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DJ Tech, Media & Telecom Roundup: Market Talk

· 02/05/2021 04:20

The latest Market Talks covering Technology, Media and Telecom. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

0857 GMT - Dassault Systemes' guidance for 2021 non-IFRS revenue increasing 9%-10% at constant currencies seems to be a sustainable trend for the French software maker in the medium term, as the outlook is underpinned by growth in licenses of 13%-15% and maintenance and subscriptions rising 8%-9%, Bryan Garnier says. "We now feel more confident in Dassault Systemes ability to generate [around] 10% like-for-like revenue growth from 2021 to the medium term," the European investment bank says. Bryan Garnier increases its estimates for revenue and operating margin for the 2025-31 period and upgrades the stock to buy from sell, raising its target price to EUR208 from EUR144. Dassault Systemes shares trade 2.2% higher at EUR184.25. (mauro.orru@wsj.com; @MauroOrru94)

0707 GMT - Getac Technology's plan to launch products with more software solutions and digital capabilities could boost the company's profitability and sales, Citi says. It keeps its buy rating on the stock but trims the target price to NT$57 from NT$58 due to its enlarged share count, which has diluted share prices slightly. Getac plans to bring to market products with more software capabilities, such as cameras with artificial-intelligence features to help take better pictures or data-management systems to sort files. These products are promising as they not only meet customers' new demand but also sell at higher prices, Citi says. Shares end 0.3% higher at NT$47.65. (yifan.wang@wsj.com)

0639 GMT - Zee Entertainment Enterprise's shares seem expensive after rising 74% in the past six months, Citi says, as it downgrades the stock to neutral from buy. The U.S. bank maintains its target price of INR265.00, noting that the worst may be over for Zee Entertainment as its core business seems to be recovering from the impact of Covid-19. The Indian entertainment company's cash flows may be hurt by its plans to increase its investment in digital platforms, TV broadcasting and movies. However, these plans lack clarity as the investment amount is still unconfirmed, Citi adds. Shares fall 14% to INR214.75. (yiwei.wong@wsj.com)

0600 GMT - Shares of Semiconductor Manufacturing International Corp. decline in midday trade, following comments from the company that U.S. export restrictions will continue to affect its expansion plans and financial performance in 2021. The Chinese semiconductor foundry was blacklisted in the U.S. last year amid national security concerns. Citi notes, however, that the U.S. semiconductor equipment sector will still play a key role in the foreseeable future for SMIC, and expects further risks from the U.S. export restrictions to be limited for the company under the Biden administration. Shares are down 7.7% at HK$25.15. (justina.lee@wsj.com)

0250 GMT - Novatek Microelectronics is likely to report another quarter of record earnings in 1Q, supported by strong work-from-home demand, Daiwa Capital says, as it maintains an outperform call on its stock. The investment bank raises the stock's target price to NT$500 from NT$325, citing Novatek's record 4Q net profit on stronger-than-expected price increases. But investors should be mindful of potential business uncertainties in 2H. "As opposed to the rosy 1H21, we suspect the sustainability of [work-from-home] demand and forecast likely a below seasonal 2H21 for Novatek on our inventory risk concerns," Daiwa says. Shares are up 10% at NT$479. (justina.lee@wsj.com)

0229 GMT - ASE Technology will gain from a digital transformation trend that is driving multiple product upgrade cycles for bandwidth and advanced computing, Daiwa Capital says. The semiconductor-manufacturing-services provider expects to benefit from an expanding global chip market, with management guiding for this year's global chip revenue excluding memory chips to grow 5%-10%, and ASE estimated to grow 2x faster than the sector. "This is in line with our positive stance on its structural growth." Daiwa raises its target price to NT$110 from NT$90 and maintains a buy rating. Shares jump 7.0% to NT$104.50. (justina.lee@wsj.com)

2213 GMT - Australian shares look set to open strongly following a positive lead from US stocks, which gained amid cautious optimism about Covid-19 vaccine rollouts and economic recovery. ASX futures are up by 1.0%, pointing to a resumption of the S&P/ASX 200's recent gains. The benchmark slipped 0.9% Thursday after rising 3.3% across the previous three sessions. The S&P 500 rose 1.1% and closed at a record. The DJIA also rose 1.1%, while the Nasdaq Composite climbed 1.2% to a fresh record. Ahead of the local open, News Corp reported a 40% rise in 2Q segment Ebitda, while REA said 1H underlying profit rose 13%. (stuart.condie@wsj.com; @StuartLCondie)

2102 GMT - Sales of Activision Blizzard's "Call of Duty" rose 40% in 2020 from the year prior, while "Call of Duty: Mobile," a free-to-play game, generated double-digit growth in net bookings in 4Q from the year-earlier period. Looking ahead, many of Activision Blizzard's other franchises will go in the same direction as "Call of Duty" by adding free-to-play entry points across consoles, PCs and mobile devices, the company's longtime chief executive, Bobby Kotick, tells the WSJ. "A big part of what we want to do is grow our reach," he says. "Our stated goal is from 400 million to 1 billion players. There's only one way to do that--you have to be free and accessible." Shares are up 5% after-hours. (sarah.needleman@wsj.com; @saraheneedleman)

2026 GMT - T-Mobile's 2020 Sprint purchase gave the combined company opportunities to save money in the long run as well as big near-term costs, a fact reflected in 2021 guidance. The cellphone carrier says merger-related costs will run $2.5B-$3B before taxes this year, adding to last-year's $1.9B tab for combining once separate stores, back-office jobs and network infrastructure. Integrating the erstwhile rival contributed to a slightly lower 4Q profit result despite much higher revenue from new Sprint customers. (andrew.fitzgerald@wsj.com; @drewfitzgerald)

2014 GMT - Activision Blizzard posts a 4Q increase in revenue and net bookings, as people continued to turn to videogames to stay entertained during the pandemic. But the maker of Call of Duty says implied adjusted EPS slipped to $1.21, down from $1.23 a year ago. Revenue of $2.41B and net bookings of $3.05B were up from $1.99B and $2.71B, respectively. For the full year, the company says it generated $8.09B in revenue and $8.42B in net bookings, up from $6.49B and $6.39B for 2019, respectively. Activision shares are up 5% in after-hours trading. (sarah.needleman@wsj.com; @saraheneedleman)

1551 GMT - Cummins reports its revenue from China last year rose 25% from 2019 to a record $6.9B, driven by higher demand for Cummins' diesel engines used in commercial trucks, construction equipment and computer data centers. The run up was aided by the government stimulus spending that followed the country's Covid-19 lockdown. "The record performance in China is remarkable when considering the COVID-related restrictions in the first quarter," CFO Mark Smith told analysts. But Cummins expects the momentum to run out of its China business this year. The engine maker projects revenue from China could fall by 20% in 2021 with most of the decline occurring in the second half of the year. Shares down 1.4% at $232.06.(Robert.tita@wsj.com; @bob_tita)Cellnex Telecom's love affair with markets in the past two years has enabled the Spanish wireless-telecommunications company to undertake large-scale acquisitions in the strategic Europe market. Cellnex has racked up EUR7.7 billion through capital increases since March 2019 to finance deals, and following Wednesday's announcement that it would acquire around 10,500 of Hivory's towers in France, it said it would launch another capital increase of up to EUR7 billion. Cellnex's capital-intensive business model requires it to invest heavily to grow, hence its high leverage. Its primary means of maintaining its credit rating is its revenue visibility--with the latest deal, the company now has long-term service revenue amounting to more than EUR100 billion--as well as its leading status in the growth market that is European telecoms. But this hasn't always been the case. Three years ago, when its shares traded a shade above the EUR14 a share of its May 2015 IPO--a fraction of the current price--certain international hedge funds took a significant number of short positions in the company. Such times now feel remote for a company conscious of a liquidity-rich market, and keen for investment projects--whether bond-buying or further capital increases. (carlos.perea@dowjones.com) This market talk was translated in whole or in part from a ​Spanish-language version initially published by EFE Dow Jones, a partner of Dow Jones & Co.

(END) Dow Jones Newswires

February 05, 2021 04:20 ET (09:20 GMT)

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