Saturday, April 23, 2016
Apple Inc (AAPL.O) will continue its reduced production of iPhones in the quarter ending June in light of sluggish sales, the Nikkei business daily reported, citing parts suppliers notified of the plan.
Apple apparently does not plan to make enough of the newly launched iPhone SE model, the Nikkei report said. (s.nikkei.com/23C81i1)
The company's shares fell 1.8 percent to $110.05. Shares of some Apple suppliers also fell following the report. Skyworks Solutions Inc (SWKS.O) was down 1.4 percent, Broadcom Ltd (AVGO.O) fell 2.4 percent while Jabil Circuit (JBL.N) lost 1.7 percent. The Nikkei reported in January that the technology giant was expected to cut production of its iPhone 6s and 6s Plus models by about 30 percent in the quarter ended March, but production was expected to return to normal in the current quarter.
The production cut could last longer than the one it implemented in 2013, when Apple cut production orders for its cheaper iPhone 5C a month after its launch, the Nikkei said.
Apple has told parts suppliers in Japan and elsewhere that it will maintain the reduced output level in the current quarter, the Nikkei report said.
Apple did not immediately respond to a request for comment.
In January, Apple said it expected a fall in revenue for the quarter ending March - its first forecast for a revenue drop in 13 years - as the critical Chinese market showed signs of weakening. It also reported the slowest-ever increase in iPhone shipments.
Global smartphone sales in 2016 are expected to grow at their slowest rate - in single digits in percentage terms, according to research firm Gartner Inc (IT.N).
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Revenue of the world's largest technology services company fell 4.6 percent to $18.68 billion in the first quarter, but beat analysts' average estimate of $18.29 billion.
It was the 16th straight quarter of revenue decline for IBM.
Under Chief Executive Ginni Rometty, IBM has been moving towards areas such as cloud-based services, security software and data analytics, while trimming its traditional hardware business by exiting low-margin businesses.
However, revenue in the company's newer businesses is failing to make up for declines in its traditional segments.
Bernstein analyst Toni Sacconaghi, in a research note before results, wrote that the falloff in IBM's traditional businesses was dwarfing the company's ability to capture new revenue.
Revenue from "strategic imperatives," which includes cloud and mobile computing, data analytics, social and security software, rose about 14 percent in the first quarter.
But revenue from the services and hardware segments fell 4.3 percent and 21.8 percent, respectively, in the quarter.
Excluding items, IBM earned $2.35 per share, beating the average analyst estimate of $2.09.
The company received a $1 billion refund in the quarter that lowered its effective tax rate to a negative 95.1 percent compared with 19.5 percent last year.
The company maintained its full-year adjusted earnings guidance of at least $13.50 per share. Analysts on average were expecting $13.55, according to Thomson Reuters I/B/E/S.
Up to Monday's close, IBM's shares had risen 10.83 percent this year, compared with a 2.46 percent gain in the S&P 500 index .SPX.
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Strong acceptance of its newer offerings also helped VMware forecast second-quarter revenue largely above analysts' estimates, helping send the company's shares up 8.7 percent to $55.95 in after-hours trading on Tuesday.
VMware's new virtualization offerings include NSX, which makes networking more efficient, and vSAN, which organizes data in a way that increases storage capacity inside servers.
The company expects second-quarter revenue of $1.66 billion to $1.71 billion, compared with analysts' average estimate of $1.66 billion, according to Thomson Reuters I/B/E/S.
Palo Alto, California-based VMware, which has been struggling on multiple fronts, is hoping those new products will offset declining demand for its traditional server-virtualization software.
Sales of VMware's flagship vSphere software, which helps companies cut costs by running multiple operating systems on a single machine, have fallen as the market for the software has matured and customers shift to the cloud.
"The core business is still under pressure," Cross Research analyst Shannon Cross told Reuters. "I think what they did was they threw a billion through this repurchase to shareholders to appease them."
License bookings for NSX doubled in the first quarter, while those for vSAN tripled, VMware Chief Executive Pat Gelsinger said on an earnings call.
That helped push up the company's first-quarter revenue by 5.2 percent to $1.59 billion, beating analysts' average estimate of $1.58 billion, according to Thomson Reuters I/B/E/S.
License bookings from vSphere were less than 35 percent of total license bookings in the first quarter, down from more than half of total bookings two years earlier, Chief Financial Officer Zane Rowe said on the call.
License revenue fell slightly to $572 million from $576 million, as vSphere sales continued to decline.
VMware's total net income fell to $161 million, or 38 cents a share, from $196 million, or 45 cents a share.
Excluding items, it earned 86 cents per share, beating average analysts' estimate of 84 cents.
VMware's parent, EMC Corp, (EMC.N) is being acquired by Dell Inc [DI.UL]. Shares of EMC, which reports results on Wednesday, were up 1.7 percent at $25.99 after VMware's results.
VMware said on the conference call it expected to begin repurchasing shares after the EMC shareholder vote on the Dell merger.
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The new MacBook is 13.1 mm thin, weighs 2 pounds and has a battery capable of up to 10 hours of wireless web browsing on a single charge.
The device, which starts with a price tag of $1,299, will be available for sale from Wednesday.
(This story corrects paragraph one to remove reference to Apple updating its 12-inch MacBooks with Retina display and Force Touch trackpad. These features were available in the previous version.)
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Verizon submitted its offer with advice from investment banks Guggenheim Partners LLC, LionTree LLC and Allen & Company, the people said on Tuesday. The U.S. telecommunications company will face competition in the second round from other companies and private equity firms, the people added.
On Tuesday evening, Yahoo's advisers were still reviewing the preliminary offers received on Monday. The auction attracted interest from a diverse array of companies ranging from Japanese online retailer Rakuten Inc (4755.T) to Yellow Pages owner YP LLC, which is backed by AT&T Corp (T.N), the people said. Rakuten ended up not making an offer, a spokesman for the company said.
Apax Partners LLP, TPG Capital LP, Bain Capital LLC, Apollo Global Management LLC (APO.N) and Warburg Pincus LLC were among the private equity firms that submitted first-round bids, the people said. Yahoo may decide to allow buyout firms to team up in the second round, the people added.
The field had whittled down ahead of Monday's first-round bid deadline as several companies that were mulling an offer, including Comcast Corp (CMCSA.O) and Time Inc (TIME.N), decided to opt out, the people said.
No two offers submitted were identical, and Yahoo is deciding which proposed structures and assets to be divested offer the best potential value, the people said. The company hopes the auction can conclude by June, but the timing could sleep, the people said.
Softbank Group Corp (9984.T), which owns 43 percent of Yahoo Japan Corp, and Alibaba Group Holding Ltd (BABA.N), in which Yahoo holds a 15.5 percent stake, have not participated in the auction, but may engage with the U.S. company once the future of its core internet assets becomes clear, the people said.
The sources asked not to be identified because the details of the sale process are confidential. Representatives of Yahoo, Verizon, YP, Comcast, Time and the private equity firms declined to comment. Softbank, Alibaba, Guggenheim, LionTree and Allen & Company did not immediately respond to requests for comment.
Yahoo, under pressure from shareholders including activist hedge fund Starboard Value LP, launched an auction of its core business in February after it shelved plans to spin off its stake in Chinese e-commerce company Alibaba.
Analysts see Verizon, which bought AOL last year for $4.4 billion, as being a more likely candidate to prevail in the auction for Yahoo's web business.
On Yahoo's first-quarter earnings call on Tuesday, Chief Executive Marissa Mayer said Yahoo management had been "running a quality process designed to keep interested parties engaged."
"Over the past two months, (Chief Financial Officer Ken Goldman) and I and the rest of the management team have spent time in person and on the phone with interested participants, including some of the most well-known, respected names in the industry," Mayer said.
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More than 80 million units of the console have been sold since it was launched in 2005.
Xbox 360 also introduced Microsoft's Kinect motion-sensing game device. It was the company's primary gaming console, until it launched the Xbox One in 2013.
The Xbox 360 launched with a number of popular video games including Activision Blizzard Inc's (ATVI.O) "Call of Duty 2" and Electronic Arts Inc's (EA.O) "Need for Speed: Most Wanted".
Microsoft said in a blog post it would continue to sell existing inventory of the consoles, and that it would continue to provide customer support. (bit.ly/1U6G8bF)
The company's Xbox Live network, which allows online multi-player gaming, will continue to be available for the Xbox 360.
Sales of older-generation consoles, such as the Xbox 360 and Sony's PlayStation 3, have been declining as consumers shift to newer versions of the consoles from the companies.
"While we've had an amazing run, the realities of manufacturing a product over a decade old are starting to creep up on us," said Phil Spencer, the head of Microsoft's Xbox division.
The company has also introduced the ability for users to play games launched for the Xbox 360 on its latest console. Microsoft currently offers over 100 video game titles as a part of its "backward compatibility" feature.
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Yahoo, which has been struggling with falling ad revenue for years, has sped up the process to sell its media, email and other web businesses, bowing to pressure from activist shareholder Starboard Value LP and others.
Shares of Yahoo rose as much as 5 percent on Wednesday, as investors digested the company's slightly better-than-expected quarterly results late on Tuesday and CEO Marissa Mayer's reassurances that she was focused on the sale.
Yahoo's advisers are working through offers to put together a short list, and Verizon Communications Inc was set to advance to the second stage of bidding for the internet company's core assets, Reuters reported, citing sources.
Daily Mail & General Trust Plc said last week it was in talks with potential partners to mount a joint bid for Yahoo's internet assets.
Buying Yahoo's core assets - which include a search engine and email, news and sports services - would boost Daily Mail's online reach and digital ad revenue from its globally popular websites, and partly offset shrinking print revenue.
Private-equity firms Apax Partners LLP, TPG Capital LP, Bain Capital LLC, Apollo Global Management LLC and Warburg Pincus LLC have also submitted first-round bids, according to sources.
As well, the auction has attracted interest from Japanese online retailer Rakuten Inc and Yellow Pages owner YP LLC, which is backed by AT&T Corp.
While investors seemed pacified by Yahoo's results and the progress on the sale, analysts said the company management's failure to address key questions about the bidding process had added a level of uncertainty.
"... We were hoping that (Mayer) would provide more colour on what was for sale ... and timing around the process," Neil Doshi, an analyst at Mizuho Securities USA said in a note.
"Too little, too late" was how Barclays analyst Paul Vogel characterized Yahoo's renewed focus on mobile and video search initiatives.
However, Barclays, Mizuho and at least 9 other brokerages raised their price targets on Yahoo's stock, mostly based on the change in the value of Yahoo's Asian assets.
Oppenheimer was the most bullish, raising its target to $49 from $40. The median price target on the stock is $40.
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