CHICAGO, July 19, 2013 /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 Microsoft (Nasdaq:MSFT-Free Report), Yahoo! Inc. (Nasdaq:YHOO-Free Report), Google (Nasdaq:GOOG-Free Report) and SanDisk Corp. (Nasdaq:SNDK-Free Report).
The world's largest software company Microsoft (Nasdaq:MSFT-Free Report), reported earnings after the bell today, posting an EPS of $0.66 and revenue of $19.9 billion. This was below the Zacks Consensus Estimate of $0.74, and revenues were below expectations of $20.7 billion.
The Zacks Expected Surprise Predictor foretold of a negative earnings surprise for Q2. This was expected due to fifteen downgrades in the past 60 days with zero upgrades by any MSFT analysts. Currently, Zacks models show a negative Expected Surprise for the remaining two quarters and overall for 2014.
The analysts who downgraded MSFT's earnings are concerned about PC sales and demand; Q2 was the fifth consecutive quarter with a year over year decline in PC sales (Q2 declined 11%), coupled with the recent slashing of Surface tablets price by up to 30%. Some analysts have remarked that the demand for the tablet is just nonexistent. Furthermore, the Windows division, Entertainment division, and the Servers and Tools division all showed declines in revenue for Q2.
On the positive, the company still believes that Windows 8, and the upcoming Windows 8.1 (due out later this year) will spur increased interest from developers, and consumers as a whole. Moreover, CEO Steve Ballmer recently stated that the "new norm for the company would be a faster release of Window upgrades and much more focus on devices such as smartphones and tablets."
In afterhours trading, MSFT has declined more than 5% on increased volume. This suggests that the analysts fears regarding PC sales and demand have been validated.
Another Acquisition for Yahoo!
Internet giant Yahoo! Inc. (Nasdaq:YHOO-Free Report) recently announced the acquisition of mobile advertising startup, Admovate. Financial details of the deal were not disclosed.
Mountain View, CA-based Admovate was founded in 2012. It focuses on mobile advertising technology that enable advertisers to create and deliver personalized offers to consumers through mobile platforms.
Being a little-known company, it's not clear whether it has any existing products. But the acquisition stands out because these engineers are focused on the delivery of ads whereas the other were focused on content. After the closure of the deal, Admovate employees will join Yahoo's display advertising team at its California headquarters.
After CEO Marissa Meyer took over the reins of the company, Yahoo! has been quite active on the acquisition front. Some of its recent acquisitions include Astrid, a task-management app maker; Summly, a news-condenser app maker; Stamped, a mobile-review app maker; OnTheAir, which specializes in broadcasting video chats or interviews to online audiences; Snip.it, which is a kind of clipping service for the web; Propeld, a location-based apps maker; Jybe, a social recommendation site; Loki Studios, a mobile gaming start-up, PlayerScale, a gaming infrastructure company; photo app maker GhostBird Software; enterprise conference call service provider; Rondee, a mobile app developer; Bignoggins Production, amobile app developer; Qwiki Inc. and an email and address book management company, Xobni.
The acquisitions are part of a strategy to broaden and strengthen Yahoo!'s expertise in the mobile segment as adoption of mobile devices such as smartphones and tablets continues to accelerate. Through these acquisitions, Yahoo wants to offer apps with new features to attract more users to its website.
Also, with these acquisitions, Yahoo is picking up a whole lot of engineering talent as well as key technologies and products at a cheaper rate. These acquisitions can help Yahoo! enter the social marketing segment, where its rivals have already established themselves.
We are positive about Yahoo as its search business continues to show signs of improvement, even in the face of tough competition from Facebook, Google (Nasdaq:GOOG-Free Report) and Microsoft (Nasdaq:MSFT-Free Report). Currently, Yahoo has a huge task at hand, which is to bring back its users and make them spend more time on its properties. This would be crucial in bringing back advertisers as well.
In the second quarter of fiscal 2013, Yahoo generated revenues of $1.14 billion, down 0.4% sequentially and 6.8% year over year. Traffic acquisition cost (TAC) was down 10.8% sequentially and 53.1% from last year. Excluding these costs in all periods, net revenue was essentially flat (up 0.3% sequentially but down 0.9% year over year), short of the consensus estimate.
Yahoo has a Zacks Rank #3 (Hold). Another stock to consider is SanDisk Corp. (Nasdaq:SNDK-Free Report), which has a Zacks Rank#1 (Strong Buy).
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