Alphabet: Tuesday Will Showcase Software Chops, Says Jefferies

Get ready for a big push on software by Alphabet‘s (GOOGL) unit Tuesday morning, according to Jefferies & Co.’s Brian Fitzgerald.

In a note to clients Monday, Fitzgerald, who has a Buy rating on Alphabet stock, and a $1,000 target, reflects on the chatter surrounding the media event that Google is hosting in San Francisco Tuesday.

It’s been speculated Google is unveiling new smartphones, successor devices to the “Nexus” line it had been cranking out for years, this time under the moniker “Pixel.”

Fitzgerald believes these are devices meant to show off Google’s software and services more than ever before:

Google is expected to debut two new flagship smartphones called Pixel and Pixel XL. Designed to compete more directly against devices like the iPhone, the Pixel devices should reflect Google’s new “more opinionated” view around hardware and software design. At an expected $650 price point they will be significantly more expensive than the Nexus devices ($350-500 ballpark) they are ostensibly replacing. The phones will allegedly be manufactured by HTC and will feature 5″ and 5.5″ screens, aluminum and glass construction, and even a headphone jack. In our view, Google’s ambition here is not merely revenue growth, rather the devices will serve as a top-tier hardware platform to showcase and drive usage of Google’s best-in-class software services.

Fitzgerald also expects to hear more about Google’s “Daydream” virtual reality headset project, which it talked about earlier this year. (He’s not the only one looking forward to this.)

And then there’s “Andromeda“: “There is some speculation Google is working on a new OS called Andromeda, which is a unification of its Chrome and Android operating systems. Google is also said to be working on a new Pixel-branded laptop slated for release in 3Q’17.”

Microsoft ‘HoloLens’: At Least They’re Not Hyping it Like Google Glass, Says Piper

Piper Jaffray’s Gene Munster this afternoon offers what he terms a “monthly reality check” of virtual reality and augmented reality, including his own tests with Microsoft’s (MSFT) “HoloLens” glasses.

Munster, who follows Apple (AAPL), among others, thinks that in ten years, “both VR & AR/MR [mixed reality] will be mainstream.”

He writes that he bought one of the $3,000 developer kits in which HoloLens is currently available.

It’s rough, he writes, but at least it wasn’t hyped like Google’s Google Glass:

A month ago we bought HoloLens. The current HoloLens is not a finished product and intended for developers to experiment with the platform. That said, we believe that HoloLens is a good first step into MR, but there is a lot left to be improved upon. The good news is that there isn’t the same hype around the HoloLens like there was for Google Glass, which gives Microsoft time to refine and perfect it. Pros of HoloLens. We found battery life is better than expected and handles 2-3 hours of use. Mapping your surroundings with computer vision works well. The holograms generated by the device are convincing enough to allow you to enjoy games and experiences. There is enough substance to the app store to allow you to explore a variety of applications and use cases. Cons of HoloLens. The 40° field of view is small compared to both humans eyes which surprisingly have nearly 200°, which can make it hard to play a game or find objects in a room. “Air tapping” to select objects can be difficult if the user is new to the gestures, and user interface isn’t intuitive. Its expensive ($3,000), but this is to be expected because it’s a developer kit and most things on the HoloLens are custom designed.

Munster notes that there are some parties in particular that will solve the “obstacles” to mixed reality:

SunEdison Says in Settlement Talks with TerraForm Yieldcos

In the latest installment in the solar Yieldco debacle, bankrupt solar panel installer SunEdison (SUNEQ) this afternoon said, it is having settlement talks with its two Yieldco. subsidiaries, TerraForm Global (GLBL) and TerraForm Power (TERP), as part of its ongoing bankruptcy case.

Said SunEdison CEO John Dubel, “Our Chapter 11 process has been long and complex and we are now at a critical stage as it relates to the Yieldcos.”

“We take to heart Jack Stark’s comments that a settlement of disputes between the Yieldcos and SunEdison is overwhelmingly in the interests of both sides, and we will proceed with our settlement discussions while at the same time moving forward with the sale process.” He was referring to Jack Jenkins-Stark, head of Imergy Power Systems, and one of SunEdison’s independent board members.

SunEdison filed chapter 11 on April 21st, after a protracted and ultimately failed bid to acquire fellow panel installation firm Vivint Solar (VSLR), an event that cast a pall over the Yieldco. industry. TERP is down about 19% in the last 12 months, though it has rallied about 35% this year so far. GLBL is down about 25% this year and down 36% in the last 12 months.

The two Terraforms on September 25th made public claims against SunEdison, including that it failed “to perform under the integrated sponsorship arrangement put in place at the time of TerraForm Power’s initial public offering,” which it said “constitutes a material breach,” which, it said, “if not remedied, excuses TerraForm Power from payment or performance of its contractual obligations under the sponsorship arrangement.”

TerraForm Power shares are down 48 cents, or 3.4%, at $13.56, in late trading. Global shares are unchanged at $4.10.

Versum: Credit Suisse Likes the Margins, Morgan Stanley Sees Little Upside

Today is the first day of “regular way trading” in shares of Versum Materials (VSM), a spin off of industrial company Air Products and Materials (APD) that gets most of its revenue from semiconductor firms, and the stock has gotten two new analysts covering it today, Neel Kumar with Morgan Stanley and Kieran de Brun with Credit Suisse, the former a bear and the latter a bull.

Versum is known for chemicals and materials that handle things such as “deposition” and “planarization” in semiconductor wafer production. It also makes special “delivery systems” to allow customers to apply the materials safely in a wafer fab.

Versus shares today are up 45 cents, or 2%, at $23.15.

Morgan Stanley’s Kumar assigns the stock an Equal Weight rating, and a $24 price target, writing that its “growth prospects do not yet justify a premium valuation relative to its direct peers.”

Intel’s 14-Nano, 10-Nano Ramps Looking Good, Says BlueFin

Things are looking good for Intel through the end of this year, according to BlueFin Research Partners’s Steve Mullane, after reviewing what he deems production levels last month at the company’s factories.

Mullane’s up-beat note follows Intel’s having raised its Q3 outlook on September 16th, citing rising personal computer demand.

Mullane writes “Q3 production -3% to -4% sequentially, +2% from forecast at outset of quarter,” and that ” 2016 PC OEM shipments on track for 5% sequential decline; better than earlier expectations.”

Among positives, he’s seeing Intel pushing the pedal on production of chips at 14 billionths of a meter, or “14-nano,” as it moves toward 10-nano next year:

Our first look into the overall Q4 production forecast appears to indicate that production levels will undergo significant product mix adjustments. Our early reads by the key semi material suppliers indicate a 7-8% sequential decline in Q4. INTC continues to reduce legacy node production at both Fab 11X (New Mexico) and Fab 32 (Arizona), while prepping Fab 28 (Israel) with the transition to 10nm production in early 2017 […]

Citrix, Teradata: UBS Cuts Both to Sell on ‘Too Many Moving Pieces’

UBS’s software analyst Brent Thill today cuts his rating on shares of both Citrix Systems (CTXS) and Teradata (TDC) to Sell from Neutral, arguing that there are “too many moving pieces” in the case of both companies.

For Citrix, he thinks “the next leg of the story will prove more difficult, as investor attention shifts back towards the core workspace services business,” while for Teradata, the company’s “move to the cloud”

“will provide a much-needed reset to financial model expectations,” but it could be a long, messy transition.

With Citrix selling off its LogMeIn business, most of what remains is the slower-growing virtualization software business, and here, he likes VMware (VMW) better:

Apple: Great News, iPhone 7 Stocked Out, Say Piper, Pac Crest

The Street again today takes the pulse of Apple’s (AAPL) iPhone 7, released on September 16th for generally availability through retail channels.

Piper Jaffray’s Gene Munster reiterates an Overweight rating on Apple shares, and a $151 price target, writing that his “checks” with several retail outlets show inventory has risen, but is still constrained,with higher-capacity “iPhone 7 Plus” models the hardest to get ahold of:

We checked 134 Apple Stores in the US for in-store iPhone 7 availability. 35% of SKUs that we checked were available for in-store pickup with the majority being iPhone 7 vs iPhone 7 Plus. This is an improvement from the 20% we published on September 25th. Going a level deeper, the iPhone 7 which we believe will account for about 40% of total iPhone 7 units had 61% SKU availability, compared to 8% available for the iPhone 7 Plus. In China we measured even tighter supply at 16%.

Qualcomm’s Pricey Stock Needs an NXP Deal, Or Something, Says UBS

Shares of NXP Semiconductors (NXPI) are higher by 46 cents, or half a percent, as the Street continues to contemplate rumors that Qualcomm (QCOM) may try to buy them.

The most recent bit of speculation was a Bloomberg report late Friday that the company hired Qatalyst Partners “to begin a formal sale process to find a buyer for NXP,” with Qualcomm not the only potential bidder, but also Broadcom (AVGO), Intel (INTC), and Samsung Electronics (005930KS).

Apple, HPE, Cisco Dominate Investor Chats at Credit Suisse

Credit Suisse’s Kulbinder Garcha, who follows Apple (AAPL), and several other hardware names, today writes of a recent marketing trip across the U.S. and Europe, and the kinds of questions people asked him about the iPhone giant, and about Cisco Systems (CSCO), Hewlett Packard Enterprise (HPE) and other names.

As far as “interest levels,” Garcha writes that Apple, HPE, Qualcomm (QCOM), NetApp (NTAP), Motorola Solutions (MSI), and Cisco having fairly high and stable interest from investors, while Arista Networks (ANET), Juniper Networks (JNPR), IBM (IBM), HP Inc. (HPQ), Ericsson (ERIC), and Nokia (NOK) interest is mixed and in some cases rather low.

Here’s how Garcha describes the varying levels of long and short investment interest in each of the names:

Facebook’s ‘Marketplace’: Well-Positioned to Compete with eBay, AMZN, Says Baird

Shares of Facebook (FB) are down 23 cents at $128.04, after the company this morning announced “Marketplace,” a function integrated into its mobile app that lets you browser for listings of stuff being sold in your area.

That has pressured shares of Ebay (EBAY) somewhat: it’s down 39 cents, or 1.2%, at $32.51.

Taking a first crack at this, R.W. Baird’s William Power reiterates an Outperform rating on Facebook stock, and a $155 price target, noting that “this is not Facebook’s first rodeo,” as “importantly, Facebook is already a popular marketing platform for retailers, including existing product ads.”