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Facebook, Yahoo and Google Beat the Market - Analyst Blog


Technology companies had a rather eventful week, with many of the top players easily outperforming the market. Here's a look at the top stories-

Facebook, Publicis Getting Together

Digital advertising is clearly coming of age with social and mobile platforms attracting significant spending. The third largest advertising consortium Publicis has reportedly agreed to spend $500 million to collaborate with Facebook (NASDAQ: FB) on the study of users, analysis of data, development of ad campaigns targeting specific audiences and development of content (including in the video format) for Facebook and Instagram.

Publicis will also gain access to Instagram's prized inventory (the Instagram part is similar to its deal with Omnicom announced earlier this year). The initial rollout will be in North America, but expansion to international markets could follow.

Google Is the World's Leading Brand

Despite Microsoft's (NASDAQ: MSFT) continued brand attacks, regulatory scrutiny of its business practices and its ongoing legal battles, Google (GOOGL) has emerged as the most valuable brand, according to an annual study commissioned by WPP and carried out by Millward Brown Optimor. In doing so, Google toppled Apple (NASDAQ: AAPL), which had the leading spot for three years.

Millward Brown said that Google's Glass, investments in artificial intelligence and the broader application of Android across new platforms like automobiles drove the increase in its mind share. But Google still generates the bulk of its revenue from search advertising, so whether this increased brand value will translate to revenue and profits is not clear yet.  

Microsoft's New Tablet Targets Laptops

Microsoft has apparently shelved its plans for a Surface mini and has instead come out with what looks like a Surface mega. While still technically a tablet, the Surface Pro 3 is big enough to be a laptop and in fact functions as one. Microsoft's target is clearly the enterprise market, where Apple's products have made headway.

So it's not sparing costs – Surface Pro 3 comes equipped with Intel (NASDAQ: INTC) processors and retails for $799-$1,949. The MacBook Air that Microsoft is pitching it against starts from $899. Considering the price points, Microsoft may not alienate its hardware partners although the beauty of the device could make them uncomfortable.

Yahoo Japan Wont Buy eAccess

Yahoo! (NASDAQ: YHOO) shares rallied last week, as Yahoo Japan decided against buying Japanese telecom company eAccess for $3.2 billion. The rationale for the deal was never really clear since all it hoped to achieve was an expansion of its services to smartphones and tablets, which would come at considerable extra cost.

The real reason was likely to have been an attempt to bail out debt-ridden Softbank by using cash from Yahoo Japan. (Yahoo has a 35% stake in Yahoo Japan, less than Softbank's 42.5%.)


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GOOG = Class C shares (new, non-voting)

GOOGL = Class A shares (old, 1 vote per share)

Other stories you may have missed-

HP Reports, Announces More Job Cuts: Hewlett Packard Company (NYSE: HPQ) announced second quarter earnings that were in line with our estimates. CEO Meg Whitman remains optimistic about the company's prospects despite the fact that the only positive from the quarter was a more stable PC market.

The focus has shifted from PCs and peripherals to services, cloud and now 3D printing. The fact that these businesses have yet to gain momentum is likely the reason it needs to reduce the global workforce by another 11,000 to 16,000.  

Google Looking to Buy Twitch: YouTube is rumored to have notched up a deal to acquire video game streaming platform Twitch for roughly a billion dollars. This would be a very good deal for Google for a number of reasons. Twitch has 45 million users that will join YouTube (in fact it's the fourth largest destination for peak Internet traffic behind Netflix [NFLX], Google and Apple).

Moreover, all of this traffic is in live streaming, an area where YouTube has had no success. The combination would make YouTube more compelling, while adding strength in gaming. Live streaming in other verticals could be added later.

Intel's Broadwell to Miss Back-to-School Season: Intel CEO Brian Krzanich has said that Broadwell will miss the back-to-school selling season, but will make it to the 2014 holiday season. This is a bit of a disappointment since it will miss a major selling season. However, Broadwell is based on 14nm process and it won't be easy for a competitor to close the gap given the technical issues associated with this shrink. At the same time, tablet penetration rates appear to be peaking and the PC market stabilizing, which means that adoption is likely to be good.

Google's Foreign Cash Could Fund Acquisitions: Google has apparently told the SEC upon request that it may spend up to $30 billion of foreign cash in acquisitions and IP. At the end of the last quarter, it held around $34.5 billion of cash overseas and another $25 billion in the U.S. Google's decision not to repatriate the cash and pay necessary taxes has been supported by 90% of its shareholders.

First HBO Shows come to Amazon Prime: Amazon's (NASDAQ: AMZN) share prices moved up as its Prime Instant Video (a subscription service that comes for $99 a year)added HBO shows like The Sopranos, The Wire, Deadwood, Six Feet Under, Flight of the Conchords and Eastbound & Down as well as some seasons of Boardwalk Empire and True Blood. The company has also stepped up its promotion of the Fire TV STB through emails authorizing a 30-day free trial.

Also read: Netflix Goes to Europe

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