Tech Titans Fall: Amazon (AMZN), Google (GOOG), Apple (AAPL) and eBay (EBAY)

NEW YORK (TheStreet) -- Amazon (AMZN) is reportedly in the process of developing two smartphones, one a low-end device and the other with state-of-the-art eye-tracking technology. TechCrunch reports the more expensive model will have four forward-facing cameras tracking eye and head movements to shift and imitate a 3D interface. The project is still in development and no release timeframe has been confirmed.

Amazon's latest release, the Kindle Fire HDX, received generally positive reviews on Wednesday, though many critics said the lack of Google  (GOOG) Play support detracted from the overall experience.

At the time of publishing, an Amazon had not yet responded to TheStreet's request for comment.

Amazon shares are down 1.2% to $316.68, as of 11:40 a.m. EST. The S&P 500 is down 1.04%.

TheStreet Ratings team rates Amazon as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate Amazon a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins." Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AMZN's revenue growth has slightly outpaced the industry average of 17.8%. Since the same quarter one year prior, revenues rose by 22.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet & Catalog Retail industry. The net income has significantly decreased by 200% when compared to the same quarter one year ago, falling from $7 million to -$7 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet & Catalog Retail industry and the overall market, Amazon's return on equity significantly trails that of both the industry average and the S&P 500.


Google has acquired gesture-recognition software company Flutter for an undisclosed amount. The three-year-old company is known for app software which controls services such as iTunes, YouTube and Netflix with hand gestures.

"We share Google's passion for 10x thinking, and we're excited to add their rocket fuel to our journey," Flutter CEO Navneet Dalal said in a statement.

Google shares dropped 0.67% to $882, as of 11:40 a.m. EST.

TheStreet Ratings team rates Google as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate Google (GOOG) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and increase in stock price during the past year. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results." Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 22.7%. Since the same quarter one year prior, revenues rose by 19.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • GOOG's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.08, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has increased to $4,705 million or 10.65% when compared to the same quarter last year. Despite an increase in cash flow, Google's average is still marginally south of the industry average growth rate of 14.23%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.


Apple (AAPL) is expected to release a third iOS 7 update to fix a glitch in the message system preventing texts from sending.

"We are aware of an issue that affects a fraction of a percent of our iMessage users," Apple said in a statement. "We will have a fix available in an upcoming software update.

It is not known when the update will be available for download.

Apple shares are 1.2% lower at $484.50, as of 11:40 a.m. EST.

TheStreet Ratings team rates Apple as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate Apple (AAPL) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself." Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AAPL's revenue growth has slightly outpaced the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 0.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • AAPL's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, AAPL has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 41.67% is the gross profit margin for Apple which we consider to be strong. Regardless of AAPL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AAPL's net profit margin of 19.53% compares favorably to the industry average.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Computers & Peripherals industry and the overall market, Apple's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • Apple's earnings per share declined by 19.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, APPLE INC increased its bottom line by earning $44.16 vs. $27.67 in the prior year. For the next year, the market is expecting a contraction of 10.9% in earnings ($39.33 vs. $44.16).


PayPal, and parent company eBay (EBAY), announced it will partner with a number of retailers to provide free two-day shipping within the U.S. for a limited time. The offer will apply to purchases made via PayPal on merchandise from Levi's, Sports Authority, Aeropostale (ARO) and iRobot  (IRBT).

The model is similar to Amazon Prime, which offers unlimited free two-day shopping for an annual charge of $79. PayPal hasn't indicated whether it will expand the offer or provide it any permanence.

eBay shares are 1.5% lower at $55.79, as of 11:40 a.m. EST.

TheStreet Ratings team rates eBay as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate eBay (EBAY) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."


Highlights from the analysis by TheStreet Ratings Team goes as follows:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 22.7%. Since the same quarter one year prior, revenues rose by 14.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Although EBAY's debt-to-equity ratio of 0.21 is very low, it is currently higher than that of the industry average. To add to this, EBAY has a quick ratio of 1.73, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has increased to $1,011 million or 31.64% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 14.23%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

Written by Keris Alison Lahiff.

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