Value Line is regarded as the best independent research available. More than just recommendations, Value Line provides the rationale behind its picks for greater understanding.
- Don D., California
Technology Round Up - May 31, 2013
Yahoo! Buying Tumblr
Yahoo! (YHOO) has agreed to purchase social networking Web site Tumblr for approximately $1.1 billion, almost all of which will be payable in cash. As part of the deal, Tumblr, which operates a microblogging service, will be independently operated as a separate business, with founder David Karp staying on as Chief Executive Officer. Tumblr’s products, services, and brand will continue to be defined and developed separately, as well.
With more than 300 million monthly unique visitors and 120,000 signups every day, Tumblr is one of the fastest growing media networks. Its popularity is expected to bring a significant community of users to the Yahoo! Network. This acquisition is expected to increase Yahoo’s audience by 50%, to more than a billion monthly visitors, and to grow traffic by around 20%. Moreover, the two companies will work together to create advertising opportunities that enhance the user experience. The acquisition, which remains subject to customary conditions, will probably close in the second half of the year.
Hewlett-Packard’s Earnings Release
Wall Street cheered Hewlett-Packard’s (HPQ - Free Hewlett-Packard Stock Report) earnings release for the April quarter. Although the company posted a decline in revenues and share earnings, it nonetheless exceeded consensus expectations. The top line declined roughly 10%, on a year-over-year basis. Unimpressive results were experienced in all of Hewlett-Packard’s product segments, though weakness was particularly pronounced in the personal systems line. Notebook sales fell 24%, while desktop computer volumes declined 19%. Meanwhile, enterprise products sales decreased 10%, and enterprise services revenues declined 8%. Sales fell only modestly in the printing segment. Overall, share net came in at $0.55 for the recent quarter. This was well below the $0.80 a share earned in the prior-year period, but easily beat expectations of $0.38 to $0.40 per share.
OmniVision’s Strong Rebound
Shares of digital imaging solutions provider OmniVision (OVTI) have rebounded sharply since late April. Most recently, the stock jumped following the company’s fourth-quarter earnings release (period ended April 30th). Performance for the recent quarter exceeded investors’, and our own, expectations. Revenues of $336.2 million advanced nearly 54% on a year-over-year basis. Share earnings came in at $0.17, which was a strong improvement from the $0.05 a share earned in the prior-year period. The company experienced healthy sales performance in the markets for mobile handsets in China, which offset seasonal weakness in other regions. It also saw an improved product mix and better results for its high resolution sensors.
Dell’s Disappointing Results
Dell (DELL) reported disappointing results for the April quarter. The company’s top-line declined modestly, due to weakness in the personal computers and peripheral devices line (which is its largest business). This was partly offset by a healthy increase in enterprise products. Share earnings of $0.07 were well below the prior-year tally of $0.36, though some of this was the result of expenses related to Dell’s bid to go private. These weak results, and the prospect of further difficulties in the personal computers line, appear to support the case for management’s plan to take Dell private. Indeed, the board of directors has unanimously voted in favor of a $24.4 billion offer ($13.65 per share) led by founder and chief executive officer Michael Dell.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.