For Immediate Release
Chicago, IL – April 25, 2012 – Zacks.com 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 Apple (
AAPL), DTS Inc. ( DTSI), SRS
Labs ( SRSL), Dolby Laboratories Inc. (
DLB) and Sony Corp. ( SNE).
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Here are highlights from Tuesday’s Analyst
Blog:
Apple Earnings Crush It Again
Apple ( AAPL), the world’s
largest company by market cap and recent investor darling, reported
great earnings just a few minutes ago. The company saw profits come
in at $12.30/share well above the Zacks Consensus Estimate of
$10.03/share, pushing the stock up over 7.2% immediately after the
release.
This solid beat comes after some were beginning to grow worried
over the firm and its impressive growth trajectory. Concerns were
building over the recent price slump and anxiety over a possible
decline in subsidies from telecom giants AT&T and Verizon for
the iPhone.
However, these worries were easily dispelled after the company’s
release as AAPL once again crushed lofty expectations for growth in
many of its key products.
Some of the key stats:
- Revenues come in at $39.19 billion compared to the Zacks
Consensus of $36.58 billion
- iPhone sales up 88% to 35.1 million units
- iPad sales up 151% to 11.8 million units
- Gross margin rose 600 basis points to 47.4%
- International sales made up 64% of total revenue
While the huge beat may have come as a surprise to some, those
who have been following the earnings estimate trend in AAPL
probably aren’t too surprised as analysts have generally been quite
bullish on the tech giant.
The company has seen earnings estimates rise almost universally
over the past month with seven analysts raising their estimates in
the past seven days and 13 raising their estimates in the past 30
days. Meanwhile, on the downside, only one analyst bumped their
target lower out of the 33 estimates that are in the Zacks
Consensus Estimate.
Furthermore, the magnitude of the move in estimates has also
been impressive in Apple over the past quarter. Just a month ago
the Zacks Consensus Estimate called for earnings of $9.76/share
while the 90 days ago number was at $9.13/share. Given these
figures, estimates have moved up by about 9% over the course of the
quarter including a nearly 2.7% increase in the past 30 day
period.
Clearly analysts were expecting another robust report and AAPL
delivered once again.
DTS Set to Acquire SRS Labs
A leading provider of high definition (HD) audio technology,
DTS Inc. ( DTSI) recently announced that it has
entered into a definitive agreement to take over SRS
Labs ( SRSL) in a 50:50 cash-and-stock deal totaling about
$148.0 million. DTS expects the acquisition to be completed by the
end of the third quarter of fiscal 2012.
Under the terms of the agreement, SRS shareholders have the
option of choosing from either $9.50 in cash or 0.31127 DTS shares
for each SRS share they hold. DTS expects to pay the cash portion
from its existing cash balances, which stood at $50.8 million at
the end of December 31, 2011. The offer price reflects a premium of
38.0% per share over the share price of SRS on April 16, 2012.
SRS is a leading provider of audio processing and enhancing
technologies and boasts of a strong clientele, including some of
the most well known brands of the electronic industry such as
Samsung, LG and Sharp. However, its vast audio patent and trademark
portfolio remains the most important asset.
Post acquisition, DTS is expected to have more than 1000 audio
patents and trademark in its kitty, which will help the company to
expand its services in the rapidly growing mobile industry and
other network-connected devices. Since SRS technology is widely
used in televisions (particularly home entertainment), smartphones,
and virtual audio applications (PCs), we believe that the
acquisition will boost DTS’ product portfolio, thereby expanding
its customer base going forward.
Moreover, the acquisition will help the company to meet the
growing consumer demand for high-quality audio regardless of the
platform used. Apart from patents, the acquisition will also
generate significant cost and operating synergies going forward.
DTS expects the acquisition to generate at least $8.0 million in
estimated annual cost savings starting from 2013. DTS expects the
transaction to be accretive on a GAAP basis by 2013.
We believe that DTS will continue to gain market share riding on
its strong product portfolio, robust growth from the Blu-ray market
and increasing penetration into network connected devices. However,
we believe that the volatile macro environment and sluggish
consumer spending will remain headwinds for Blu-ray sales going
forward.
Moreover, we believe that the strong growth of network connected
devices will eventually cannibalize the sales of DVD-based products
and Blu-ray sales. This in turn will hurt DTS’ growth over the long
term. Further, the company faces significant competition from
Dolby Laboratories Inc. ( DLB), Sony
Corp. ( SNE) and privately-held THX Limited, which will
hurt its profitability going forward.
Thus, we remain Neutral over the long term (6-12 months).
Currently, DTS Inc. has a Zacks #4 Rank, which implies a Hold
rating in the near term.
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APPLE INC (AAPL): Free Stock Analysis Report
DTS INC (DTSI): Free Stock Analysis Report
SRS LABS INC (SRSL): Free Stock Analysis Report
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