Earnings previews for the giants of the Web
With the quarter just closed out, here's the scuttlebutt on companies like Amazon, eBay and Facebook.
With that, here's a quarter's worth of scuttlebutt on some Web giants, including Amazon (AMZN), eBay (EBAY), Netflix (NFLX), Facebook (FB), AOL (AOL), and Yahoo (YHOO).
Amazon reaps rewards
Bloomberg's Danielle Kucera expects Amazon to lose its position as the most expensive technology stock -- but only in a good way. She argues that investors have been patient while founder Jeff Bezos blew through $18.5 billion or so in order to stake out a competitive position in digital content and cloud computing, and speed delivery of everything else Amazon sells by opening new warehouses coast to coast.
"Patient" is an understatement. Investors have bid Amazon up to a share price that's about 700 times earnings, the richest valuation among the Standard & Poor's 500 (INX) stocks.
Now, Kucera argues, it's pay dirt time, when those huge investments start paying off. She expects Amazon's profits to increase enough to cut its valuation to about 48 times earnings next year.
Not all are as optimistic about Amazon's future, at least in the short term. Since JPMorgan downgraded the stock in mid-March and tacked a $300 price target on it, it has dropped a bit, from about $275 to $261 at Monday’s close. Others have a price target ranging from $245 to $370.
Amazon reports on April 26.
eBay's best little friend
eBay is on a roll in investor opinion lately, with many focused on the auction site's fast-growing PayPal division. Last Thursday, at the company's first analyst meeting in two years, investors got plenty of encouragement for their optimism about the mobile computing future of both the eBay marketplace and the PayPal electronic payments business. The company projected total revenues will top $21 billion, or nearly 70%, by 2015.
On Monday, when the Nasdaq market reopened with a dull thud, eBay still climbed 2.75% to close at $55.71.
eBay reports on April 18.
Netflix on a rollercoaster
Netflix stock is a true roller-coaster ride for investors, but lately it's been traveling upwards, doubling since the start of the quarter to $182.43 at Monday’s close.
Which would be fine if that were a bit closer to the $300 it had reached two years ago, just before its new pricing plan enraged many of its loyal subscribers.
From the view of many analysts, Netflix is still a disaster waiting to happen, because of concerns about its basic subscription model. That is, subscribers adore paying a low monthly fee for all-you-can-watch viewing. But they want all of the premium-priced content that Netflix can't include in that low price.
Its many competitors, from the cable companies to Amazon, make do by offering a library of staples and classics, and charging a premium fee for the hot stuff. Netflix, having made its name with all-you-can-watch pricing, can’t get away with that.
That said, Netflix is growing its subscriber base fast, here and abroad. It anticipates growth in earnings per share of 118% in the next year, to $2.99 per share. It has a history of meeting or beating expectations, too.
Netflix reports on April 24.
Facebook's must-do list
The only thing Facebook investors want to hear about this week is the topic of a scheduled April 4 company announcement. Rampant speculation aside, all we know is that the announcement is related to Google (GOOG) Android, the mobile operating system.
Therefore, it's about Facebook’s business plan for mobile. And that means it had better be good, because many analysts are seriously worried about Facebook’s ability to grow and adapt in a mostly-mobile world. Meaning, how it will make money off its mobile users.
In short, when Facebook announces its quarterly results on May 1, Facebook analysts will be looking for a catalyst for the future. And they haven't seen one of those that they liked since the company went public almost a year ago at $38 a share, a price it has never again approached.
Facebook reports on May 1.
AOL is still not dead
Huh? Who talks about AOL anymore? We do, when its stock goes up about 25% since the first quarter of the year.
The stock rose more than 8% last Wednesday alone, after Barclays upgraded it to an overweight and upped its price target to $44, from $38, noting the company’s "return to modest revenue growth" and continuing cost-cutting moves.
With its last earnings report, for the last quarter of 2013, AOL was perceived as having turned a corner. It even reported its first revenue growth in eight years -- which is many, many generations in the Internet world. Even better, it reported increased advertising revenue, offsetting a continued decline in revenue for its dial-up business. Yes, AOL still has a dial-up business. (Who are these people?)
AOL reports on May 6.
Yahoo's last best chance
One more back-from-the-dead Internet name: Yahoo. We're about to get the first indication whether hiring Marissa Mayer as CEO was a great public relations move or a great move, period.
Yahoo's stock is hovering around its 52-week high of $23.88, not bad at all considering it was a little above $15 just three months ago. In part, this is the Mayer effect. But it's also because investors suddenly remembered that Yahoo owns stakes in two big brands abroad, China's e-commerce site Alibaba and Yahoo Japan.
But like everybody else in the Web business, Mayer also talks a lot about mobile. She took at least one step in that direction recently, by buying newbie company Summly, creator of an app that is designed to make content easier to browse on mobile devices.
Maybe she'll cough up some more details when the company announces its quarterly results on April 16.
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