhead to list of studios again

Microsoft Corporation (NASDAQ: MSFT) has been at the center of many discussions recently. The issue at hand right now is the closure of popular Lionhead Studios and the cancellation of its upcoming title, Fable Legends. The news has not been received well by the community and everyone has expressed dissatisfaction, feeding Microsoft with a lot of backlash on the issue. Now, it looks like Microsoft is trying to make amends once more.

After the news spread of the closure of Lionhead Studios, Microsoft removed eight of its first-party studios from its Microsoft Studios website, including Lionhead. While that was said and done, at the time of writing, Lionhead studio is back and visible on the said website. There has been no announcement or revelation on the matter so far but the studio is perfectly visible on the website as we speak. Could this be a simple mistake or could it be yet another U-turn by Microsoft?

Before you go on and point out the most probable thing to say that it could be a simple mistake on the part of team Xbox and the web developers, we must keep in mind that Microsoft did a complete U turn back at the launch of the Xbox One in 2013. For those who do not know, Microsoft completely scrapped their used games DRM plans for the Xbox One when they received a ton of backlash from the community on the matter. The plans included players not being able to play physical copies of games on another console than the one it was originally used on.

If we look at it, the current situation is pretty much the same. The closure of Lionhead Studios and the cancellation of Fable Legends have earned Microsoft a lot of negative publicity and the management has been left to fend for themselves in front of the brutal words of the community. Given the current situation, it would not be surprising for Microsoft to make a U-turn on this move as well and if that happens, we should see an announcement pretty soon.


An increase in competition can pose serious threat to Tesla market share

Tesla Motors Inc. (NASDAQ:TSLA) had posted profits for the first time in its quarter ended September 30. There was no other company solely for the purpose of manufacturing electric cars. However, things have taken a turn as a California based startup, Lucid Motors, announced plans to install a car assembly plant which will be operational by the end of 2018.

The company plans to invest $700 in the assembly line which will be situated in the Grand Canyon state. Lucid Motors will build a 1000 horsepower sedan, which it showcased a few weeks earlier at the Los Angeles Auto Show. Chief Technology Officer, Peter Rawlinson, had said at the show: “We’re a California car company and it’s a fresh California spirit.” On the selection of the site he said, “The site we’ve located has been carefully selected, having scoured the U.S. extensively,” It is expected that the company will produce 50,000 to 60,000 cars each year at full capacity. The company will also hire around 2,000 employees.

Lucid Motors can pose a serious threat to Tesla which is currently struggling to generate a growing revenue stream. The company had also acquired Solar City which will likely help it in its future models. The startup is being backed by Chinese investors along with various other startups. Lucid Motors is also being funded by BAIC, which is a major automaker in Beijing and is controlled by the Chinese government.

Amid recent development, Tesla stock lost 3.34% of its value yesterday, and closed on $189.57. The stock is still losing its value in the after-market hours. It has fallen by 0.03% as of 7:59PM EST and is being traded at $189.52. The effect of the SEC probing into the accounting practices of the company are taking its toll on the market share price. However, an increase in competition may also lead to a decline in Tesla. If Lucid Motors enters the stock market, it will provide investors with an option, other than Elon Musk, to invest in the electric car industry.