The Zacks Analyst Blog Highlights: Alphabet And Oracle

For Immediate Release

Chicago, IL – May 17, 2016 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Alphabet (NASDAQ:GOOGL) (GOOGL) and Oracle (NYSE:ORCL) (ORCL).

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Here are highlights from Monday’s Analyst Blog:

Technology Stock Roundup: AAPL Down; ORCL, GOOGL in Court

Last week, which was light in terms of tech earnings, saw a number of negative reports on Nikkei that pulled down Apple (AAPL) shares. At the same time Alphabet (GOOGL) and Oracle ( ORCL) found themselves heading to court again.

Here are the top stories-

Nikkei Reports Pulling Down Apple

Back-to-back negative reports from the Nikkei impacted Apple shares (NASDAQ:AAPL) last week. The first of these mentioned falling iPhone shipments based on estimates from IHS, smartphone part makers and manufacturing equipment makers, all of which see increasing demand for cheaper Chinese smartphones from Huawei, Xiaomi, Lenovo, ZTE, Vivo, etc. While Huawei is currently expected to be the biggest gainer (to grow 20-30% this year), the top 10 Chinese smartphone makers are together expected to grow 15% to 550 million.

The other reports focused on weak sales of Apple component suppliers and measures taken by Japanese and Taiwanese part makers to target Chinese phone makers. Since Apple is already dealing with its first quarter of shipment decline, the Nikkei reports had more of a negative impact.

Oracle Has Some New Numbers for Alphabet

Oracle lawyer Peter Bicks says that Alphabet’s Google made $42 billion in revenue and $21 billion in profits from Android-based smartphones and is therefore seeking $8.8 billion in damages, or around 11.7% of its balance sheet cash. It’s a huge amount even for Google, but it’s as yet unclear if Google will have to pay for it. Google used 37 application programming interfaces (APIs, or software code that enables interoperability between programs) that belonged to Sun, which was subsequently taken over by Oracle.

The last time the case was tried, the court held that the technology wasn’t copyrightable. Moreover, Google argued that the inability to use APIs and making them negotiable and licensable, especially in the given circumstances (such as Sun encouraging Java use to ensure its proliferation) would limit innovation. App and hardware makers building on Android would also be affected and there would be cost escalation for all.

HP, Red Hat and Yahoo (NASDAQ:YHOO) submitted papers supporting Google while Microsoft (NASDAQ:MSFT), EMC (NYSE:EMC) and NetApp (NASDAQ:NTAP) sided with Oracle at the time. Both sides argued for innovation. Microsoft said that failure to protect APIs would lead software makers to reveal less about them, which would in turn affect innovation.

But that was a long time ago. Oracle now says it has numbers to support its claims. Google of course doesn’t make anything from Android but from software it has developed on it that people use to search, download apps, etc. It doesn’t even sell those, earning only from the ads and commissions they generate.

So after Google was granted victory in 2012, the decision was overturned on appeal, when Google asked the Supreme Court to hear the case. When they refused, the case went for retrial. Now there’s a jury of 8 women and 2 men to decide Google’s fate.

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