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BlackBerry Back On Track?: Tech Winners & Losers

NEW YORK (TheStreet) ––BlackBerry (BBRY - Get Report) shares spiked 4.3% to $9.54 in response to a report that the company had completed its restructuring.

Reuters reported today that an internal memo circulated to all BlackBerry employees said the company had completed its restructuring process. The memo, sent Friday, was from CEO John Chen, who wrote, “We have completed the restructuring notification process, and the workforce reduction that began three years ago is now behind us.” Chen also said that BlackBerry would soon begin hiring in product development, sales, and customer service.

BlackBerry could not be reached for comment.

Chen is committed to turning around the troubled Canadian company, cutting costs, selling property, and building revenue from business services and the BBM messaging service. In July, for example, BlackBerry sold its research and development department in Germany to Volkswagen (VLKAY). In the past three years, the company has shrunk its workforce by roughly 60%.

Must Read: How Apple's Big Deal With IBM Hurts BlackBerry and Microsoft

Last week, Chen told Bloomberg Television that while BlackBerry had received no buyout offers, it would be profitable by March 2016, with an 80% chance of turning itself around independently.


GT Advanced Technologies (GTAT) shares jumped 7.1% to $15.13 despite a mixed earnings report.

GT reported yesterday that in its second quarter, the company earned $58.0 million in revenues, down from $168.3 million a year earlier. This yielded a net loss of 16 cents per share, well below earnings of 19 cents per share a year earlier. Analysts polled by Thomson Reuters modeled a loss of 14 cents per share on revenues of $63.9 million.

GT’s full-year revenue guidance was also lower than expected: the company expects revenues between $600 million and $700 million, while it had previously forecast a range of $600 million to $800 million. This estimate was also short of analysts’ expected $667 million.

However, full-year earnings per share guidance was higher than expected. The company now expects earnings between 12 cents and 18 cents per share, up from both the previously forecast range of 2 cents to 18 cents and analysts’ expected 3 cents. This increase reflects “an expected change in mix and more favorable gross margins in the second half of the year,” according to the press release.

"Results during the second quarter were in line with our guidance," said CEO Tom Gutierrez. "We have continued to see strong interest in our suite of sapphire production tools.” He added, “We remain confident about the long-term potential of the sapphire materials business for GT.”

Gutierrez also said that GT, which supplies advanced sapphire materials to Apple (AAPL), would receive its fourth and final Apple payment on schedule.

Several analysts issued reports in response to the results. Goldman Sachs analyst Brian Lee wrote last night that he was reiterating his “buy” rating and would reevaluate the price target after the call, noting that the reduced full-year revenue guidance was “was better than expected, in our view.”

Stifel Nicolaus analyst Sven Eenmaa, who holds a “buy” rating on GT stock, wrote, “The guidance implies to us continued progress with Apple with increasingly material volumes as production at now nearly completed plant starts to ramp through 2H14, and final $139 million payment from Apple is expected in October.” Raymond James analyst Pavel Molchanov, who rates the stock “market perform,” wrote that GT’s “relationship with the world’s most highly-valued tech company has clearly outweighed the transition” in financials. 


Shares of RetailMeNot (SALE - Get Report) plummeted 25.6% to $18.83 after reporting disappointing earnings.

The online coupon marketplace’s second-quarter net income declined 16% year-over-year, to $4.3 million, or 19 cents per share, 1 cent above consensus estimates. Revenues this quarter were $59.5 million, just shy of the expected $60 million and a 37% increase year-over-year. Mobile app sessions this quarter totaled 169.2 million, up from 26.5 million in the same quarter last year. Globally, 18.5 million mobile apps have been downloaded as of this quarter, up from 7.1 million in June 2013.

"Our results continue to demonstrate the value of our multi-channel services that help consumers save money and enable retailers to increase sales in the United States and international markets," said CEO Cotter Cunningham in a statement. "Overall we saw strong growth in consumer usage and engagement across platforms. We believe that from discovery to purchase, we offer retailers high ROI channels that help them turn shoppers into buyers."

Like other online vendors such as eBay (EBAY), RetailMeNot was hurt by changes to the Google (GOOG) search algorithm. The Wall Street Journal reported last month that according to research analytics software Searchmetrics, RetailMeNot’s search-engine optimization visibility fell 48% in one week after the Google update.

RBC Capital Markets analyst Mark Mahaney downgraded the stock to “sector perform” from “outperform” this morning. He believes that Google will remain a challenge for the company: “We believe that Google, as it expands more aggressively down the ecommerce funnel (e.g., PLAs, Google Shopping) may constitute a substantial long-term challenge to SALE’s fundamentals.”


Arista Networks (ANET) shares rose modestly following positive analyst coverage ahead of earnings, gaining 2.12% to $70.70.

Santa Clara, Calif.-based networking company Arista went public in June of this year. In its first day of trading, it sold 5.25 million shares for $43, above the marketed range of $36 to $40. The stock closed up 28%, raising $226 million.

Wells Fargo analyst Jess Lubert reiterated his “outperform” rating. He projects earnings in line with analysts’ expectations. His checks “suggest Arista is benefiting from strong data center spending, with a combination of new builds and upgrades to higher speed Ethernet connectivity appearing to drive strong demand for the company’s switches.” He also expects the company will meet or surpass his gross and operating margin estimates of 63.0% and 10.2%, respectively.

RBC Capital Markets analyst Mark Sue also reiterated his “outperform” rating and his $77 price target on the stock. However, he models earnings and revenue less than consensus, at 11 cents per share on revenues of $125 million. He notes that the company’s markets, especially cloud computing, have performed well: “Web 2.0 customers are rapidly building out large data-centers, while enterprises are prepping their move to the cloud; a multi-year cycle. Data-center capex is healthy, estimated +13% YoY this year. Microsoft recently reported commercial cloud revenue +147% YoY, driven by Office 365 & Azure and expects to expand its data-center footprint and capacity. Juniper’s recent switching results (+25% YoY) point to healthy switching market uptake.”

Needham and Co. analyst Alex Henderson maintained his “buy” rating and $75 price target on Arista. He cites Arista’s competitors as both indicators of strength and potential pitfalls: “Strong Data Center indications from Intel (INTC) support a robust outlook. The outlook for the quarter looks uniformly positive. The only question mark is Cisco’s (CSCO) pricing and we think Arista can power through this expected headwind.”

Arista will report its earnings, the company's first since its IPO, on Thursday after the bell. Analysts polled by Thomson Reuters expect the company to report earnings of 13 cents per share on revenues of $125.3 million.

--Written by Laura Berman in New York

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SYM TRADE IT LAST %CHG
ANET $79.75 -1.30%
BBRY $7.99 0.25%
GTAT $0.50 -2.08%
SALE $17.19 -0.64%
AAPL $125.62 -0.30%

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