We believe that TMT is in the midst of a once-in-a-generation sea-change paradigm shift, driven by mobile platforms, cloud computing, and wireless broadband. The last such shift, catalyzed in the ‘80’s by PCs, cell phones, and telephone/cable deregulation, drove waves
– Gainsaying the naysayers, QCOM sees double digit growth in 3G/4G handsets with surprisingly stable ASPs for the next few years – driving chip opportunity and royalty collections. – Snapdragon is the undisputed SoC leader, dominant in flagship smartphones while
– TWTR has settled into the low-mid $40’s, yielding a fully diluted market cap of roughly $30B – coincidently the same floor valuation suggested by discounting a future multiple of sales. – 4Q13 consensus expects a 32% QoQ seasonal sales
– QCOM delivered on the top line, but missed EPS due to $0.10 of litigation costs. 4Q guidance was cautious, but CEO Jacobs blessed a double digit 5 year CAGR for sales and earnings. – Meanwhile, CBS handily beat estimates
TWTR sales growth will be driven by 5 factors: number of users, engagement by users, ad density, ad pricing and additional monetization vehicles. Monthly active users were up 39% YoY in 3Q13, with considerable further room for growth, given
– FB and TWTR revenues are driven by the same things – how many user visits can you attract and how much advertising can you get them to view? – FB spooked investors on the first driver by showing decelerating
– Apple beat consensus with 4QFY13 revs of $37.5B vs. $36.9B and EPS of $8.26 vs. $7.96, but the dreaded whisper number was apparently higher still – Expectations and iPhone launches aside, the results are kind of “meh” – sales
– Preliminary pricing for TWTR at $17-20/share values it at $12.5B, fully diluted at the upper end of the range. I believe that it is worth $30B+ and that pricing may rise ahead of issue – TWTR management has begun
Quick Thoughts: Mister Softy’s blow out quarter and business as usual at Amazon – MSFT blew out earnings amidst a sweeping reorganization; It’s difficult to compare growth across segments, but growth is growth and more to come with new products
TWTR is losing money today, but not for long. Stripping out stock compensation, TWTR’s COGS (35.5% of sales), R&D spending (34.5%), and SG&A (40.7%) currently yield (-9.7%) non-GAAP operating margins, compared to FB at 41%, GOOG at 32% and LNKD
