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Vinayak

Tech Picks from the Valley Trader

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Short idea: APPL has been tumbling since the iPhone 5 launch

 

Apple Drops Below $400 for First Time Since Dec. 2011

 

AAPL+Stock+chart.bmp

 

Source: Investoraide

 

The AAPL stock decline seemingly has been set off by a substandard sales forecast from one of the tech firm's foremost suppliers. Investors have started to fear that the demand for Apple’s signature iPhone and iPad products going down considerably. This actually is reflective of the underperforming global electronics market.

 

Apple will have to innovate and do something great because there is now a lot of negative sentiment on Wall Street for the large cap tech stock.

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Apple Said To Offer $17B of Bonds in Record US Sale

 

Apple Order Book for Six-Part Deal Said to be $50B

 

Apple (AAPL) had to innovate and now it has finally gotten a breakthrough with its iBond. CEO Tim Cook has been under fire and now was the time to pull out all the stops. Usually, investors aren't that optimistic about buying debt from companies. But the good thing for Apple is that it has a huge cash pile.

 

Shareholders are extremely pleased with this attempt by the Cupertino, CA based firm to get back on their good books. The deal is reportedly going to be handled in six parts by investment banking giants Deutsche Bank and Goldman Sachs.

 

For Apple, this is a great way to borrow cheap and look to buy back shares which ultimately boosts the EPS (earnings per share) figure.

 

Other large cap tech stocks are already doing this big time. Microsoft (MSFT) raised $2.7bn in debt last week issuing bonds in the US and in Europe, its first ever euro denominated debt deal.

 

The bonds worth $17B is actually a record sale according to industry experts. Apple is looking to save big on its taxes as it has a lot of cash overseas with this bond deal.

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New+Bitmap+Image+(2).bmp

 

Source: Investoraide

 

Facebook (FB) seems to be rather promising after all. I must say I had my qualms about the social network but it has reaped its rewards in making the conscientious effort to step up its mobile ad business. EPS missed estimates by just a penny and overall the earnings call was positive for FB investors.

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IBM: Excellent Value For Money

 

The common stock valuation ratios are reflective of IBM being renowned as the industry leader. Additionally, highly successful value investor Warren Buffett recently stated that he would buy more IBM stock "from time to time."

 

Since 2000, IBM has lowered its share count by a third due to the drop in revenue growth. This has seen the stock price appreciate over the last 10 years by a great deal. Additionally, the EPS has also gone up.

 

The remarkable fact is that for each $1,000 of stock owned over the last 13 years, the quarterly dividend has added up to a whopping $2,200. This is more than double the initial investment, without taking into account the gain in the stock price.

 

IBM has tremendous potential

 

I have always been a firm believer in innovation. IBM is the most innovative business around as indicated by the fact that it has gotten the most patents since the year 2000.

 

The Dividend Discount Model shows that IBM is a great investment idea as the current stock price of $203.03 is much lower than the calculated intrinsic value of $455.63. This is a much bigger difference than what we saw in the case of SAP AG (SAP) which had an intrinsic value of $83.56.

 

IBM is definitely good value for the money and past performance shows that it keeps returning that value to investors through dividend increases and buybacks, in addition to stock price appreciation.

 

Read more here: http://seekingalpha.com/article/1439671-ibm-excellent-value-for-money

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Yahoo! Will Buy Tumblr for $1.1B, Mostly in Cash

 

Yahoo! is really hoping for a big turnaround under Marissa Mayer and this latest move is a hope that the acquisition of the white-hot blogging site will do precisely that.

 

Tumblr may be a big deal right now, but how Yahoo! will make money out of the acquisition isn't as clear cut. So I strongly believe that Yahoo! stock will slide in the coming weeks and how it does in the future will depend on the success of Tumblr and other factors.

 

Tumblr seems to be getting the better end of the deal as it needs the advertising that the Yahoo! deal will bring. This is definitely big news in the tech world right now and I will be watching this one closely for you.

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DELL: Playing of the Earnings Miss and Recent Bearishness

 

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Source: InvestorAide

 

Dell (DELL) showed weakness and the numbers are pretty jarring. It reflects the dying PC market; sector reports illustrate that this is the biggest quarterly decline in PC sales since these figures started being recorded. And not to mention the numerous shareholder disputes that has been plaguing Dell. The company has been forced to look at new strategies. Dell’s profits for Q1 slid 79%. The P/E ratio paints a favorable picture, but even that has creeped up over 10. Additionally, it isn't as healthy as some of its closest competitors. The key chart failures make Dell's stock price action look bearish.

 

The Fib resistance appears to be in the mid-14s and further technical analysis demonstrates the case for some puts. Option traders should note the downside bias and the fact that DELL is well past resistance.

 

Nonetheless, I will look to play off of the earnings miss in DELL. I will entering into some monthly and weekly puts on the large cap tech stock.

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GOOG: A Stock To Watch

 

Google Said to Consider Buying Waze, Risking Bidding War With Facebook

 

This makes a lot of sense for GOOG to do in order to check FB. Additionally, Waze seems to be having a superior technology to GOOG's app and so the Israeli startup might be worth acquiring for the search giant.

 

GOOG in a new antitrust probe regarding how the internet company handles some ad sales

 

The top player in web display advertising with a 15.1 percent market share in 2012 of the $15 billion U.S. display ad market (FB has a 14.6 percent share) is continuing to face some challenges. Google is already trying to convince European antitrust investigators to wrap up a separate antitrust probe.

 

It will be interesting to see how the stock price reacts to these developments.

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AT&T: Value investors should look to dollar cost average right about now

 

AT&T Inc. (T) is one of the most honored companies in the world. Recently, PCWorld/TechHive ranked the company's 4G LTE network as the fastest for a second consecutive year. AT&T has always been a solid name to consider for dividends with relatively low risk.

 

Dividend stocks have always outperformed non-dividend stocks over the long term. This is the case whether it is a bull or bear market. The encouraging sign for AT&T is that it appears to be a better investment as a dividend stock than even IBM (IBM) and we all know how much I love IBM.

 

There is a lot more to love about AT&T. AT&T's P/E ratio may be on the high side at 28.78, but it appears to be healthy considering that its closest competitors have astronomically high or no P/E values reported. Verizon Communications Inc. (VZ) has a P/E of 129.50 and Sprint Nextel Corporation (S) has an unreported P/E.

 

Additionally, AT&T leads the way even with its EPS and it has the largest market cap of the three telecommunications firms with a value of $199.5B.

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Mayer's Yahoo: Outcome of acquisitions will be the key

 

Yahoo! Inc. (YHOO) has been using the Google playbook; free meals and iPhones for employees. The Sunnyvale, CA based search giant has also started buying small tech start-ups to gain a wider audience. It all started with the purchase of the social media site Snip.It and now it is the headline-grabbing acquisition of blogging site Tumblr for $1.1B. This is a big step in boosting Yahoo's mobile ad business as a lot of Tumblr users are teens and young adults that log into the site via its well-liked mobile app.

 

Yahoo has also been in talks to buy Hulu. This would be a good purchase as it is a popular video-streaming service that would give Yahoo additional advertising revenue. Hulu has a strong user base and the subscription revenue will also factor into any potential offer.

It is true that Yahoo has a bad record with its past acquisitions with GeoCities being a famous example. But that is going to change under Mayer who has been instrumental in leaving the underlying structure of a purchased company mostly unaltered.

 

With all that Yahoo has got going on, the stock makes sense for a value play. I want to see how much I should pay for Yahoo shares and I will use the present value of free cash flows (FCFF).

 

The Present Value of FCFF reveals an intrinsic value of $25.02 a share and Yahoo shares are currently hovering slightly above this value.

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Facebook: Latest Trends

 

New study reveals how Facebook users check out profiles

 

According to two researchers at the Ohio State University, a person's mood influences who they stalk on Facebook at any given time. This study has shed insights on user behavior on the popular social network.

Study Explains Why You Stalk Your Most Pitiful Friends On Facebook

 

Teens are officially over Facebook

 

This has been a trend for quite some time now with many of the younger generation giving up Facebook for 'cooler' networking platforms. But Facebook has a bigger audience to target as it only has 1.3 billion users as of now. Remember the world population stands at over 6 billion people. Instagram appears to be the new Facebook and the good thing is Facebook has already bought the service. The $1 billion price tag may very well be worth it.

Teens are officially over Facebook - Business - NZ Herald News

 

Behind Facebook's money making machine

 

Facebook makes a lot of money through advertising which is quite inexpensive and reaches a large target audience.

Now, Facebook makes more than $1 billion a quarter in ad revenue. Annual revenue by year increased from $5.09 billion in 2012 to $7.8 billion in 2013. According to Gizmodo data from earlier this year,FB rakes in roughly $15,152 of revenue every 60 seconds, with $2,887 of that coming in as profit.

The amazing thing is, that's nothing compared with what's about to come.

How Does Facebook Make Money?

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