The Zacks Analyst Blog Highlights:Amazon.com, Apple, NII Holdings, America Movil and Telefonica

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Aug 14, 2012, 09:30 ET

CHICAGO, Aug. 14, 2012 /PRNewswire/ -- Zacks.com 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 Amazon.com, Inc. (Nasdaq:AMZN), Apple (Nasdaq:AAPL), NII Holdings Inc. (Nasdaq:NIHD), America Movil S.A.B. (NYSE:AMX) and Telefonica S.A. (NYSE:TEF).

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Here are highlights from Monday's Analyst Blog:

Amazon Cloud Player in Sonos Wireless

Amazon.com, Inc. (Nasdaq:AMZN) has recently announced that its Cloud Player can stream music wirelessly through the Sonos Wireless HiFi System. Management has added Sonos to the compatible Cloud Player device list due to the popular demand from its customers.

John MacFarlane and Trung Mai founded the Sonos Wireless HiFi System in 2002. The vision of the company is to provide an out-of-the world experience of listening to music through the best sound quality possible.

Amazon's Cloud Player is like a web storage application, which allows people to listen to their music from any computer or Android device with Internet access. It allows streaming on devices such as Kindle Fire, Android, iPhone, iPod Touch, Mac and PC. Amazon doesn't give out exact numbers, but the Cloud Player has apparently won millions of users since its launch in early 2011.

Amazon lets users buy music from its own library of 20 million tracks and also allows imports from other sources. However, while Amazon has sweetened the deal by offering the first 250 songs free but anything in excess of 250 and up to 250,000 requires an annual subscription of $24.99 a year. Amazon currently offers the service to U.S. consumers alone, but one might expect expansion in international markets in the not-too-distant future.

Apple (Nasdaq:AAPL) on the other hand does not charge annually, but only for what users download. A song costs around 99 cents in the iTunes store, but is available for playback on any iCloud registered device at no extra cost..

Amazon's strategy of including Sonos makes its service more ubiquitous. It is expected that since the inclusion of the Sonos system will bring more users to the Amazon cloud, it would help push sales of all its other digital goods. Therefore, while iTunes still leads in the segment, Amazon's tactics could bring rapid market share gains for the company.

Amazon's second quarter results were more or less within expectations. Reported revenue of $12.83 billion was down 2.7% sequentially and up 29.5% from the year-ago quarter. This was better than the guidance for the quarter of $11.9-13.3 billion (down 4.4% sequentially, or up 27.1% year over year at the mid-point) and in-line with consensus expectations. Year-over-year revenue growth was 32%, excluding an unfavorable currency impact.

Amazon is one of the leading players in the extremely fast-growing retail eCommerce market. While the strong growth prospects are making the market more competitive by the day, Amazon continues to maintain and even grow its share on the back of its consistent and reliable service. Amazon's scale of offerings, its broad reach and platform approach are the keys to its success.

Currently, Amazon has a Zacks #3 Rank, which implies a Hold rating in the near term.

NII Holdings Suffers Downgrade

Recently, NII Holdings Inc. (Nasdaq:NIHD) suffered a setback as credit rating agency Standard & Poor's Ratings Services (S&P) downgraded the company. NII Holdings' corporate credit rating was lowered from "B+" to "B" and its senior unsecured debt rating was lowered from "B" to "B-." However, S&P maintains its stable outlook for the company.

We believe the primary reasons for this rating downgrade was NII Holdings' dismal performance in the second quarter of 2012 and reduced outlook for the rest of 2012. Estimate for net subscriber addition for fiscal 2012 was reduced from 1.4 million to 1 million.

Full-year 2012 operating revenue is now estimated at $6.1 billion compared with $7.1 billion estimated earlier. Similarly, newly projected consolidated OIBDA is $1 billion in contrast with $1.4 billion projected earlier.

Management cited massive fluctuations of foreign currency rates, lower average revenue per user (ARPU), higher costs for deploying 3G networks, and aggressive competition from large wireless carriers, such as America Movil S.A.B. (NYSE:AMX) and Telefonica S.A. (NYSE:TEF) in the Latin American markets are the main factors for disappointing future outlook.

Nevertheless, NII Holdings has taken four steps to revamp its business model. These include: (1) deployment of nationwide 3G wireless networks in Mexico, Brazil, and Chile in 2012 (2) enhancement of iDEN network and integration of this technology with 3G wireless technology (3) enhancement of its brand value through inclusion of more retail outlays and expanding the existing distribution channels (4) using state-of-the-art IT technologies to develop an innovative back-office, which will enhance the productivity and efficiency of its employees to properly service its clients.

We believe these restructuring activities along with a reduction in 3G network roll out costs may improve the company's operating margin in 2013. We maintain our long-term Neutral recommendation on NII Holdings. Currently, it holds a Zacks #3 Rank (Hold) on the stock.

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