Saturday, March 17, 2018

Samsung says third-quarter to top consensus as phones boom

Samsung says third-quarter to top consensus as phones boom

Stock Market Predictions

SEOUL (Global Markets) - Samsung Electronics said its quarterly profit should top the most bullish market forecasts, with smartphones becoming its main profit engine despite intense competition from bigger rival Apple.

Indeed, analysts expect Samsung to report record profit from handset sales in the third quarter and overtake Apple as the world's biggest smartphone vendor in unit terms.

The South Korean firm estimated its quarterly operating profit at 4.2 trillion won ($3.5 billion) versus a consensus forecast of 3.4 trillion won by analysts surveyed by Thomson Global Markets I/B/E/S. That would be down 14 percent from a year ago but up 12 percent from the preceding quarter.

The estimate released on Friday was higher than even the most bullish street view of 3.95 trillion won. Detailed earnings for July to September will be released later this month, Samsung said.

"Samsung's estimates are far better than expected," said Park Jong-min, a fund manager at ING Investment Management. "Its telecommunications business is seen very positive as shipments of smartphones and other high-end handsets expanded."

Investors are looking for signs the telecoms business can sustain strong growth for the year-end holiday season as its flagship Galaxy line of smartphones and tablets squares off against Apple's new iPhone, which goes on sale next week.

Stellar growth and strong profit margins from its telecom business mark a big transformation for a company, which has relied for years on its mainstay computer memory chips to boost profit. It had a negligible share of the smartphone market until early last year.

Samsung shares held steady on Friday, while the broader market rose 2.6 percent, an underperformance that analysts blamed on the prospects for a tougher fourth quarter owing to weak prices for memory chips and flat screens. However, Samsung shares had risen sharply in September as the wider market fell.

Earnings at the world's biggest technology firm with sales of $130 billion last year, are set to slide to 3.4 trillion won in the fourth quarter, consensus estimates show.

Profit from Samsung's telecoms division is widely expected to top earnings from the semiconductor business at the world's biggest memory chip maker.

Analysts say Samsung is one of the best placed companies to deliver something fresh and exciting to rival Apple, which has released a string of big-hit products in the past two decades.

It already makes the closest competing tablet by sales to Apple's iPad.

Samsung sold 19 million smartphones in the second quarter and shipments are expected by analysts to have risen to more than 28 million units in the third quarter compared to the 60 million units Samsung is targeting for 2011.

Samsung sold about 1 million fewer smartphones than Apple in the second quarter.

It plans to release its first smartphone based on the latest version of Microsoft's mobile operating system this month, while a 5.3-inch screen Galaxy Note, a hybrid of a smartphone and a tablet, is set to go on sale later this year.

Samsung leads a pack of companies selling phones on Google's Android operating system.

"The Galaxy S II probably played a key role in boosting the company's earnings and it will continue to do so pretty much unchallenged, until Apple unveils a better new version of iPhone," said Kyung Woo-hyun, a fund manager at Daishin Asset Management.

Samsung, which worked out how to make black and white TVs in the 1970s by tearing apart Japanese models, has become a top global brand over the past decade.

It boasts a market value of $118 billion, much bigger than the combined value of Sony Corp, Nokia, Research In Motion, Toshiba and Panasonic Corp.

Samsung's shares have fallen 5 percent over the past three months versus a 12 percent drop in Apple's shares.


Expectations for further momentum in Samsung's smartphone business grew after Apple's newest iPhone, unveiled this week, left investors and Apple's fans wishing for more than a souped-up version of its previous device introduced more than a year ago.

"I previously thought Apple's new iPhone would slow Samsung's handset earnings momentum, but there was no iPhone 5, and the iPhone 4S will not be a burden on Samsung in the fourth quarter," said Ahn Seong-ho, an analyst at Hanwha Securities.

But an intensifying legal battle with Apple over patents and designs threatens to dent growth of Samsung's handset and component business. Apple is also Samsung's biggest customer, buying mainly chips and displays.

"I am very surprised at the (profit) numbers. I am guessing either a particular lineup of products with higher margins sold well, or cost cutting measures were aggressively implemented," said James Song, an analyst at HI Investment & Securities.

Some analysts expected one-off gains such as reduced provisioning costs relating to royalty payments to Microsoft over smartphones and tablets using Android, or a cheaper won currency to boost profitability.

The South Korean won tumbled 9.4 percent against the dollar in the third quarter, making Korean products cheaper to overseas consumers.

Chips and flat screens are underperforming as consumers delay buying TVs and computers in a slowing global economy. This has pushed down prices of key components.

Prices of dynamic random access memory (DRAM) chips used in PCs tumbled about 50 percent in the third quarter and many analysts, including those at Citi and UBS, believe Samsung was the sole profitable DRAM maker in the third quarter.

Major global technology companies from Hynix Semiconductor to LG Display and Sony Corp are expected to report operating losses from their core businesses in July-September.

($1=1191 won)

(Additional reporting by Hyunjoo Jin and Jungyoun Park; Editing by Jonathan Hopfner and Anshuman Daga)

Ubiquiti rises in debut, breaks U.S. IPO drought

Ubiquiti rises in debut, breaks U.S. IPO drought

Stock Market Predictions

(Global Markets) - Shares of wireless equipment maker Ubiquiti Networks Inc (UBNT.O) closed up 16.7 percent in their stock market debut on Friday after the company broke a two-month drought in the U.S. IPO market.

Investors shrugged off concerns over a U.S. government review of the company's sales into Iran to send its shares 16.7 percent above the $15 IPO price in their first day of trading on the Nasdaq. The shares closed at $17.50 after going as high as $19.00, up 26.7 percent, earlier in the day.

Ubiquiti makes wireless networking and video surveillance equipment. It priced 7.04 million shares at $15 on Thursday, the bottom of a lowered price range.

Europe's debt crisis and a weak economic recovery in the United States have made it difficult to price new issues. Most companies have opted to delay their IPOs until there is less volatility.

"A lot of companies have walked away. It's encouraging to see this deal work," said founder and IPO analyst Ben Holmes.

Holmes said the company's revenue growth and gross margins are impressive, and that after it cut the share price -- Ubiquiti sold shares for $6 below the midpoint of its original price range -- investors probably felt they were getting a good deal.

Ubiquiti's revenue has risen sharply in each of the last five years. It was profitable in each of those years except 2010.

In fiscal 2011, ended June 30, Ubiquiti posted net income attributable to common stockholders of $4.98 million on revenue of $197.87 million. Its gross margin during that period was 41 percent.

Rising markets likely also helped the share sale. The S&P 500 index .INX.SPX closed up 13.9 percent from an intraday low on October 4.


While Ubiquiti is getting applause for completing its IPO, sales of its products into countries including Iran are being reviewed by the U.S. government.

Most of Ubiquiti's revenue in fiscal 2011 -- 70 percent -- came from overseas, and one of the penalties it could face would be loss of its right to export.

Ubiquiti said in its IPO prospectus that certain of its products were sold into Iran, Cuba, Syria, Sudan and North Korea and that some of its encryption components were sold without the appropriate export authorization.

In particular, it highlighted two distributors selling its products into Iran. Over the past three years, one distributor accounted for 7, 6 and 4 percent of Ubiquiti's revenue, the company said. It suspended sales to that distributor in February 2011 after it had continued selling into Iran after being told not to.

Ubiquiti said the other distributor's sales into Iran were not a "material portion" of the distributor's business with Ubiquiti, and that it now has a new agreement with that distributor that requires compliance with export control and economic sanctions laws.

"It looks like they have dealt with this,"'s Holmes said.

Ubiquiti said one U.S. government review of its sales into Iran resulted in a warning letter, and a second review is pending. The second review, by the U.S. Treasury's Office of Foreign Assets Control, could result in Ubiquiti facing fines, losing its ability to export, and being referred for criminal prosecution, the company said in the risk factors section of its prospectus.

In fiscal 2010, Ubiquiti recorded an expense of $1.6 million for export compliance, which it said is its best estimate of its exposure to fines.

U.S. relations with Iran are particularly sensitive right now because of an alleged attempt by Iran to assassinate the Saudi Arabian ambassador in Washington.

Ubiquiti said it did not mean to violate U.S. law but that violations occurred due to a "lean corporate infrastructure," an inexperienced management team, and the fact that most of its manufacturing and sales are outside the United States.

The company is headquartered in San Jose, California.

It said it has since revised its distribution agreements, disabled software downloads in certain countries, and obtained appropriate paperwork for its encryption products.

As of June 30, Ubiquiti had 92 full-time-equivalent employees in four offices globally. It has no direct sales force but instead relies on distributors, resellers and original equipment manufacturers. Ubiquiti Chief Executive Robert Pera is a former wireless engineer at Apple Inc. (AAPL.O)

Underwriters on the IPO were led by UBS Investment Bank (UBSN.VX) (UBS.N), Deutsche Bank Securities (DBKGn.DE) and Raymond James.

(Reporting by Clare Baldwin in New York, additional reporting by Rodrigo Campos in New York; Editing by Lisa Von Ahn, John Wallace, Gary Hill)

Friday, March 16, 2018

Fiat share plan seen easing route to Chrysler merger

Fiat share plan seen easing route to Chrysler merger

Stock Market Predictions

MILAN (Global Markets) - A plan by Fiat Spa (FIA.MI) to convert preference and savings shares into ordinary shares will reduce the cost of equity and remove a potential hurdle to a merger with Chrysler, which is now majority owned by the Italian carmaker.

Fiat and its sister company Fiat Industrial (FI.MI) said late on Thursday the proposed conversion would streamline the capital structure and simplify governance for both groups.

Analysts said the plan was moderately earnings-enhancing as it would reduce the total number of issued shares and eliminate the cost of higher dividends for holders of savings and preference shares.

Simplifying the equity structure would also allow Fiat to remove a possible barrier to a full merger with Chrysler, which it has managed since a bailout deal with the U.S. government in 2009, they added.

Fiat now owns 53.5 percent of the U.S. No. 3 automaker, and that is due to rise to 58.5 percent by year-end.

Mediobanca's senior analyst Massimo Vecchio said in a report that a merger with Chrysler -- which CEO Sergio Marchionne has said is the goal -- would be easier because savings shareholders would no longer be able to block this.

He also noted that if Fiat decided to spin-off luxury sports car brand Ferrari, it would no longer need to issue Ferrari savings and preference shares to Fiat shareholders.

For truck and heavy equipment maker Fiat Industrial, the conversion would similarly ease any disposal of truck unit Iveco by avoiding a savings shareholder vote.

"The first thing that comes to mind is that this operation has been done to have a single type of share in view of a merger with Chrysler," said another analyst, speaking on condition of anonymity. "It removes a technical barrier."

Both companies are owned by the Agnelli family's holding company Exor SpA (EXOR.MI), which said on Thursday it intended to maintain its 30 percent stakes in both companies -- moving to quash at least for now long-running speculation that it may want to dilute its stakes.

In trading on Friday, Fiat savings shares (FIAn.MI) were up 16 percent and its preference shares (FIA_p.MI) rose 19 percent. Fiat Industrial's savings shares (FIn.MI) advanced 32.5 percent and the preference stock gained 37 percent.

A Milan trader said the prices were moving in line with the premium implicit in the conversion rates for Fiat and Fiat Industrial.


Fiat ordinary shares, however, fell more than 7 percent to 4.74 euros, with one trader saying hedge funds were arbitraging the ordinary shares with the preference shares.

But several analysts said the fall was due to much higher than expected net industrial debt overshadowing a better-than- forecast trading profit in the third quarter.

"The biggest surprise in the quarterly release was certainly the ballooning level of net debt," said Credit Suisse in a report. It increased to 5.8 billion euros, well above analysts' consensus forecast of 4.1 billion euros.

Trading profit -- which is similar to operating profit but excludes one-off items, impairments, changes in the value of securities held by the company and profits from associates -- came in at 851 million euros, against 705 million euros in the analyst consensus distributed by Fiat.

Fiat reported results after the market close on Thursday, incorporating Chrysler for the full quarter for the first time, and will hold a conference call at 10:00 a.m. ET on Friday.

(Additional reporting by Michel Rose and Nigel Tutt; Editing by David Holmes and David Hulmes)

UBS shares rise on pledge to restart dividends

UBS shares rise on pledge to restart dividends

Stock Market Predictions

ZURICH (Global Markets) - Shares in Swiss bank UBS (UBSN.VX) rose on Friday as investors welcomed its pledge to start paying dividends again, though its plans to trim its scandal-hit investment bank failed to go as far as some had hoped.

At an investor event in New York on Thursday, UBS said it would cut investment bank risk-weighted assets by almost half and shift focus back to its core business of managing the assets of the rich as it pared its profitability targets.

UBS said it would propose a dividend of 0.10 Swiss francs per share for 2011, earlier than many analysts had expected, and implement a progressive capital return program thereafter.

UBS, which until a recent $2 billion rogue trading scandal had just started to restore client confidence shaken by a 2008 government bailout, made its last cash dividend in 2006, when it paid out 2.20 francs a share.

"The return to a dividend this year was a genuine surprise. It is only a token dividend, but they are two years ahead of what most analysts expected," said Jon Peace, banking analyst at Nomura in London.

"It's quite symbolic, especially in a year when other banks are under pressure to cut their dividend right down. The fact they have gone the other way will be remembered by investors."

UBS shares were up 1 percent by 0937 GMT, outperforming a flat European banking sector index .SX7P.

UBS said its investment bank staff would be cut to 16,500 by the end of 2013 and 16,000 by the end of 2016 from 18,000 now, with most job losses achieved by attrition and restructuring rather than redundancies.

The bank said that meant a net 400-500 more jobs would go on top of 3,500 staff it said in August it would cut across the bank, bringing the total workforce reduction to 6 percent at the world's third biggest wealth manager.

Banks worldwide are shedding thousands of jobs as new capital requirements aimed at shielding them from future crises compound the impact of a tough trading environment.

UBS will slash by almost 50 percent investment bank risk-weighted assets of 300 billion Swiss francs ($327 billion) by 2016 as it relegates the investment bank to a provider of services to the private bank, which serves wealthy clients.


But analysts said this reduction was only marginally more than what the bank had already targeted and noted the bank was not exiting many businesses in its investment bank.

"Shareholders should question why UBS requires 16,000 employees and 150 billion francs RWAs to support private banking clients," said JP Morgan Cazenove analysts in a note.

They said a further scaling back of the bank's fixed income, currencies and commodities business was "inevitable" within the next 12 to 18 months.

Nomura's Peace said the bank had left itself leeway to make further cuts without denting morale.

"The subtext is that this is a conservative number and they can go further, but if they say they are going to decimate the investment bank it could significantly raise employee turnover and execution risk," Peace said.

Some investors had called for much more radical steps at UBS, such as entirely spinning off the investment bank, which almost brought it to its knees after more than $50 billion in writedowns on securities in the financial crisis.

"The risky investment bank and the conservative wealth management business do not belong together," said analysts Oliver Forrer and Martin Koch at private bank Wegelin.

"From the perspective of shareholders, a legal and financial splitting off of the investment bank is the only viable path which will pay in the long term."

JPMorgan analyst Kian Abouhossein even suggested earlier this month that UBS and rival Credit Suisse (CSGN.VX) should focus solely on private banking and pool their investment banks if plans to curb risk-taking fail to appease shareholders.

Earlier this month, Credit Suisse announced it was cutting 1,500 jobs and 50 percent of risk-weighted assets in fixed income by 2014 as it more closely aligns investment and private banking.

($1 = 0.917 Swiss Francs)

(Additional reporting by Rupert Pretterklieber in Zurich, Steve Slater and Sarah White in London; Editing by Will Waterman)

Thursday, March 15, 2018

Chico's shares rise on possible PE buyout report

Chico's shares rise on possible PE buyout report

Stock Market Predictions

(Global Markets) - Shares of Chico's FAS Inc (CHS.N) rose as much as 7 percent on Friday after a report in an online publication about possible private equity interest in the women's clothing retailer.

A story suggested that Chico's may be an attractive target for private equity firms, Interactive Brokers Group options analyst Caitlin Duffy wrote in a report on Friday.

Global Markets, however, could not access the report.

Tiburon Research Group analyst Rob Wilson said Chico's, which has seen its sales slow down, might be looking to sell itself before more bad news comes out.

Shares of Fort Myers, Florida-based Chico's were trading at $11.12 in Friday afternoon on the New York Stock Exchange. They had hit a high of $11.23 earlier in the day.

Chico's did not respond to an e-mail and calls seeking comment.

Retailers like Chico's have been forced to increase markdowns to attract customers in a heavily competitive environment, eating into their profits.

Three years ago, the company had set a goal to earn $1 a share for fiscal 2012. However, last month it said that the target would not be met.

For fiscal 2013, it expects to earn $1.50 a share.

"I think (Chico's) made a mistake putting up some very aggressive earnings target out there ... They're certainly not on the trajectory on which they'll be able to achieve their target," analyst Wilson, who thinks $14 a share would be a good price for the company, said.

Interactive Brokers Group's Duffy said call options on the specialty retailer were attracting buyers. She said investors traded more than three times as many calls on Friday compared with Thursday.

In November, the retailer had warned that its margins will remain under pressure as it offers higher discounts to draw shoppers in the holiday season.

(Reporting by Arpita Mukherjee and Ranjita Ganesan in Bangalore; Editing by Viraj Nair)

Stock Market Predictions – Should you Be in The Market Right Now?

Stock market prediction is an secret art joined with the best of computer science. With the recent performance of the stock market and economic performance, it is an idea we all need to take seriously.

The newspapers, radio and TV all review how our personal portfolios have taken a beating. While things have recovered some recently, many investment portfolios have been hit dramatically. Credit card balances have leaped and foreclosures have skyrocketed.

Talking heads often admit that the economy has an important influence on the stock market price. Short term the market may be able to shrug it off but in the long run profitability and cash flow will win out. Balance can take a while to re-establish itself though.

Just remember as you listen to the pundits providing their latest stock market predictions that they don’t have a crystal ball. Had you known what was going to occur in 2000, you would have escaped a large decline in your 401ks. They are really just using complex models to anticipate the market’s movements.

Should you Be in The Market Right Now?
Their prediction is based on experiences, a model and sometimes just a gut feeling. Knowing what their stock market prediction is based on can help you understand if it is going to be useful for you. No one truly believes you can predict the future. those experienced in the trading pits can make very educated guesses though. They use tools like technical analysis based on the past price movements and trading volume to determine the probability of the market moving in one direction.

Being able to look at technical analysis can give you an edge in the market. Even a small percentage over the long run can add thousands to your retirement income. People will often talk about bubbles and picking the top or bottom of one. Just remember one very important fact.

Bubbles always tend to last longer than people expect they will. Trying to guess the end of a bubble can be dangerous. Now one really knows if silver or oil will continue its price increase. Or if the economy will enter into a decent recovery or a double dip recession. Building a model allows us to get a decent idea of where things are likely to head though. Developing those models can be very difficult. They will often function very well for a short period of time and then deteriorate swiftly.

Many times that is enough to give you a decent edge. Commodities aren’t the only thing in question. Many commodities have a direct influence in the stock market. Gold price can have a huge impact on a gold mining company’s ability to make a profit. Those profits tend to dictate the share price of a stock. If you can generate increasing and steady profits, investors generally reward you with higher stock prices.

Make sure you study the model and understand what it is built upon. Make sense of their model before believing their conclusions. Stock market prediction can give you a distinct advantage in the market IF you find the right one. Pick the wrong one and you could be living in the paupers section of town.

You can find out a lot about Stock Market Prediction here. It contains the current prediction and a poll to let you participate as well. Discover what your friends think is going to happen. Join in the Stock Market Prediction party.

See also: Be trusted to stock market predictions..

Wednesday, March 14, 2018

HP sinks as investors flee business revamp

HP sinks as investors flee business revamp

Stock Market Predictions

NEW YORK/BANGALORE (Global Markets) - Shares of Hewlett-Packard slumped by more than 20 percent to a six-year low on Friday as investors wiped about $16 billion off the market value of the world's biggest PC maker in a resounding rejection of its plan for a major shake-up.

Investors also appeared to lose confidence in Chief Executive Leo Apotheker after a flurry of HP announcements on Thursday including an $11.7 billion acquisition offer, a shuttering of its mobile efforts and the potential spin-off its PC business.

This was on top of disappointing financial guidance for the third quarter in a row. HP may also be risking future PC sales as its customers could flee to rivals like Dell Inc in the uncertainty, one analyst said.

"They're doing too many things at the same time," said Sterne Agee analyst Shaw Wu.

Even if it makes sense in the long term, HP should not have told the world it was thinking of getting rid of its PC business, which brings in 16 percent of its profits, Wu said.

"Why would anybody want to do business with them if it's up for sale," he said. "To have this in limbo for 12 months is going to be pretty material."

On top of this, investors worried that HP's offer of nearly $12 billion for British software company Autonomy Corp was too high and questioned why it was giving up so soon on the mobile business it bought for $1.2 billion from Palm Inc, Wu said.

HP shares fell as low as $22.76 on Friday making it the biggest loser on the New York Stock Exchange. Before the announcements its shares had closed at $31.39 on Wednesday. Investors fled to rivals like Dell, pushing its shares up nearly 3 percent, as it is expected to profit from HP's chaos.

"There's not a lot of confidence in (Apotheker's) management," said Wu, noting that he had to lower guidance every quarter since he joined HP. "This is just further proof,"

At least two brokerages downgraded Palo Alto, California-based HP, and five cut their price targets, mainly citing uncertainty and expenses related to the restructuring.

"Last night HP may have eroded what remained of Wall Street's confidence in the company and its strategy," Needham & Co said in a research note.

Gleacher & Co analyst Brian Marshall cut his price target for the stock to $39 from $50 saying he "materially underestimated the magnitude and timing of this metamorphosis."

He said however that HP "is undergoing a sound strategy transformation by focusing on high-growth, high-margin opportunities in the enterprise/commercial markets."

With a forward 12-month price-to-earnings ratio of 5.6, the company is trailing its peers, including Dell, Apple and IBM according to Starmine SmartEstimate.

Before Thursday's news HP's stock had already lost nearly a fifth of its value since it reported quarterly results in May.

HP said it has already stopped production of its WebOS-based devices like its TouchPad tablet, which failed to attract buyers.

Cypress Semiconductor Corp -- the main supplier of touch controllers for TouchPad -- will also hurt if the company pulls the plug on the product, brokerage Collins Stewart said.

Cypress' shares fell 1 percent to $16.93 on Friday.

HP has been struggling with its once hugely popular PC business, as niftier gadgets like Apple's iPad have eaten into its business.

Thursday's weak forecast follows smaller rival Dell's lowered revenue outlook earlier this week that dragged down both stocks.

Both companies have been venturing out of traditional comfort zones and into enterprise solutions and services, but continuing soft sales have been a constant source of trouble.

Brokerage Robert W. Baird said HP is no longer a "safe haven" stock and expects it to lose market share.

HP's decision to spin off the PC business reflects commoditization, as consumers change the use of computers, and this may hurt Intel, the world's largest supplier of PC chips, brokerage Nomura said in a note.

"A reversal in average selling prices would remove a key revenue driver over the last six quarters (for Intel)."

(Additional reporting by Rachel Chitra in Bangalore; Editing

by Don Sebastian, Joyjeet Das, Dave Zimmerman)