Last week was not too good for big tech, but most did better than the market nonetheless. A quick look at some of the top stories-
The Bug in the First Android Watches
Right after the first Android smartwatches started shipping from Google’s (GOOGL) Play Store, Android Police identified a bug that was preventing the installation of paid apps on the devices. Google was able to work on a quick fix before the devices reached most customers, so there likely won’t be too much of a backlash.
Samsung and LG made the first Android watches. Samsung’s Gear Live at $199 is slightly cheaper than LG’s G Watch, which costs $229. Both are powered by Qualcomm (QCOM), run on Android Wear (the new OS for wearables) and are operated by a smartphone running on Android 4.3 or higher. The Samsung device has apparently got a better display and more sensors, while the LG device has longer battery life.
Semi Foundries Have a Story to Tell
All the pureplay foundry stocks declined this past week, but there’s more to the story.
The Chinese foundry Semiconductor Manufacturing International started the week on a positive note following the announcement of its collaboration with Qualcomm. The two have agreed to work together on 28nm process technology so Qualcomm, which is fabless, can get some of its Snapdragon processors manufactured in China. SMI benefits because the agreement will help develop its 28nm process and because Snapdragon is a market-leading device.
United Microelectronics and Taiwan Semiconductor reported monthly sales numbers. Both saw sales up in the mid-teens percentage range, but this didn’t have much of a positive impact on share prices. UMC is yet to get 28nm to scale, which means persistent pressure on margins. TSM is much better off, with stronger utilization, 20 nm ramp up and the positive impact of Apple’s (AAPL) business.
But TSM’s partiality to Apple is not having a very good effect on its other partners. Qualcomm is already getting closer to Samsung and last week, Panasonic took some business to Intel (INTC). As a result, Intel will make SoCs for the Japanese company’s audio visual equipment using its 14nm process. This is a very big deal for Intel, which only recently decided to share its process lead with competitors. But the services will not be opened to all and sundry: CEO Krzanich has promised only “strategic” partners.
Additionally, In Semi Equipment World…
Lam Research (LRCX) shares jumped 4.01% after its analyst event at SEMICON. The company narrowed its CY14 WFE expectations to $32 billion, +/- $1 billion (previous +/- $2 billion). It now expects WFE spending of $35-40 billion by 2016/2017 (previous 2015/2016). The increased adoption of multi-patterning processes in logic and DRAM segments is expected to drive additional opportunities for Lam.
Management expects this to result in a market expansion opportunity of $2 billion by 2016/2017. This is expected to yield revenue, gross margin and operating margin of $5.6 billion, 46-47% and 21-23%, respectively, which are above previous expectations.
The merger of Applied Materials (AMAT) and Tokyo Electron is drawing near and the two have now decided to call the combined entity Eteris, or the “eternal evolution of society.”
KLA Tencor has decided to return more cash to investors.
|
Company |
Last Week |
Last 6 Months |
|
AAPL |
+0.98% |
+21.99% |
|
FB |
-0.10% |
+14.89% |
|
YHOO |
-1.96% |
-13.88% |
|
GOOG |
-0.94% |
|
|
GOOGL |
-1.15% |
+1.98% |
|
MSFT |
+0.57% |
+17.64% |
|
INTC |
+0.80% |
+17.88% |
|
CSCO |
+1.48% |
+13.88% |
GOOG = Class C shares (new, non-voting)
GOOGL = Class A shares (old, 1 vote per share)
Other stories you may have missed–
Corporate
China Labor Watch Slams Samsung: Samsung decided to stop business at a Chinese supplier when the U.S.-based labor watchdog China Labor Watch said that it found child labor at the facility. It also declared that Samsung’s monitoring process was ineffective. Chinese law considers the employment of persons below 16 years to be child labor.
Microsoft Could Be Planning Job Cuts: CEO Satya Nadella has issued a memo that describes Microsoft (MSFT) as “the productivity and platform company for the mobile-first cloud-first world”. While he didn’t mention any job cuts, the notable deviation from Ballmer’s “devices and services” strategy and the prospective integration of Nokia’s devices business is leading to a lot of speculation.
Zynga Regains Compliance with Nasdaq
Regulatory
China Doesn’t Like Apple’s Location Tracking Feature: China Central Television (CCTV) has quoted a local security expert as saying that Apple’s location-tracking feature made it possible for the company to track people’s movement and could lead to the leaking of state secrets. Apple has defended itself by saying that it wasn’t a default feature and could be turned off.
The government has not said anything regarding the issue, but it could play a part in the ongoing negotiations between the Chinese and U.S. governments. Unnamed sources also said that China recently told state-owned wireless carriers to cut marketing expenses because they overspent on subsidies and promotions of some devices.
Apple and Google Asked to Change Refund Policies: South Korea’s Fair Trade Commission has asked Apple and Google to change their policies with respect to free apps. Many free apps are automatically charged to the customer after the expiry of the free trial period before the customer is able to remove the app. The companies currently do not refund anything that was charged before cancelling the app.
New Technology/Products
Facebook’s Mobile Video Player For iOS: Facebook is getting more active on the video front. Right on the heels of the LiveRail acquisition, the company is now testing a video feature for iOS devices that appears similar to Youtube’s “Related Videos.” When users click on a video in the news feed, they get other video suggestions that might prompt them to watch a few more. The system has every chance of working and could lead to a nice new way to earn some video ad dollars.
Rumor: Microsoft Surface Mini Coming This Summer: The Surface Mini could hit stores this summer. Microsoft apparently delayed the smaller version because its checks suggested weaker demand for the device. It’s not clear what’s changed in the past few months (could be the supply chain), but rumors suggest that the device is back in production.
Microsoft Plans to Stop Windows 7 Support: Microsoft’s Windows 8 is not doing well, at least so say media reports quoting various parties. In fact XP upgraders are going for Win 7 instead of the newer Win 8. This could be partly the reason it is thinking of withdrawing paid support to Win 7. But it won’t happen suddenly. The company is giving us until Jan 13, 2015 after which we need to pay for the service. But security updates will continue to Jan 14, 2020.
M&A
Microsoft Picks up InMage for Azure: In attempt to accelerate Azure adoption at enterprises, Microsoft has acquired business continuity solutions provider InMage. These solutions will now become a part of Azure and facilitate disaster recovery on Windows, Linux, physical, virtualized on Hyper-V, VMware or others. InMage’s Scout facilitates data migration, so it can be used to steal customers from other providers such as VMware.
Analyst Commentary
Garmin Plunges on Analyst Downgrade
Some Numbers
Microsoft’s Office 365 Gets Tweak: In an attempt to retain and grow its SMB customers, Microsoft is lowering the price Office 365 premium prices from $15 per seat per month to $12.50. It is also raising the employee cap in some cases to 300 from 25. It also has a $5 per seat per month Office 365 option that includes its cloud products, but not desktop versions of Office proper.
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