Tag: wall street

Red Hat does better than expected

red-hatRed Hat has surprised the cocaine nose jobs of Wall Street by being able to stick to its profit forcast, despite the US dollar shooting through the roof.

Red Hat predicted it would make a profit for the first quarter that matched analysts’ estimates despite warning on a strong dollar hurting its revenue.

Red Hat shares were up five percent in after-market trading after the company’s profit beat the average analyst estimate for the eighth straight quarter.

The company also said a $500 million share buyback program will replace an existing $300 million programme.

Red Hat gets nearly half its revenue from international operations and expected to suffer from the US dollar’s strong gains. HP, Microsoft and IBM had estimated a significant impact from the dollar’s gains.

The company, whose customers include Adobe and Verizon, forecast an adjusted profit of $469 million-$474 million for the first quarter.

Red Hat also forecast a revenue of $1.99-$2.02 billion for the full year. Analysts were expecting  revenues of $2.02 billion.

The company’s billings revenue was $688 million in the fourth quarter. Analysts had expected $646.2 million.

 

Apple shares tank

You-Gun-It-When-We-PushWall Street watched in horror yesterday as the value of shares in the industry darling, Apple shares plummeted faster than a free fall parachuting team of elephants which had forgotten to pack the key ingredient of their act.

Apple shares tumbled shortly after the start of trading on Monday, briefly suffering their largest price drop in at least three months on an unusual spike in volume.

More than 6.7 million shares trading in a one-minute stretch, the heaviest minute of trading in Apple since October 29.

The stock lost over three percent in that minute, falling as much as 6.4 percent to $111.27. At midafternoon, it was down three percent to $115.45. The Tame Apple press did its best to insist that the share drop was nothing to do with Apple. They claimed it was all down to algorithmic trading which put Apple on sell.

Reuters was a bit huffy that computers had dared to say its favourite computer company was worth less than it was in the morning. The HFT has been criticised for affecting the trading of stocks by sending in numerous trade quotes that slow quote activity – without filling the trades when shares fall, it wrote.

However, other analysts disagreed. Bill Harts, chief executive officer of Modern Markets Initiative, an advocate of high-speed electronic markets said that determining the cause of the decline was not so simple. “The fact is we don’t yet know what caused the drop, and blaming it on HFT is misleading.”

Morgan Stanley strategists dropped Apple’s weighting in their strategic portfolio to three percent from four percent in an equity outlook note released Monday, but traders said the swiftness of the decline was too dramatic to be attributed solely to the note, which was released before trading opened.

It might have been the Morgan Stanley news that rather stimulated the event, but not enough to cause such a decline, analysts claim.

 

Silver Lake to sell IPC

wall streetPrivate equity outfit Silver Lake wants to sell IPC Systems which makes communication systems for Wall Street traders.

It will be the end of one of Silver Lake’s longest-held investments and the outfit bought IPC from Goldman Sachs Group private equity arm in 2006 for $800 million.  Ironically it has hired Goldman and Evercore Partners to auction IPC off.

IPC makes about $160 million a year and could be valued at more than $1.4 billion in a sale, including debt. It makes specialised telephony systems for financial institutions ranging from investment banks to hedge funds. It is present in 5,000 customer sites in more than 60 countries.

IPC could be become a little more of a risky investment as the outfit seeks faster growth in sales of data and network services to financial services customers. These services are highly commoditized and IPC’s competitors in this area have more dosh to fight the upstart.

In August, IPC announced it had named Neil Barua, a Silver Lake operating partner and interim chief executive of IPC since February, as its permanent CEO.

Private equity funds typically hold companies three to seven years, making Silver Lake’s ownership of IPC for more than eight years unusual.

Silver Lake also wants to get rid of another financial technology company this year – the high-frequency trading outfit Virtu Financial.