Looking for the next Internet search portal to take market share from Baidu? Look no further than Qihoo 360 Technology (NYSE:QIHU-Free Report).
Qihoo 360 is the largest Internet security provider in China, with over 461 million monthly active users, representing a penetration rate of 96% in arguably the world's largest web market. That's right. You are talking about the largest common-language/culture Internet market in the world and QIHU is now the #2 portal.
With that kind of access to the Chinese market, why haven't we heard of this $7 billion upstart before as a threat to Baidu? And where does the search element come in?
The Story is Out
Qihoo 360 Technology offers a broad spectrum of Internet and mobile security products. Its core Internet and mobile security products include 360 Safe Guard and 360 Anti-virus 360 Mobile Safe, 360 Safe Browser, 360 Personal Start-up Page, 360 Application Store and 360 Safebox.
In a brilliant strategy move, Qihoo 360 began offering its cloud-based Internet security products for free to users. And this has allowed them to monetize their significant audience through online advertising services, including paid links as well as Internet value-added services, such as offering access to third-party Web games and virtual items.
More recently, the company's launch of so.com, its Internet search engine, is the game-changer for the company as it leverages its broad reach in China to capture lucrative search market share. The "360" brand stands for Internet security to the company's users, and these users are a ripe audience for advertisers.
What's happening in the world of men's discount dress wear? Two stores I have shopped at for years are frequenting the bottom of the barrel in the Zacks Rank lately.
First it was Jos. A. Bank Clothiers in early summer with an earnings miss and cloudy guidance. I had always wondered how JOSB could offer such big discounts with "buy 1, get 3 free" types of store sales. My speculation was that the shirt they charge $80 for is made for under $10 in China.
Now this month, it appears that declines in consumer spending are taking their toll on the outlook of The Men's Wearhouse (NYSE:MW-Free Report). On September 11, the company posted adjusted Q2 earnings of $1.01 per share that missed the Zacks Consensus Estimate of $1.15 and decreased 12.2% year over year. Including one-time items, earnings came in at 85 cents per share.
Citing macroeconomic challenges, Men's Wearhouse lowered its fiscal 2013 guidance and shares of this specialty retailer of menswear in the United States and Canada plunged more than 14% the next day.
And analysts who had actually been raising estimates before the end of the second quarter were sent scrambling the other way, taking this year's EPS in the past two weeks down to $2.44 from $2.77 and 2014 down to $2.82 from $3.02. The most recent notches down in estimates last week caused MW to drop from a Zacks #3 Rank (Hold) to a #5 Rank (Strong Sell) this week.
BlackBerry Continues to Slide
Canadian handset maker, BlackBerry Limited (Nasdaq:BBRY-Free Report) which plans to release its second quarter 2014 financial results on Sep 27 recently produced a disappointing preliminary result for the second quarter of fiscal 2014. As a result the stock price of the company fell by nearly 17% to $8.73 per share at the close of the market on Sep 20.
BlackBerry anticipates GAAP net loss of nearly $950 million to $995 million for the second quarter of 2014 mainly attributable to written-down unsold devices costing of between $930 million to $960 million. Moreover, it expects revenue for the upcoming quarter to be $1.6 billion, down 45% year over year while smartphones sales are expected to be 3.7 million, down 50% year over year.
Loss per share on a GAAP basis is expected to be around $1.81 to $1.90 which includes written down cost of the inventories and a $72 million restructuring expense, while excluding these charges loss per share is expected to be in between 47 to 51 cents. As per the Zacks Consensus Estimate revenue and EPS for the period are expected to be $2,422 million and a loss of 19 cents per share respectively.
BlackBerry also plans to slash its smartphone portfolio from six handsets to four devices which includes two entry level phones and the remainder will be high-end devices. Such a move will help the company to reduce cannibalism of its own devices and target both the markets in both developed and emerging nations. Moreover, the company's decision to trim its staff strength by nearly 40% will help the company to slash its operating costs by nearly 50% by the end of the first quarter of 2015.
Earlier, BlackBerry which was the market leader in the smartphone business, had failed to upgrade its operating platform. It led to loss of market traction to Apple Inc.'s (Nasdaq:AAPL-Free Report) iOS and Google Inc.'s (Nasdaq:GOOG-Free Report) Android operating systems during the past few years, and as a result the company is incurring huge losses.
Despite launching its new operating platform BB10, the company has failed to revamp its smartphone business. In the last year, the company sold nearly 32.5 million smartphones as compared to Samsung Electronics' 216 million and Apple Inc.'s 136 million handsets.
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.