Apple, Imax buck July losses; Napster, Yahoo take hit
EmptyThe Nasdaq and just about every other index took a beating last month, dragging down new-media shares in general. So, naturally, shares of Apple Inc. moved up 8%.
Apple reported huge quarterly sales of Macintosh computers even as sales of iPods weren't especially impressive and its iPhones were somewhat disappointing -- considering the hype. Apple, however, dropped in July after unsubstantiated rumors surfaced that it would cut back production on its iPhone.
Apple's July gains come at the expense of rivals not only in the telephone and computer businesses, but in digital music. That is one reason shares of Napster Inc., an iTunes competitor, took a nosedive during the same month that the music-enabled iPhone debuted.
Napster plunged 18% to $2.79 last month. The company delivered its quarterly financial results Wednesday.
Analysts' opinions on Napster haven't changed in months, with a couple calling it a "strong buy," one calling it a "strong sell" and others indifferent about it.
RealNetworks Inc. also took a hit, even though it also is in growth sectors like online video and games, as well as music via its Rhapsody service. RealNetworks dropped 12.9% to $7.12 on the month, though it moved higher Wednesday after it won a patent lawsuit and earned an analyst upgrade.
The Nasdaq lost 2.2% in July.
TiVo Inc. caught an upgrade in July, and shares made a healthy gain. Then a few days later, another analyst advised investors to sell TiVo. The bearish analyst was proven right, in the short term, at least.
But the bull -- Kaufman Bros. analyst Todd Mitchell -- who went from a "sell" recommendation on TiVo to a "buy," maintains that TiVo is at an inflection point because the company begins its long-awaited rollout to select Comcast Corp. this month; its patent infringement lawsuit against EchoStar Communications Corp. could wind down this year in TiVo's favor; and TiVo's advertising business is underestimated.
The analyst put a $9 price target on TiVo. TiVo fell 5% to $5.50 in July.
Even Bear Stearns analyst Kunal Madhukar, who only rates TiVo shares "market weight," wrote last month that TiVo's advertising rating service could become a big business. He has a $7 target on TiVo.
DVR competitor NDS Corp., controlled by News Corp., didn't fare any better in July as it fell 7% to $43.72. The company is set to report quarterly results Tuesday.Yahoo Inc. so far hasn't done much under new CEO Jerry Yang, who recently replaced Terry Semel. In Yang's first month at the helm, Yahoo fell 14.3% to $23.25, no doubt because of another below-par earnings report.
Google Inc. also didn't perform well in July, even though Yahoo's problems usually are traced back to Google's successes. Google's quarterly earnings fell just shy of some expectations, and its shares were off 2.4% to $510 for the month.
"Despite the lower-than-expected earnings, our longer-term thesis remains unchanged, and we think the negative reaction to the stock creates a buying opportunity for longer-term investors," JMP Securities analyst William Morrison wrote.
One of the more significant new-media whoopings went to Netflix Inc., which reported declining quarter-over-quarter subscriptions for the first time in its history. Shares fell 11% to $17.23.
Its major competitor, Blockbuster Inc., added 600,000 subs to its online offering, and its shares also fell, though just fractionally, to $4.29. It should be noted, however, that Netflix earned money in its most recent quarter, while Blockbuster lost money, and Netflix has 6.7 million online subs compared with Blockbuster's 3.3 million.
A rare success was Imax Corp. The company signed new theater deals last month in China and Siberia, and said it will release a Martin Scorsese Rolling Stones documentary in September and announced that "Harry Potter and the Order of the Phoenix" set an Imax boxoffice record.
Merriman Curhan Ford analyst Eric Wold upgraded shares from "neutral" to "buy," and shares rose 19.4% to $5.04 last month.