The latest Market Talks covering Technology, Media and Telecom. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.
0812 GMT - NetEase's earnings growth looks set to slow this year, dragged by the weak performance of the newly launched "Condor Hero" game and declining revenue from another title, "Fantasy Westward Journey", HSBC Global Research analysts say. The company's PC gamer user activity dropped 6% on year in 1Q, which may be dragged further by lower income from "Fantasy Westward Journey", they add. The return of Blizzard's games to China in 2H via a deal with NetEase may partially offset that impact. HSBC expects NetEase's total and game revenue to rise 3% each on year for 1Q. They keep a buy rating on the stock but cut the target to $126.00 from $130.00. ADRs closed at $94.02. (jiahui.huang@wsj.com; @ivy_jiahuihuang)
0652 GMT - STMicroelectronics cut its revenue and margin forecasts for the year more than the market had anticipated, Citi analysts write. The European chip maker expects revenue of $14 billion to $15 billion in 2024 compared with a previous range of $15.9 billion to $16.9 billion. Its gross margin is now forecast in the low 40s compared with the previously expected low to mid-40s. "Expectations had been declining into results, but this is a major cut to 2024," the analysts say. STMicroelectronics is grappling with a slowdown in demand for chips in the automotive sector. (mauro.orru@wsj.com)
0406 GMT - Bilibili could face risks meeting its goal of breaking even in 3Q, HSBC analysts say in a research note. Although the Chinese video platform's move to cut the incentive plan for mid- to top-content creators could lift gross profit margin, improvement of operational expense is more limited, they say. Meanwhile, cutting incentives for content creators and payments to livestreamers could pose long-term risks, as creators could migrate to other platforms, the analysts say. HSBC reckons Bilibili would likely break even in 4Q, and trim its 2024 earnings forecast by 8%. HSBC maintains a hold rating on Bilibili and trims its ADR target price to US$11.30 from US$11.50. ADRs last closed at US$12.75. (sherry.qin@wsj.com)
1412 GMT - The analyst consensus on Airbnb's room night growth in FY24 was pulled down to 11% from 13% after the short-term rental platform provided 1Q guidance, leaving little downside risk for a company that has multiple levers in place to exceed the Street's views, Mizuho analysts say in a research note. Current estimates for seasonality in 3Q don't account for the incremental demand Airbnb could see from the Summer Olympics in Paris, the analysts say. Airbnb might also gain share this year as hotel prices could remain elevated due to staff shortages, they say, pointing out that staff salary growth in the hospitality industry this year is expected to outpace growth in hotels' average daily rates. The analysts upgrade Airbnb's stock to a buy from neutral and raise price target to $200 from $150. (dean.seal@wsj.com)
1319 GMT - CoStar Group started monetizing Homes.com memberships on Feb. 12, a move that drove nearly $40M in net new bookings for 1Q and helped boost quarterly revenue 12% year-over-year to an above-consensus $656M. CEO Andy Florance says the rollout was the "strongest sales launch of any product in the company's history" and has prompted CoStar to raise its 2024 sales forecast for Homes.com. In a research note, JMP analysts praised the company's early success in attracting nearly 8,000 subscriptions to Homes.com, with about 90% of members choosing a 12-month subscription. Homes.com has also been able to grow its brand awareness to 24% in March from just 4% in January thanks to CoStar's brand campaign, the analysts say. Shares tick up 1.6% to $86 premarket. (dean.seal@wsj.com)
1304 GMT - Rogers Communications is looking to sell its data centers as part of a broader C$1-billion asset-sale plan, executives say on an earnings call. The Canadian telecom company says that most of the assets it plans to sell will be in real estate, and noted it wants to sell enterprise data centers which focus on third-party sales. The sales process seems to be slower, however, due to the interest-rate environment which has been higher and dragging longer than expected. "I do expect that we will have asset sales to announce this year, and hoping that we'll have sufficient interest in the data centers," one executive says. (adriano.marchese@wsj.com)
1250 GMT - Rogers Communications says its costs will be C$100 million lower in 2024 thanks to lower interest rates and other factors. In an earnings call, Rogers executives say the Canadian telecom company expects its costs will be lower than they would have otherwise been thanks to C$50 million from Cogeco interest divestiture proceeds received in December, which it says was "money we don't have to borrow." In addition, it says its recent C$3.4 billion bond deal with a coupon rate of 4.9%, which is lower than the previous 6.5% bonds it had, will save another C$50 million. Together, these will help reduce costs in the year and boost free cash flow, executives say.(adriano.marchese@wsj.com)
1243 GMT - Increased Canadian investment in intangible assets such as software and data in recent years may prove to be an important source of productivity near term, a study by Statistics Canada suggests. The agency notes real GDP per capita has grown at an average 1.1% annually since 1981, rising to C$58,100 per person in inflation-adjusted dollars at end-2023 from about C$36,900. Yet the pandemic shock and falling per-capita output in recent quarters has left GDP per capita 7% below the long-term trend. The study finds industries that relied heavily on digital technologies were much more resilient during the pandemic, with higher digital intensity in finance and wholesale trade industries contributing to productivity gains during the recovery period. (robb.stewart@wsj.com; @RobbMStewart)
1111 GMT - AT&T's free cash flow hit $3.1 billion during a typically cash-poor 1Q, beating its earlier guidance of at least $2.5B and soothing investor anxieties about the wireless company's financial chops. The company a year earlier spooked the market with an aberrant $1B FCF figure before making up for the shortfall later in the year. AT&T shares up 3% premarket. (andrew.fitzgerald@wsj.com; @drewfitzgerald)
(END) Dow Jones Newswires
April 25, 2024 04:20 ET (08:20 GMT)
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