Technology Stock Roundup: Yahoo Slides as Alibaba Files IPO - Analyst Blog

The Alibaba IPO filing was the hottest news last week, but Facebook FB, Intel INTC, Google (GOOGL) and Microsoft MSFT also played their roles.

Alibaba IPO Raises Questions About Yahoo

Chinese ecommerce giant Alibaba, in which Yahoo YHOO has a sizeable stake, filed its IPO last week.  But although shares have been buoyant in anticipation of the filing, there was in fact a huge sell-off following the announcement.

The negative sentiment started off with the news that Yahoo's estimated stake of 24% had in fact got diluted to 22.6%, meaning lower cash inflow to Yahoo when it sold the agreed-upon 40% of its holdings. The value of its remaining holdings would also therefore be lower.

Second, Alibaba priced its shares at $50, which values Yahoo's stake at a little over $26 billion, or most of its current market capitalization. Taking out the value of its other Asian assets would indicate that the core business is worth next to nothing. Following the IPO, Yahoo will also lose out on some royalty income, which will make a difference considering the challenges. So what of Mayer's turnaround efforts?

It is a fact that the company is much better-focused now and while the benefit of the numerous acquisitions is not evident yet, Yahoo's progress can be tracked by the undeniable increase in traffic and engagement. Mayer and others at Yahoo are optimistic about the core business and Yahoo's success, particularly in mobile and intend to use the windfall judiciously. But 2014 promises to be rocky, with monetization improving only gradually.

Privacy Concerns Hit Facebook

Last week, Facebook investors expressed concern regarding the repercussions of further intrusion into user privacy. When Facebook acquired Finnish app company Moves, it had promised not to integrate Moves user data into Facebook profiles. But when The Wall Street Journal reported that Moves had made changes to its terms of service, many people, including a couple of privacy watchdogs questioned its motives.

Whereas previously Moves expressly stated that it wouldn't disclose an individual user's data to third parties without a user's consent or law enforcement order, it has now made allowances for Facebook in order to "help provide, understand, and improve" services. Facebook says the sharing will be limited to its staff so they can further develop and support Moves, but of course the wording is not so limiting. At any rate, it's possible that privacy watchdogs Center for Digital Democracy and the Electronic Privacy Center will take the matter to the FTC. 

Is “Win-tel” Giving Way to “Chrome-tel”?

Intel has dived into the Chromebook market, announcing 20 new models that will be using its Bay Trail chip and Celeron brand. The new models will come from Hewlett Packard HPQ, Dell, Acer, ASUS, Lenovo, LG Electronics and Toshiba. Intel INTC-powered Chromebooks will now have 11 hours of battery life and be available at a minimum cost of $349. All the models will launch by year-end.

Success in tablets is not evident yet, but Chromebooks are mobile devices with stupendous growth rates (2.5 million units in 2013 to 4.2 million units this year, according to IDC). If most of them have Intel inside, this is indeed good news for the company; particularly since the PC market remains in the doldrums.

Of course Intel will continue to protect the desktop for its higher-end chips and chances are the Wintel combo will continue in the segment. But the problem with the mobile market is cost. Since both Intel and Microsoft have high-end products, they are destined to walk separate ways in this market. Therefore, Microsoft likely will continue to favor cheaper ARM designs while Intel partners with companies that offer free operating systems.

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Microsoft Extends Lead In Enterprise Software Market: IDC reports that Microsoft remains the leading enterprise software provider in the world with a 17.8% market share that jumped 12% over the past year. IBM IBM grew much slower taking the second spot, followed by Oracle ORCL, SAP SAP and Symantec SYMC. Microsoft led in 2 of the three categories (applications software and systems infrastructure) and was the third largest provider of application development and deployment software.

EA Shares Surge Post Earnings: Electronics Arts EA posted better-than-expected quarterly resultsthat sent shares soaring 24.8% last week. Investors have punished the shares in the past as EA missed expectations time and again. The new CEO is likely breathing life into the company, making it possible for EA to emerge as a leading provider of online games and delivering on its growth targets.

Wii Maker Plans New Devices For Emerging Markets: Nintendo's president has said that the company would be making new devices for emerging markets, a departure from its strategy of selling lower-end versions of its games in these markets. The decision may have been prompted by Chinese regulators deciding to lift the ban on selling video game consoles, as well as the growth prospects (PricewaterhouseCoopers estimates that China's video-game industry will be worth $10 billion in 2015).

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