The Zacks Analyst Blog Highlights: Apple, Facebook, Intel, Microsoft and Google

Jan 07, 2014, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Jan. 7, 2014 /PRNewswire/ -- announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Apple (Nasdaq:AAPL-Free Report), Facebook (Nasdaq:FB-Free Report), Intel (Nasdaq:INTC-Free Report), Microsoft (Nasdaq:MSFT-Free Report) and Google (Nasdaq:GOOG-Free Report).


Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday's Analyst Blog:

Technology Stock Roundup

Last week saw Apple (Nasdaq:AAPL-Free Report) and Facebook (Nasdaq:FB-Free Report) lose some ground, with Intel (Nasdaq:INTC-Free Report) remaining notably resilient.

iPad Excitement Falls Flat

A recent report by Chitika Insights indicates that Apple's iPad lost market share to its smaller rivals during the Christmas season in the U.S. and Canada. Considering the fact that CEO Tim Cook expected this to be an iPad Christmas, there was a great deal of disappointment following the report.

Usually, in a consumer market, the market leader tends to gradually lose some share to smaller rivals. This is not that much of a concern and actual sales continue to grow as long as the market itself is growing. But this is not what appears to be happening, which is the real concern. Tablets are not real alternatives for full-blown computing devices and therefore the market for tablets is limited to a considerable extent.

This market is approaching its potential, particularly in the developed markets of the U.S. and Canada. The Chitika report does not indicate the rate at which the market itself grew, so actual volume increase at each of the major players is not evident.

The other thing to keep in mind is the fact that Apple products are premium quality, which also means they are priced at a premium. Despite the price tag, Apple emerged with a 76.1% market share post-holiday, which can't be considered a poor showing by any standard. But future growth for the iPad is greatly dependent on underpenetrated markets, so Apple's international execution seems to be the thing to watch.

Facebook Hits Privacy Snag

Facebook shares slumped in the beginning of the week for no apparent reason, but the losses were nothing compared to the triple-digit gains over the last six months.

During the week however, the company saw privacy issues resurfacing, with a couple of Facebook users (Matthew Campbell and Michael Hurley) filing a lawsuit in a North California district court. The plaintiffs allege that Facebook scans private messages between users, extracting information that can then be sold to advertisers, marketers and data aggregators.

They claim that these actions violate the provisions of the Electronic Communications Privacy Act and other laws related to privacy and unfair competition in California. Facebook has denied any wrong-doing.

Privacy concerns regarding Facebook are not new, but these charges, if proved true, would indicate a lack of privacy and therefore safety of Facebook users. Zuckerberg has previously indicated a complete disregard for these sentiments by saying things to the effect that people shouldn't be posting what they don't want to publicize. But the inability to discuss issues would render the platform useless except for the meaningless and shallow conversations for which it has been criticized.  

Overall usage trends for Facebook don't look bad at this point: there is increasing usage of Facebook among older people and increasing use of Instagram (which Facebook acquired) among teens.

Intel Touches 52-week high

Sentiments toward chip giant Intel are being buoyed by recent reports of stabilizing PC demand in developed markets. Maxim Group said last week that Intel's fourth-quarter revenue may be expected to come in at the high end of the guided range, driven by improving PC builds and shipments, as well as stronger data center demand. A Digitimes report also indicated positive trends in the PC market. As a result, Intel shares pulled ahead of the market and also touched a 52-week high.

Since recent discussions of Intel have centered on its success or lack thereof in the mobile market, it's easy to overlook the fact that mobile's importance comes from two factors – first, mobile represents a very fast-growing market; and second (and more important), mobile is eating into its core computing market.

But one can perceive a limit beyond which such cannibalization is unlikely to continue because of the obvious advantages of comprehensive computing systems. Intel remains very strongly positioned in this segment and even stabilization or moderate growth in this segment will look good for Intel because of the progress it is making in mobile.

Additionally, Intel has significant capacity that will enable it to ramp production very rapidly to take advantage of any design wins. Being at the forefront of leading edge technology, it is also in a position to generate stronger margins than competitors.

Chinese phone-makers have issues with Microsoft/Nokia combine: Chinese phone makers Huawei and ZTE have asked the Ministry of Commerce in China to see that wireless patent licensing fees are not raised as a result of Microsoft's (Nasdaq:MSFT-Free Report) acquisition of Nokia. Chinese companies have been contained by Apple and Samsung in the U.S., but they have a significantly stronger position in the global market (four of the top seven global players are Chinese according to IDC).

From SmartPhones to Auto: EnvisionIP says that Google (Nasdaq:GOOG-Free Report) and Apple have recently acquired 310 and 35 auto-based patents, respectively. Other technology companies looking for an entry into the segment include Samsung (234 patents), LG (161), Sony (155), Nokia (42) and BlackBerry (25). Google also has a pending application for gesture-based control within the car. Automotive entertainment, safety, control and navigation are some of the areas with scope for electronic applications.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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