Techzone 360 Week in Review


Let's get to the least well-kept secret on the block. As our week was drawing to a close it finally became clear as to who the next Microsoft CEO will be. As much as many of us were hoping for a truly different voice to emerge to drive Microsoft forward, following an overly extensive search where it appears to have been the case more often than not that possible candidates declined the idea of heading up Microsoft, ultimately the company opted to play it safe…and very safe. It is now clear that Satya Nadella will become Microsoft's next CEO. Is it a good thing to have played it so safe? Last week Microsoft reported a great quarter financially speaking - with Nadella at the helm we can expect many more such quarters - but will Microsoft emerge as a visionary leader or merely remain an awesome value company?

This was one of those weeks where most of the giant tech companies reported on 2013 Q4 earnings. Facebook did extraordinarily well, and it is becoming very clear that the company is getting a real handle on directly tapping into the mobile world we live in. Mobility now plays a central role in Facebook usage, with desktop use steadily declining. The company's earnings call makes it clear they are mastering mobility - which allows us to rate Facebook an ongoing success story from both a product and financial perspective.

Google reported earnings this week as well and the company certainly made it clear that its revenue growth is not likely to be derailed any time soon. Quarterly earnings jumped substantially, even in the face of mobile access driving down click values. Mobility has been a tiny bit of a concern but Google clearly has it in hand. The company also announced its first stock split, which should drive market cap quite a bit higher than it currently is when the split goes into effect on April 2, 2014. Finally the company also declared its first dividend - which will be distributed in the form of a new C class of Google stock.

Google also missed by a whopping $0.28 cents on income. Coming in at $12.01 a share - consensus analyst estimates had it pegged at $12.29. Normally this would set of hand-wringing and a sell-off, but Google's financials across the board are so strong that analysts "laughed the miss off!" It's worth reading the details. In great part Motorola Mobility had something to do with this, but the good news is that the day before its earnings call Lenovo announced that it was taking Motorola Mobility off Google's hands for $2.9 billion. It’s a great move for Lenovo, and a "peace of mind" move for Google, which retained Motorola's entire 17,000 patent IP portfolio.

Google also announced the $400 million acquisition of artificial intelligence company DeepMind. We haven't quite done a deep dive into what DeepMind brings to Google just yet, but the AI technology hints at new ways to search.

Amazon didn't fare quite as well. Though Amazon reported a significant uptick in earnings the company hugely disappointed on revenue guidance, which caused a significant stock sell-off. Normally Amazon gets a pass on these things under the guise of investing for its future, but not this time. As a result, Amazon is now considering raising its prices! This includes pricing for Amazon Prime.

Finally, on the earnings end of things, we began the week with Apple announcing its fiscal Q2 2014 financials. That also happens to be the holiday buying season quarter and hopes were high for Apple to hit a homerun on iPhone and iPad sales. Well, the company set all sorts of mobile sales records and beat analyst consensus estimates on the big three - revenue, earnings, and gross margin! But don't let that exclamation point fool you - any other company would have seen a run up in the stock based on half of the good news Apple reported, but…this is Apple we're talking about. It "only" sold 51 million iPhones in the quarter (think about that number for a second) but that was probably 6 million too few for analysts. Investors immediately drove the stock about $35. The sell-off was also due in part to conservative guidance for the next quarter - but we need to consider that for Apple Q2 of any year is traditionally the slowest sales quarter of the year. No matter.

Amazon was also in the news this week due to word spreading that the company is preparing to launch its own game console. Details are sparse yet. Google (again) is also beginning to see emerging signs that Google Glass will become a possibly significant gaming tool. Meanwhile, old school Nintendo (we don't know what else to refer to it as) continues to stay the path of its old technology and appears to not be interested in the move to mobile device-based gaming. But given the massive decline in its gaming business it now seems to believe that Nintendo should dive into the health care industry!

Finally it wouldn't be a week in tech without some tech patent events taking place. Samsung was in the news again, but this time because Samsung is going to have to shell out about a billion dollars to Ericsson - there are some very interesting reasons why Samsung has to do so. A small offset to the patent payments is that Samsung also announced that it has signed a wide ranging IP-based partnership with Google - which fits in quite nicely with Google getting rid of Motorola.

Finally this week we need to note that a tiny 28 person company based in New York City - Vringo, may be able to place a potentially $1 billion sized thorn in Google's side. Vringo may be poised to earn a huge payout on some old Lycos search engine patents it acquired that apparently impact directly on Google's AdWords platform.

Have a great Super Bowl weekend!

Edited by Tony Rizzo
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TechZone360 Senior Editor

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