Apple announces new $100B buyback program, boosts dividend by 16%

Apple announces new $100B buyback program, boosts dividend by 16%

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Apple announces new $100B buyback program, boosts dividend by 16%

Apple (AAPL) said it will complete the execution of the previous $210B share repurchase authorization during fiscal Q3 and announced a new $100B buyback program.

Its board has declared a cash dividend of 73c per share of Apple’s common stock payable on May 17, to shareholders of record as of the close of business on May 14.

“Our business performed extremely well during the March quarter, as we grew earnings per share by 30 percent and generated over $15 billion in operating cash flow,” said Luca Maestri, Apple’s CFO.

“With the greater flexibility we now have from access to our global cash, we can more efficiently invest in our US operations and work toward a more optimal capital structure.

Given our confidence in Apple’s future, we are very happy to announce that our Board has approved a new $100 billion share repurchase authorization and a 16 percent increase in our quarterly dividend.”

Separately, Apple reported Q2 EPS $2.73, consensus $2.69 – Reported Q2 revenue $61.1B, consensus $60.98B.

Apple reported Q2 iPhone units 52.22M vs. 50.76M last year – Reported Q2 iPad units 9.11M vs. 8.92M last year. Reported Q2 Mac units 4.08M vs. 4.2M last year.

AAPL closed at $169.10.


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Barron’s is bullish on GM and Delta

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:

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Stockwinners offers Barron’s review of stocks to buy

BULLISH   MENTIONS:

Delta, GM look cheap, with growth potential – While a solid start to earnings season helped push share prices higher earlier this week, some remain deeply discounted, Jack Hough writes in this week’s edition of Barron’s. Despite Delta Air Lines’ (DAL) pessimistic valuation, consolidation has left only a handful of key players and the company faces less competition in key markets than some of its peers, the report adds. Additionally, Goodyear Tire (GT), General Motors (GM) and Lincoln National (LNC) also made the valuation cutoff, Hough says.

General Mills shares fall to ‘bargain territory.’  – General Mills (GIS) has fallen 27% so far this year and while the drop seems deserved because earnings growth has stalled, a closer look suggests sales trends are improving, thanks in part to new-product launches, Jack Hough writes in this week’s edition of Barron’s.

Cruise operators can offer ‘nice’ yields, solid dividend growth – Cruise operators, like Carnival (CCL), Royal Caribbean (RCL) and Norwegian Cruise Line (NCLH), can offer nice yields and solid dividend growth, but economic downturns can pressure payouts, Lawrence Strauss writes in this week’s edition of Barron’s. Another option for investors looking for yield among cruise operators is Walt Disney (DIS), the report added. The entertainment company has a wide variety of holdings, and while its cruise business did not account for a large portion of its $55B of sales last year, it is not insignificant either.

Tech giants may make own custom chips to get edge on one another. – There has been a tension between the world’s largest tech companies- Alphabet (GOOG; GOOGL), Amazon (AMZN), Facebook (FB), Apple (AAPL), Microsoft (MSFT), Baidu (BIDU), and Alibaba (BABA)-and the chip companies they rely on, especially Intel (INTC) and Nvidia (NVDA), Tiernan Ray writes in this week’s edition of Barron’s. While the giants buy massive quantities of Intel’s microprocessors, and Nvidia’s graphics chips, or GPUs, to power their data centers, they are also in an arms race to have the best artificial-intelligence-based machine-learning functions, the report noted, adding that there was always the possibility they may decide to buy fewer off-the-shelf parts and make their own custom chips to get an edge on one another.

 MPL valuations look cheap – Master limited partnerships’ valuations appear cheap, and U.S. energy production is thriving, lifting cash flows for pipeline firms, Darren Fonda writes in this week’s edition of Barron’s. MLP, such as Enterprise Products Partners (EPD), Magellan Midstream Partners (MMP), MPLX (MPLX), Plains All American Pipeline (PAA), could reward investors with higher yields as cash flows rise, Fonda adds.

OTHER MENTIONS

Trump’s tweets politicize U.S. markets, Barron’s says – With President Donald Trump, both politics and business appear personal as he continues his tweets aimed at individual companies, Vito Racanelli writes in this week’s edition of Barron’s. Before and after the election, he consistently aimed arrows at Amazon.com (AMZN) and at the proposed acquisition of Time Warner (TWX) by AT&T (T), the report noted. The President is not alone in singling out companies, Racanelli points out, adding that Democratic candidate Hillary Clinton also took issue with Mylan’s (MYL) price increases for its EpiPen. Maybe it is a sign of the times, but the rise of powerful social-media platforms is the key enabling factor, the report said.


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Barron’s is bullish on Google

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:

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Stockwinners offers Barron’s review of stocks to buy, stocks to watch, 

BULLISH   MENTIONS:

Alphabet a ‘bargain’ in big tech – Alphabet (GOOG; GOOGL) has the world’s dominant search engine in Google, as well as valuable businesses like YouTube, the Android cellphone operating system, and Waymo autonomous vehicles, but investor are not giving the company enough credit partly because of worries that it, like Facebook (FB), will soon face greater government regulation, Andrew Bary writes in this week’s edition of Barron’s. Alphabet trades for almost 25 times projected 2018 earnings, but its effective P/E is lower because of nearly $100B in net cash and losses in its “other bets” businesses, he adds.

AI done right may give managers ‘an edge.’  – BlackRock (BLK), Vanguard, Fidelity, and T. Rowe Price (TROW), among others, have all invested time and money setting up tech centers in major cities, apart from their headquarters, as they compete for cost savings, Crystal Kim writes in this week’s edition of Barron’s. Artificial Intelligence, done right, could also give portfolio managers an edge, and better serve investors with a wider array of financial planning tools, the report adds.

 IAC/InterActiveCorp sells at discount of assets value – Over the past two decades, Barry Diller’s IAC/InterActiveCorp (IAC) has generated a higher return than Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B), Jack Hough writes in this week’s edition of Barron’s. But the shares of IAC/InterActiveCop sell at a discount to the value of its assets, he notes.

Spotify stock could rise to five times sales. – Spotify Technology  (SPOT) made its market debut las week and while its stock price could remain volatile in the months ahead, shares could “reasonably” rise to five times sales, Avi Salzman writes in this week’s edition of Barron’s.

BEARISH  MENTIONS

Facebook bracing for Capitol Hill grilling – In a follow-up story, Barron’s notes that this week Facebook’s (FB) CEO Mark Zuckerberg will come to Washington to testify before an eager group of lawmakers. Congress has a chance to remind citizens of its watchdog role, the report noted, adding that while this week’s optics will no doubt be bad, the stock’s valuation already reflects much of the pain.

Smartphone growth sags as new models not compelling enough – People are holding onto their phones longer, on average, because what they are being offered in the new models just is not compelling enough, Tiernan Ray writes in this week’s edition of Barron’s. This does not bode well for traditional makers of chips for smartphones, including Skyworks (SWKS), Qorvo (QRVO), Qualcomm (QCOM), and Synaptics (SYNA), the report adds.


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Tariffs sink stocks

Boeing, others drop after China retaliates with 25% tariffs on U.S. products

Tariffs sink stocks. Stockwinners
Tariffs sink stocks.

Shares of companies including Boeing (BA) and Tesla (TSLA) dropped in Wednesday’s pre-market trading after China retaliated against President Donald Trump’s proposed penalties on Chinese goods with plans for 25% tariffs on American products, including airplanes, automobiles and soybeans.

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Tariffs sink stocks

BACKGROUND

On Thursday, U.S. President Donald Trump signed an executive memorandum imposing retaliatory tariffs on up to $60B in Chinese imports, according to CNBC.

The new measures are designed to penalize the country for trade practices that the White House says involve stealing American companies’ intellectual property, the report noted, adding that the tariffs will primarily target certain products in the technology sector.

Trump’s plan levies 25% tariffs on a wide range of goods — about 1,300 categories in all — and includes steel, Chinese-made solar panels, dishwashers, medical equipment and machine tools.

Shares of Alibaba (BABA), Tencent (TCEHY) and Baidu (BIDU) were under pressure following the news.

CHINESE TARIFFS

On Tuesday, China’s Ministry of Commerce announced plans to levy 25% reciprocal tariffs on critical U.S. exports, covering over 106 categories of products and impacting around $50B of Chinese imports of U.S. products.

China has targeted the largest American exports to China, airplanes and soybeans, as well as automobiles, chemicals, wheat, corn, cotton and tobacco.

People familiar with the plans tell The Wall Street Journal that many of the other goods on the list, including beef and sorghum, “intentionally affect the U.S. Farm Belt, where voters supported President Trump.”

Neither the U.S. nor Chinese tariffs will take effect immediately.

“Those who attempt to make China surrender through pressure or intimidation have never succeeded before, and will not succeed now,” Foreign Ministry spokesman Geng Shuang told reporters.

PRICE ACTION

Boeing is down 6.6%, Tesla dropped 5%, Ford (F) is down 3.4% and General Motors (GM) is down 4% in pre-market trading.


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Barron’s is bullish on Tesla, bearish on Deutsche Bank

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin
Stockwinners offers Barron’s review of stocks to buy, stocks to watch

BULLISH   MENTIONS:

Comcast a bargain despite risk – Comcast (CMCSA; CMCSK) has fallen from favor with investors following its the proposal to buy SKY (SKYAY) as they fear it will get into a bidding war with Fox (FOXA) and overpay for Sky, Andrew Bary writes in this week’s edition of Barron’s. Now the stock trades at a discount to rival Charter (CHTR) and yields 2.2%, he notes.

Investors may want to look at Microsoft to play tech-stock downdraft  – For the past two weeks, large-cap technology stocks have sold off on investor concerns following the data crisis at Facebook (FB), Bill Luby writes in this week’s edition of Barron’s. One collateral-damage victim has been Microsoft (MSFT), and it is “easy to argue” that the downturn in its shares is overdone, Luby contends, adding that the tech giant’s strong fundamentals, combined with good technical support for its shares just below their recent price, make the company’s stock a strong candidate for a rebound.

Oil refiners primed for profits – The outlook for companies that turn crude oil into gasoline has looked better and demand for refining is poised to grow faster than supply in the years ahead, leading to a surge in profits and share prices across the industry, Jack Hough writes in this week’s edition of Barron’s. Refiners include Andeavor (ANDV), Marathon Petroleum (MPC), Philips 66 (PSX) and Valero (VLO), the report notes.

New AI era for chip makers– Artificial intelligence is about to become a lot more pervasive as the computer circuitry to perform AI grows more prevalent, Tiernan Ray writes in this week’s edition of Barron’s. The desire to embed AI in just about anything has meant that more chip makers are racing to diffuse their designs for circuitry that processes the algorithms that drive the software, he note, adding that relevant companies spanning the semiconductor industry include Nvidia (NVDA), CEVA (CEVA), Synopsys (SNPS) and Cadence Design Systems (CDNS).

Tesla stock may rally later this year – In a follow-up article, Barron’s notes that investors have had fun following Tesla’s journey, reaping stock gains of 600% in the last five years, but some wonder if “the music is going to stop.” The key question is whether Tesla (TSLA) can raise enough cash to keep going, the report notes, arguing that Tesla should “live to fight another day” to produce cars, and may even start to turn a cash profit next year. Barron’s believes later this year, its shares will most likely rally as clouds lift.

BEARISH  MENTIONS:

New CEO may not save Deutsche Bank stock – News that Deutsche Bank (DB) Chairman Paul Achleitner has been looking for another CEO grabbed the financial industry’s attention, but just as it may be premature to organize farewell drink for current CEO John Cryan, it may also be too soon to turn bullish on the shares, Victor Reklaitis writes in this week’s edition of Barron’s. There are plenty of reasons to stay bearish on the stock and the latest escalation of tensions between Achleitner and Cryan is just “a piece of Deutsche Bank puzzle,” he adds.


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Polycom sold for $2 billion

Plantronics to acquire Polycom for $2B in cash, stock deal

 Plantronics to acquire Polycom for $2B. Stockwinners.com
Plantronics to acquire Polycom for $2B.

Plantronics (PLT)  and Polycom announced that they have entered into a definitive agreement under which Plantronics will acquire Polycom in a cash and stock transaction valued at $2B enterprise value.

The transaction has been unanimously approved by the boards of directors of both companies, is subject to regulatory approvals and other customary closing conditions, and is expected to close by the end of the third calendar quarter of 2018. With the acquisition of Polycom, Plantronics will become the partner of choice for the communications and collaboration ecosystem.

Polycom, a privately held company, brings a global leadership position in voice and video collaboration, accelerating Plantronics vision of delivering new communications and collaboration experiences.

With the addition of Polycom, Plantronics will have the broadest portfolio of complementary products and services across the global communications and collaboration ecosystem, and the ability to create exceptional user experiences.

The combination positions Plantronics to capture additional opportunities across the $39.9B Unified Communications and Collaboration industry driven by innovation in video and the ubiquity of audio, building growth opportunities through data analytics and insight services.

Polycom significantly expands Plantronics services offering, providing a meaningful presence in management and analytics services.

The transaction is expected to be immediately accretive to Non-GAAP EPS. Plantronics targets achieving annual run-rate cost synergies of $75M within 12 months of transaction close.

Under terms of the definitive agreement, Plantronics will acquire Polycom for $2B enterprise value consisting of an estimated $690M of net debt and an estimated $948M in cash and 6.352M Plantronics shares, valued at $362M based on the 20 trading day average closing price of Plantronics stock prior to signing, resulting in Polycom shareholders owning approximately 16.0% of the combined company.

Estimated amounts are subject to customary post-closing adjustments per the definitive agreement. Frank Baker, Founder and Managing Partner, Siris Capital, and Daniel Moloney, Executive Partner, Siris Capital, will join Plantronics Board of Directors.

Plantronics intends to fund the cash portion of the consideration with cash on hand and approximately $1.375B in new, fully-committed debt financing. Wells Fargo Bank and affiliates have committed to provide the debt financing for the transaction, subject to customary conditions. P

lantronics expects to pay down a significant portion of the debt within the next several years with cash on the balance sheet and through cash generation.


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Universal Display, other Apple suppliers fall as company to develop own screens

Universal Display, other Apple suppliers fall as company to develop own screens 

Universal Display, other Apple suppliers fall as company to develop own screens . Stockwinners.com
Universal Display, other Apple suppliers fall as company to develop own screens .

Shares of organic light-emitting diode technology maker Universal Display (OLED) and other suppliers are down in morning trading amid speculation Apple (AAPL) is producing its own device displays for the first time.

APPLE DEVELOPING DISPLAYS

Apple has been quietly designing and producing limited quantities of its own MicroLED device screens for the first time “for testing purposes” using a manufacturing facility near its headquarters, Bloomberg reported Monday, citing people familiar with the matter.

The move by the company, which is significantly investing in the development of the next-generation MicroLED screens that aim to make devices slimmer and less of a drain on power, could potentially hurt a range of suppliers in the long-term, from screen makers like Samsung (SSNLF), Japan Display, Sharp (SHCAY) and LG Display (LPL) to companies like Synaptics (SYNA) and Universal Display, according to the report.

The MicroLED screens are much more difficult to produce than organic light-emitting diode screens and customers will likely have to wait a few years before the technology is released.

Apple is planning to make the new displays available first in future Apple Watch devices, but it is unlikely the screens will reach an iPhone for at least three to five years.

An Apple spokeswoman declined to comment when contacted by Bloomberg.

WHAT’S NOTABLE

LG Display is expected to start supplying some of the OLED displays for Apple’s iPhone X, shipping as many as 60M displays for the smartphone starting in June, CNBC reported in December.

At the time of the report, discussions between Apple and LG Display were ongoing and LG said, “Regarding the OLED supply deal for Apple’s iPhone X, nothing has been set in detail.

When anything is confirmed in detail, we will announce it.” Apple has previously used Samsung as its exclusive supplier of OLED panels for iPhones.

PRICE ACTION

In Monday’s trading, shares of Universal Display dropped 10.1% to $111.52. Meanwhile, shares of LG Display trading in New York were down 1.2% to $12.92, Sharp fell 2.2% to $8.05 and Synaptics dropped 1% to $47.35.


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Micron Breaks Out!

Micron shares in ‘early stages of another major breakout

Micron Breaks Out. Stockwinners.com
Micron Breaks Out!

Shares of Micron (MU) are rising after two analysts raised their price targets on the stock, citing memory market changes and potential capital returns.

‘BUY THE BREAKOUT’

On Monday, Nomura Instinet analyst Romit Shah raised his price target for Micron Technology to $100 from $55 citing multiple expansion.

After consolidating over the last four months, Micron shares are in the “early stages of another major breakout,” Shah tells investors in a research note.

The analyst said he sees key catalysts for #Micron, including a resumption of an upward trend in dynamic random-access memory pricing in the second quarter, a first-time dividend and share buyback announcement in May, continued margin expansion in NAND and increased merger and acquisition discussions. #Shah expects another 10% increase in DRAM pricing over the next six months and an announcement by the company for a comprehensive capital return program that will show the management’s confidence in future cash flows.

In addition, Shah expects additional margin expansion in NAND in 2018 and 2019 as weaker prices are offset by a stronger mix and cheaper cost per bit.

The analyst also believes Micron stands out as a potential acquisition target as it is one of the few remaining U.S. chip companies that has scale, it is expanding its presence in NAND and its valuation looks attractive. The analyst kept a Buy rating on the name.

MEMORY MARKET CHANGES

In addition, Evercore ISI analyst C.J. Muse raised his price target on Micron to $80 from $60, stating that he thinks the memory market is “absolutely” different now with the DRAM industry consolidated to three players, all of whom are acting rational, and memory has become increasingly critical while the rising complexity has limited the magnitude of new supply.

His sense is that Micron will move forward with capital returns “regardless of what we hear from the rating agencies” and predicts the company’s analyst day on May 21 should bring more news about planned capital returns starting in fiscal year 2019. #Muse, who thinks Micron can earn $13 or more in earnings per share in calendar 2019, kept an Outperform rating on Micron shares.

PRICE ACTION

Micron rose 7.14%, or $3.90, to $58.49 in Monday morning trading.


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Lumentum to acquire Oclaro for $1.8B

Lumentum to acquire Oclaro for $1.8B in cash and stock 

Lumentum to acquire Oclaro for $1.8B. Stockwinners.com
Lumentum Holdings (LITE) and Oclaro (OCLR) announced that the two companies have signed a definitive agreement, unanimously approved by the boards of both companies, pursuant to which Lumentum will acquire all of the outstanding common stock of Oclaro. For each share of Oclaro stock held, Oclaro stockholders will be entitled to receive $5.60 in cash and 0.0636 of a share of Lumentum common stock, subject to the terms of the definitive agreement.

 

The transaction values Oclaro at $9.99 per share or approximately $1.8B in equity value, based on the closing price of Lumentum’s stock on March 9, of $68.98.

 

The transaction value represents a premium of 27% to Oclaro’s closing price on March 9 and a premium of 40% to Oclaro’s 30 day average closing price.

 

Oclaro stockholders are expected to own approximately 16% of the combined company at closing.

 

The transaction is expected to generate more than $60M of annual run-rate synergies within 12 to 24 months of the closing and be immediately accretive to non-GAAP earnings per share.

 

Lumentum intends to fund the cash consideration with a combination of cash on hand from the combined companies’ balance sheets and $550M in debt financing. The transaction is expected to close in the second half of calendar 2018, subject to approval by Oclaro’s stockholders, antitrust regulatory approval in the U.S. and China, and other customary closing conditions.

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