Trading Day Commentary for Feb 23 2009 4:13 PM ET
Collins Stewart cut their estimates for Google (GOOG 330.06 -16.39) primarily due to increasing concerns of softness in CPC (cost per click) that they believe is now becoming more pronounced trend in Europe as well (a key negative takeaway from their visit to SES conf London last week) and in their view global coverage ratio reaching on the tail-end of Google's recalibration efforts. Their new estimates imply 4% Q/Q decline in net rev to $4.069 bln and $4.95 in PF EPS in March and 10% rev growth to $17.383 blnand $21.22 in PF EPS for ?09 (Q1: $5.02/$4.140 bln, FY09: $17.472/$21.19 consensus). Firm reiterates their Buy and establishing $435 as their new tgt (moving valuation framework to ?10) down from $450.
Credit Suisse upgraded Motorola (MOT 3.63 +0.02) to Neutral from Underperform and raised their 2010 EPS est, given increased confidence in mgmt's focus on spending reductions. Despite headwinds through 2009, firm believes that Mobile Devices losses have bottomed and that valuation suggests limited downside.
Deutsche Securities upgraded Palm (PALM 7.55 -0.02) to Buy from Hold and raised their tgt to $10 from $6 after channel checks and a company meeting with Palm at the Mobile World Congress in Barcelona. The firm sees clear signs that they are capable of executing to plan and shipping the Pre at least on time. They found a lot of carrier interest in the device as well. Firm said the turnaround in company prospects carries significant earnings leverage meriting a Buy rating.
Garmin (GRMN 16.28 +1.11) reported Q4 (Dec) earnings of $0.93 per share, excluding foreign currency exchange impact, $0.05 worse than the First Call consensus of $0.98; revenues fell 13.9% year/year to $1.05 bln vs the $1.12 bln consensus. Automotive/Mobile segment revenue decreased 17% to $828 mln in Q408. Outdoor/Fitness segment revenue increased 5% to $120 mln in Q408. Aviation segment revenue decreased 5% to $67 mln in Q408. Marine segment revenue was flat at $33 mln. Co reports gross margin of 41.1% compared to 44.3% in Q308 and 41.8% in Q407. Operating margin was 22.6% compared to 24.6% in Q308 and 25.7% in Q407. Co declines to offer specific guidance for 2009 until the "outlook for the year becomes clearer."
Rambus (RMBS 6.70 +0.39) confirmed the United States Supreme Court has denied a request by the Federal Trade Commission to review the Rambus case, bringing to a close its Sherman Act antitrust claims against Rambus. "Eleven DC Circuit judges examined the FTC's case, and not one supported it in any way. The Solicitor General did not support the FTC's petition for certiorari, and now the Supreme Court has denied its petition," said Tom Lavelle, senior vice president and general counsel at Rambus. "After enduring years of lost business, uncertainty, and spending millions of dollars defending ourselves against the FTC's ill-founded allegations, we're pleased the Supreme Court has put an end to these claims."
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