Big tech sector names received plenty of press today as Apple (AAPL) reached its highest levels in history and Netflix (NFLX) continued to suffer the disdain from its decision to separate its DVD-by-mail enterprise from its “Watch Instantly” web streaming business. This, in conjunction with a price increase for the service has disappointed both its customer base and investors.
Shares of Netflix have been tumbling fast in the aftermath. Even investors confident in the ability for Netflix to overcome price boost are likely tempted to shed shares in the panic. The company is now negative for the year, sliding nearly 40 percent since July of 2011.
Since Monday, the decline has been especially dramatic and yet Reed Hastings, the co-founder of the company, is standing by his decision to divide the businesses and focus on bringing Netflix into an entirely digital age. The decision would shrink the size of the library from an estimated 100,000 titles available in hardcopy to roughly 20,000 available for internet streaming.
The reduction in titles, paired with the price boost has infuriated thousands of customers who have written the company to express their irritation. 16,000 complaints have been address to the company, lamenting the creation of Qwikster, the company’s stream exclusive business and other related changes.
From an analytic perspective, the deal appears to come too soon, before Netflix has the capacity to renegotiate digital deals from studios and widen the selection. In the meantime, another company Dish Network claimed its Blockbuster acquisition would soon result in a unique streaming offering that is being speculated to rival Netflix.
The bevy of changes encouraged a fair share of the 23 analysts covering Netflix to reduce their targets though many still have PTs exceeding the current diminished levels.
Other big names in the tech sector making headlines today included Apple (AAPL), which reached its record high of $422.86 mid-day. The decision for Steve Jobs, co-founder and former CEO of Apple to step down from his post and a resume a position of Chairman, had been anticipated to negatively impact shares and Apple’s future. Instead, investors, confident the company’s pipeline, as developed by Jobs, have continued to seek out shares. Apple has remained resilient during the recent volatility, an attractive trait in a company as many investors question when the swings will stop.
One company that has not boasted such consistency this past year is Adobe System Inc. (ADBE) . Today, Adobe reported fiscal third-quarter profits of 39 cents a share on revenue of $1.013 billion compared with earnings of $230 million, or 44 cents per share on $990 million in sales from the year-ago period. While the numbers fell slightly short of analyst expectations, the company’s fourth quarter forecasts were well ahead of estimates. Sales for the current quarter are expected to come in between $1.08 and $1.13 billion, according to the company, surpassing Wall Street expectations of around $1.07 billion according to Bloomberg.
The improvement in earnings for the graphic-design software company is reportedly the result of increased demand from businesses. Demand for its Creative Suite programs has begun to fall off as corporations slash budgets for marketing departments, which often employ Adobe program’s from Illustrator to Photoshop. Additionally, the failure of Adobe’s flash program to please the taste makers at Apple and Microsoft Corp. helped lead the stock lower by 20 percent this year.
Still the company anticipated several large fish will help bolster fourth-quarter profits. Meanwhile, the largest graphic-design software company world-wide, is working on adapting its products to sync with HTML5 programming language. HTML5 has continued to grow in popularity and a program that is able to function in conjunction with this language is more likely to contribute to long-term success.
Shares of Adobe, because of the mixed message rose and then fell for the day, eventually closing in the red for Tuesday.
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