The Zacks Analyst Blog Highlights: j2 Global, Google, Apple, News Corp. and Safeway
CHICAGO, May 23, 2013 (Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
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Here are highlights from Wednesday's Analyst Blog:
J2 Global on Buying Spree
j2 Global Inc. (Nasdaq:JCOM), a leading provider of unified messaging capabilities, is continuing with its buying spree as its subsidiary Ziff Davis Inc. announced the acquisition of NetShelter from inPowered. NetShelter is the biggest technology related publisher, dedicated to consumer electronics, computing and mobile communication domain.
Notably, NetShelter has over 150 consumer and business tech sites including the very popular AndroidCentral.com that provides reviews related to Google Inc.'s (Nasdaq:GOOG) Android OS (Operating System) and Macrumors.com that collects news related to Apple Inc.'s (Nasdaq:AAPL). The sites generally create 40,000 articles per month and nearly 16 billion ad impressions every year.
j2 Global possesses a global network of publishing partners and delivers local content in 10 languages across 40 different countries. According to ComScore, combining Ziff Davis' technology sites like PCMag.com, Geek.com and Toolbox.com with Netshelter's sites will make it the largest media publisher in the technology space.
This is the fourth acquisition by j2 Global in the last four months after it acquired IGN Entertainment from News Corporation (Nasdaq:NWSA) in February, MetroFax Inc. in March and Netherland-based Backup Connect BV in Apr 2013.
Significantly enough in Nov last year j2 Global acquired privately-held digital media company, Ziff Davis Inc. for a total consideration of about $167 million. Delaware-based j2 Global believes that the combined portfolio of the acquired assets will create a very powerful content producing company and thereby allowing its marketers to address a larger group of audience.
j2 Global exited the first quarter of 2013 with a strong cash position of $310.1 million and revenues of $113.6 million, up 31.0% year over year. Although j2 Global has not divulged any financial terms of the NetShelter transaction, it believes that the acquisitions will not have any material impact upon its operations.
We believe that this is a strategic acquisition by j2 Global, aiming the young tech-friendly customers, which in turn will meet the advertiser's target of getting a desired viewer base of substantial size.
Currently, JCOM carries a Zacks Rank #3 (Hold).
Safeway Slips to Neutral
On May 21, we downgraded our long-term recommendation on Safeway Inc. (NYSE:SWY) to Neutral from Outperform as this North American food and drug retail giant is showing signs of sluggish growth. The stock carries a Zacks Rank #3 (Hold).
Why the Downgrade?
On Apr 25, Safeway reported a weak first quarter which lagged our expectations. Despite earnings growth of 16.7%, adjusted earnings of 35 cents missed the Zacks Consensus Estimate by a penny. Revenues stood at about $10 billion, flat year over year, trailing the Zacks Consensus Estimate of $10.2 billion.
Margins were under pressure in the first quarter. Despite the benefit of New Year sales, identical store (ID) sales (excluding fuel) inched up 1.5% from the year-ago quarter. ID sales growth was negated by the disposition of Genuardi's stores in 2012 and soft fuel sales.
On the positive side, Safeway gained market share with rising uptake of the "Just for U" loyalty program. We are encouraged by the company's working plan to save costs and expand foothold in the U.S. healthcare market.
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