Broadcom tumbles on plans to redomicile in the U.S.

Broadcom confirms plans to redomicile in the U.S.

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Broadcom Limited (AVGO) announced that it intends to initiate a redomiciliation process to change the parent company of the Broadcom corporate group from a Singapore company to a U.S. corporation.

The redomiciliation will occur whether or not there is corporate tax reform in the United States, although the final form and timing of the redomiciliation will be affected by any corporate tax reform.

The redomiciliation will be voted on by the company’s shareholders and is expected to be effected in a manner intended to be tax-free to Broadcom’s equity holders.

“We believe the USA presents the best place for Broadcom to create shareholder value,” said Hock Tan, the company’s President and CEO.

“We expect the tax reform plan effectively to level the playing field for large multinational corporations headquartered in the United States and to allow us to go all in on U.S. redomiciliation. However, we intend to redomicile to the United States even if there is no corporate tax reform.”

“The returns we can drive by continuing to pursue our growth strategy far outweigh the incremental taxes we would expect to pay by redomiciling in the USA,” said Tom Krause, the company’s CFO.

“We support the tax reform plan because it is pro-growth and would allow companies like us to bring off-shore earnings back to the United States after paying an annual U.S. minimum tax on global profits.”

EARNINGS GUIDANCE

Earlier today,  the company said for Q4 2017, Broadcom expects revenue will be at the higher end of the business outlook provided during its earnings announcement on August 24.

The company said in August it expected GAAP revenue in Q4 ended Oct. 29 at $4.78 billion plus or minus $75 million and non-GAAP revenue at $4.8 billion plus or minus $75 million.

ANALYST COMMENTS

BofA Merrill Lynch estimates moving its domicile to the U.S. could raise Broadcom’s (AVGO) tax rates from 4%-5% to about 12%, but the firm thinks this could be offset by potential Brocade (BRCD) synergies. The firm keeps a Buy rating on Broadcom, arguing that the reasons to own the stock – namely its premium assets, best-in-class management, and dividend potential – remain intact. The firm adds that being in the U.S. could be a precondition to acquiring Brocade and may enable Broadcom to pursue future M&A.

JPMorgan analyst Harlan Sur says Broadcom’s (AVGO) U.S. domiciliation process will occur with or without tax reform, which should pave the way for the Brocade (BRCD) deal to close in two weeks. Assuming a worst case of no tax reform, the analyst estimates the company’s earnings power including the contribution from Brocade will be $18.00-$18.50 in 2018. Assigning a Semiconductor group price-to-earnings multiple would drive fair value for Broadcom to around $310 to $315 per share, Sur tells investors in a research note. Further, citing strong near-term demand trends, the analyst remains confident management raising the annual dividend by at least 50% to $6.00 in early December. He keeps an Overweight rating on Broadcom shares with a $315 price target.

AVGO last traded at $252.16, down $7.12.


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iPhone X Coming Soon!

Watch Apple ahead of iPhone X launch

iPhone-X Coming Soon. See Stockwinners.com for details

Apple (AAPL) is expected to unveil the highly anticipated iPhone X tomorrow along with other new versions of its flagship mobile device. Commenting on the tech giant’s event, RBC Capital analyst Amit #Daryanani told investors that it may surpass expectations.

Meanwhile, his peer at JPMorgan argued that he expects the OLED based iPhone X to become available in October as Apple begins volume production in September.

APPLE EVENT

On Tuesday, September 12, Apple is expected to unveil its much anticipated 10th anniversary iPhone. According to a leak over the weekend, the new device will be called the iPhone X and will include wireless charging, facial recognition, edge-to-edge display and no home button.

Alongside the iPhone X, Apple is expected to release two other phones, namely the iPhone 8 and iPhone 8 Plus. Many also expect to see a third generation of the Apple Watch and a 4K Apple TV.

EVENT MAY TOP EXPECTATIONS

RBC Capital’s Daryanani told investors that Apple’s event tomorrow could surpass investors’ expectations, particularly as some of the new iPhone features are demonstrated live.

The analyst noted he believes the next generation flagship iPhone will feature a brand new form factor with an OLED display that spans edge-to-edge, upgraded A11 processors, wireless/inductive charging capability, a virtual home button embedded in the display, a 3-D facial recognition sensor for the front-facing camera, an augmented reality enabled rear-facing vertical dual lens camera, glass front and back with stainless steel edges, 3GB of RAM, 64GB and 256GB storage tiers, and improved water resistance.

Additionally, Daryanani expects Apple to introduce two new LCD iPhones, with pricing for the OLED device to start at $999 while the LCD models should be priced similarly to the current 7/7-plus. Alongside the new iPhones, Apple should also introduce a new Apple Watch with a cellular connection and a new TV product in addition to software updates for each device announced, he contended. The analyst reiterated an Outperform rating and $180 price target on the shares.

OLED IPHONE AVAILABLE IN OCTOBER

In a research note of his own, #JPMorgan analyst Rod #Hall told investors he currently expects the OLED based iPhone X to become available in October as Apple begins volume production in September. The specific week of October that the device begins shipping will have a few million units of impact on the December earnings forecasts, Hall noted, adding that the risk to earnings estimates is relatively small heading into the event.

The analyst pointed out that he estimates the 256GB version will cost $1,100, while the LCD models’ pricing should be similar to the iPhone 7 models. The analyst also believes that the most important thing Apple is likely to say about the Apple TV financially relates to the content available on the device, as he is expecting Amazon (AMZN) Prime Video to finally become available.

While the Apple Watch update that has been reported including LTE should be a small incremental positive, it is unlikely to move numbers, he added. Hall reiterated an Overweight rating on Apple’s shares.

SUPPLIERS TO WATCH

Here’s a look at five Apple iPhone chipmakers that should benefit from launch of iPhone X: Skyworks Solutions (SWKS), Texas Instruments (TXN), Analog Devices (ADI), Qorvo (QRVO) and Broadcom (AVGO).

PRICE ACTION

In Tuesday’s trading, shares of Apple have gained about 2% to trade near $161.50. Year-to-date, Apple shares have risen nearly 40%


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Barron’s is Bullish on Carlyle Group, Bearish on Nike

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

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BULLISH  MENTIONS

Altaba could reward investors ‘nicely’  – Alibaba (BABA) is having a stellar year and a cheap way to play it is through Altaba (AABA), whose 15% stake in Alibaba is valued at $65B, Andrew Bary writes in this week’s edition of Barron’s. While Altaba shares are up 65% this year on Alibaba’s big gains, it trades at a 30% discount to the value of the company’s assets, the publication adds’

New Apple Watch may threaten telecoms – As the world awaits the 10th-anniversary iPhone, the real news may be buried within a redesigned Apple Watch 3, Tiernan Ray writes in this week’s edition of Barron’s. Apple (AAPL) has said that the next smartwatch will gain the ability to dial up the internet wirelessly even when not connected to an iPhone, the publication notes, adding that the new Apple Watch will probably make use of an embedded SIM. Apple already allows people using its iPad tablet to select which wireless carrier they want on a month-by-month basis, and Apple Watch will allow the same, signaling that Apple may want to take more control of the mobile subscriber, Tiernan says.

Carlyle Group may be ‘best deal’ in private equity – Carlyle Group (CG) is one of the world’s largest private-equity managers, with $170B in assets under management spread over six continents, but has had a much lower profile with investors, with its units fallen 24% over the past five years, Jack Willoughby writes in this week’s edition of Barron’s. Carlyle has finally put its hedge fund woes behind it and expects a big jump in earnings, Willoughby notes, while questioning if the stock price can double.

Texas Instruments, CVS Health worth a look for income investors.  Barron’s has looked for firms with the highest dividend-safety rankings that yield at least 2% and have market caps above $25B. The top five finishers based on those criteria were Texas Instruments (TXN), CVS Health (CVS), PNC Financial (PNC), Sysco (SYY) and Medtronic (MDT), Lawrence Strauss writes in this week’s edition of Barron’s.

BEARISH  MENTIONS

Nike could fall another 10% – As Adidas (ADDYY) picks up the pace, Nike (NKE) is losing ground in the sneaker race, and its stumbling stock could fall another 10% or more in the coming year, Jack Hough writes in this week’s edition of Barron’s. Hough argues that Nike’s problem is twofold, namely the growth of e-commerce which has rattled Nike’s retail partners, including Foot Locker (FL), and Adidas that seems to have finally figured out how to sell sneakers in the U.S.


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Apple Patents 911 Finger, Call for Help Discretely

Apple patents way to call 911 emergency with fingerprint without assailant knowing

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On Tuesday, the United States Patent and Trademark Office published a patent by Apple for a method to execute a command in an electronic device through a fingerprint.

PATENT

The patent abstract is as follows:

“A device has a touch processing module that processes touch screen input to determine if the manner in which the input was entered indicates that the user intends for execution of a particular command. In one embodiment, the module may acquire fingerprint data from the user’s input and analyze the data to determine if the input was entered with a particular finger or finger sequence.

In another embodiment, the module may also acquire timing data from the user’s entry of a plurality of inputs and analyze the timing data to determine if the touch screen input was entered with a particular timing or cadence. The module may also acquire force data from the user’s entry of a plurality of touch screen inputs and analyze the force data to determine to determine if the touch screen input was entered with a particular force.”

In other words Apple has invented a process for an individual to call 911 emergency secretly using your fingerprint.

Thus, in a situation where the device owner is forced to unlock or otherwise use his phone by an assailant, contacting emergency services in the conventional manner may not be practical. Accordingly, in conventional systems, a user is unable to comply with an assailant’s commands, while at the same time discreetly contacting emergency services.”

For example, the user may program the electronic device to recognize input entered with her pinky finger as a command to place a “911” call or otherwise contact emergency services.

In another example, the user may program the electronic device to recognize input entered with a particular sequence of fingers, such as pinky-ring-pinky, as a command to make an emergency call. Thus, regardless of what routine command the user is ostensibly entering, if the user enters the routine command with the predetermined finger or finger sequence, the user is also entering the predetermined command.

For example, a user may be ostensibly be unlocking her device, but by doing so with her predetermined “911 finger” she is also calling the police.”

It is doubtful that this feature will be available in the upcoming iPhone 8 model.

AAPL last traded at $151.15.


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DexCom Rallies on Apple Decision

Apple begins supporting Dexom’s glucose monitoring sensor

Previously Apple Watch only supported 3rd party Apps through iPhone

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#DexCom $DXCM is a medical device company. It focuses on the design, development, and commercialization of continuous glucose monitoring (CGM) systems in the United States and internationally. The company offers its systems for ambulatory use by people with diabetes; and for use by healthcare providers in the hospital for the treatment of patients with and without diabetes.

The company reported a loss of $0.49 per share in Q1 of 2017,  six cents better than the Consensus Estimate. Total revenue grew to $142 million, reflecting an increase of 22.4% from $116 million in the year-ago quarter. However, the figure was two million below the estimates. Since the report, shares have been under pressure due to the mixed report. To add to its woes, market chatter had it that Apple will offer its glucose monitoring system.

At Apple’s annual developer conference currently underway, the company’s vice-president of technology Kevin Lynch said that Apple $AAPL will release a new bluetooth API for Apple Watch, its fitness-tracking gadget. Users would be able to link their Apple watch to a glucose sensor from DexCom. Previously, developers building health sensors would need to communicate with the iPhone over Bluetooth — but not with Apple Watch.

Health developers say this is a promising sign that Apple will open up new pathways for them to create their own interchangeable watch bands laden with health sensors. Health startups are already building watch bands, which use sophisticated sensors to track health conditions.

PRICE ACTION:

DXCM last traded at $71.15, up more than 5 percentage points on the day. It has a 52-weeks trading range of $57.68 to $96.38.

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The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

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Broadcom sheds light on iPhone 8 Launch

The amount of content that Broadcom supplies for each iPhone 8 sold will increase 40% versus the last version of the device

Broadcom’s revenue per iPhone 8 could rise to $16 or more

 

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Wireless component supplier #Broadcom Limited (AVGO) appeared to indicate yesterday that the rollout of Apple’s (AAPL) new iPhone 8 would be slower than the launches of the iPhones that debuted in 2016.

However, Broadcom also suggested that it would obtain more revenue from each new model iPhone than the current generation of the device.

A number of Wall Street research firms, including JPMorgan, Loop Capital and Craig-Hallum, remain upbeat on Broadcom in the wake of its results and guidance.

NEWS:

The “initial ramp” of the company’s “major North American” customer’s next generation phone “[appears] slower this year, compared to prior year,” Broadcom CEO Hock Tan said on the company’s earnings call, apparently referring to the iPhone 8. He added: “But we believe, this will likely accelerate in our fourth quarter. Our third fiscal quarter outlook reflects this expectation.”

Asked a follow-up question from an analyst about whether the “slow ramp” comments were a matter of timing or magnitude, Tan replied:

“It’s timing. I think, it is timing and last year, the similar ramp was earlier — was stronger in Q3 probably because it was earlier. And here the initial volume in our fiscal Q2 was smaller, made up with content on our side, but definitely Q4 is forecasted to be larger.”

The amount of content that Broadcom supplies for each iPhone sold will increase 40% versus the last version of the device, the company also indicated.

ANALYST REACTION:

The 40% increase in Broadcom’s content per iPhone was a positive surprise, according to Loop Capital analyst Betsy Van Hees. Broadcom is poised to benefit from its strong position in multiple, varied end markets, while it will also be boosted by its operating leverage, and accretion from its acquisition of Brocade (BRCD), according to Van Hees. She continues to identify the stock as a top pick and raised her price target on the shares to $285 from $270.

#Broadcom’s revenue per iPhone could rise to $16 or more, estimated Craig-Hallum analyst Anthony Stoss. Since the iPhone 8 probably won’t be delayed, Broadcom may surpass its guidance for its July quarter by a significant amount, the analyst stated. He raised his price target on the stock to $290 from $260 and reiterated a Buy rating on the name.

#JPMorgan analyst Harlan Sur raised his price target for Broadcom to $300 from $260, saying diversified growth and Apple iPhone content gains drove the Q2 beat and “strong” Q3 outlook.

OLED BEHIND DELAY?

Recent media reports have indicated that leaked photos purportedly showing Apple’s “iPhone 8” indicate that the next iteration of its highest-end phone may feature a curved glass OLED screen, no identifiable home button, a stainless-steel chassis and a dual-camera system. However, Apple Insider has reported, citing notes issued by influential KGI Securities analyst Ming-Chi Kuo, that Apple’s iPhone 8 may experience supply shortages through the end of 2017 due to the smartphone’s expected adoption of new technologies, including its OLED display.

The Nikkei Asian Review has recently added that analysts have speculated that OLED handsets could be delivered in late October or November, after the phone’s usual September release.

BAIRD SURVEY: Meanwhile, #Baird analyst William Power tells investors that his Apple survey to gauge demand for the next iPhone shows “solid, though not euphoric” demand, adding that there appears to be higher upgrade interest from older models than in past.

Better battery life and wireless charging were the most desired features mentioned by those surveyed, he noted. The survey doesn’t change his overall outlook, said Power, who continues to recommend purchase of the stock into the iPhone 8 launch.

PRICE ACTION: In morning trading, Broadcom $AVGO rose 7% to over $251 per share while Apple $AAPL added 0.4% to $153.73.

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The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

Apple $AAPL Stock Reaches its All Time High on $1000+ iPhone 8

apple-cash#Merrill Lynch and Goldman Sachs upped their price targets on #Apple $AAPL , while reiterating their Buy ratings on the shares, citing the potential for new products and “significant upside” in iPhone Average Selling Price, or ASPs.

NEW CATEGORIES: In a research note to investors, Bank of America Merrill Lynch raised its price target for Apple to $180 from $155. While noting that last year Apple accounted for 10% of global consumer spending, the analyst told investors that he believes the markets that the company currently addresses can be about $550B in 2020 and close adjacencies can be $300B. This excludes potential Total Available Market, or #TAM, from healthcare and automotive, he pointed out. He also noted that given the iPhone maker’s “immense” net cash, Apple can easily enter most markets through M&A.

Moreover, the analyst argued that new products and categories add to its already “significant” growth opportunity in its existing areas, and that ignoring the “shadow TAM” of new product opportunities understates Apple’s true potential. The analyst believes the tech giant still has room to grow and gain share in the traditional areas of smartphones, tablets, wearables and desktops/laptops, while new areas to explore include game consoles/handheld games, cameras/camcorders, DVD players/Blu-ray players, set-top boxes, streaming audio and video services, wearables, TVs/HDTVs and Virtual Reality.

HIGHER IPHONE PRICES: Meanwhile, Goldman Sachs was also bullish on Apple this morning, raising her price target on the shares to $170 from $164 ahead of the upcoming iPhone 8 product cycle. The analyst told investors in a research note of her own that she sees “significant upside” in iPhone ASPs, expecting the 128GB model to be priced at $999 and the 256GB at $1,099. Given the analyst iPhone SKU analysis, the analyst believes the iPhone 8 will drive well over 50% of total new iPhone shipments in the first four quarters.

Based on the higher mix and ASP of the iPhone 8, the analyst also estimates blended iPhone ASPs to be up 16% year over year in FY18, and sees a relatively modest 40bp headwind to iPhone gross margins in 2018 as additions to the bill of materials and higher memory costs are largely offset by the expected $130 ASP increase in the iPhone 8.

PRICE ACTION: Since start of the month, shares of Apple more than $11. They last traded at $156.10. Earlier in the session the stock hit an all time high of $156.42 per share.

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The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

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