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The Zacks Analyst Blog Highlights: Intel, Advanced Micro Devices, Alphabet, Lexmark and Amazon

For Immediate Release

Chicago, IL – April 26, 2016 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Intel (INTC), Advanced Micro Devices (AMD), Alphabet (GOOGL), Lexmark (LXK) and Amazon (AMZN).

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Here are highlights from Monday’s Analyst Blog:

Technology Stock Roundup: In the Thick of Earnings Season

Technology earnings started pouring in last week with more misses than beats. As a result, shares have mostly moved down past the announcements. Here is a brief recap of the Intel (INTC), Advanced Micro Devices (AMD) and Alphabet ( GOOGL) earnings stories plus other top news.

Earnings Reports

Intel : While Intel did report first-quarter earnings last week, what stole headlines was its decision to let go of 11% of the workforce. But the restructuring was probably in the cards given the persistent decline in the PC market, failure of the mobile business to take off and new headcount acquired through Altera.

Management said that the rationale for the restructuring was Intel’s diversification away from the PC business: 40% of revenue and 60% of margin came from non-PC business in 2015. That’s probably why Intel shares recovered after the initial sell-off.

Advanced Micro Devices : In AMD’s case too, the earnings announcement wasn’t the factor driving investor sentiments. Instead, the shares soared 52.3% on Friday upon the announcement of a licensing deal with the Chinese JV Tianjin Haiguang Advanced Technology Investment Co., Ltd. Under the deal, the company will license x86 chip technology (high performance processor and SoC) to the JV to facilitate the manufacture of servers within China for use by Chinese players.

AMD expects to make around $300 million from the deal. AMD also delivered better-than expected results and guidance (although it’s still reporting losses) and promised to turn profitable on a non-GAAP basis in the second half of the year.

Alphabet : The Alphabet story is still mostly about Google, which continues to grow strongly despite increased competition from multiple quarters and rising costs related to mobile. While overall results missed the Zacks Consensus Estimate, they were significantly hit by currency (54% of the business is generated internationally). The Other Bets piece remains an area of investment where losses increased while revenue continued to grow strongly. Around 60% of cash ($45 billion) is held overseas. While share repurchases continue, management focus remains on investing in the business because of significant growth potential in some capital-intensive Other Bets.

Lexmark in Buyout Talks

Lexmark (LXK) is another hardware company looking for an exit from hardware . The company has been transitioning to a more software focused and MPS driven business. But these initiatives may not bring as much to shareholders as the $40.50 a share that a consortium of companies led by Apex Technology Co. Ltd. and PAG Asia Capital and including Legend Capital Management Co. Ltd is offering.

That’s what management is purported to have thought because after the news became public and share prices responded appropriately, two law firms, namely Tripp Levy PLLC and Robbins Arroyo LLP are investigating the deal on behalf of shareholders. Both law firms point to the fact that the shares have traded higher at some point during the past year.

This may not the only glitch, however, as the U.S. government has in the past not been too keen on transferring key technology to Chinese companies. Hardware has been a different story however, so we have to wait and see.

Amazon Streaming Update

Amazon (AMZN) has launched a new Prime Video subscription that offers consumers the option to stream Amazon instant video. Consumers now have the option of buying a video-only subscription for $8.99 a month or a full Prime subscription for $10.99 a month. The existing plan requires an upfront payment of $99 a year, which also includes video.

Amazon’s reasons for this tiered pricing weren’t mentioned by the retailer itself, but there could be a number of reasons. The first would be that not all subscribers would be able or willing to make an upfront payment of $99, so the monthly pricing model would help to draw them into Amazon’s ecosystem. This would ultimately help to increase Prime memberships in a highly profitable way. The second could be an attempt to wrest some market share from Netflix, which charges $9.99 per subscription and is in the process of migrating customers to its premium service, which costs a buck more. Netflix and Amazon aren’t exactly comparable (they have different shows and original content Netflix appears more popular). But Amazon has gone slow and steady with its video plans, so this could be beneficial.

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