Random Thoughts: Tech M&A, Tech Earnings, Apple new all-time highs again

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BK TRADE UPDATE

I am out of half of my DNDN trade for a loss. Still have the last half for now, but am looking to sell it too. Am moving on from this failed BK trade entirely.

Not-so-random thoughts.

TECH M&A

Lots of tech/content M&A deals out there. For example:

*Comedy Website Funny or Die has hired advisors to evaluate the company’s options including a possible sale for $100-300M. TWX has a minority stake in the company.

* $YHOO announced it is acquiring BrightRoll for $640M in cash. BrightRoll anticipates exceeding 100M in revenue this year. Management said that acquiring BrightRoll will strengthen its video advertising platform and make it the largest in the world. YHOO expects the transaction “to enhance its EBITDA”

* Two top shareholders of $YHOO and also two top shareholders at $AOL meet with AOL CEO Armstrong to discuss the possibility of an $AOL $YHOO merger. Armstrong acknowledged the benefits of merger including $1.5B in cost savings but he downplayed the possibility of a deal and said he would only do a “friendly deal”. [Reuters] http://goo.gl/mGDDvo

If you think Armstrong can do any better creating actual value at Yahoo outside of its BABA investment, I suggest you look at AOL’s topline growth (or lack thereof) during Armstrong’s tenure. I’d rather be short AOL and YHOO than own either one, combined or separate.

TECH EARNINGS

Meanwhile, $CSCO and $NTAP earnings on tap tonight. I remember when a$CSCO earnings report would set the tone for all of tech and the$QQQ. Fifteen years ago. Expectations for $CSCO are for a relatively inline quarter and guide. Consensus is for revenues to grow barely this quarter before accelerating to +8% in the next quarter. I’d be cautious about the guidance, as carrier spending in the US has decelerated.

$CSCO is yielding 3%, has $30 billion net cash ($5 per share) and earns more than $2 per share, giving it a enterprise value-to-earnings ratio of less than 10. Cheap. But if it warns on topline, there’ll be no growth at all next year, as analysts are only looking for 4% topline growth anyway. Interesting set-up. Long-term would be long than short. Short-term would rather be short than long.

I was surprised by the strength in the$CSCO chart when I just checked it right now, as I’d figured most analysts were bearish about the last 90 days action and next quarter’s guidance heading into tonight’s report. Not betting real money, but am betting a Bearish Sentiment Vote here: http://www.scutify.com/profiles/scutifier.aspx?q=scutify&s=546383bcb229aa0a98fa8479

AAPL ALL-TIME HIGHS AGAIN

$AAPL hitting new all-time highs again today. It’s been my biggest position for many years and still is. Not sure I’d chase it just now, but I’m not selling any of mine right now either. Have trimmed in the past and might have to do so again. That one year $AAPL chart is looking rather extended…just thinking outloud.

When a stock “feels like a safe-haven” and/or like a momentum stock, it’s often time for it to all reverse and freak the bulls and longs out for a while…the hardest trade to make is often the right one. If you haven’t trimmed any $AAPL any time recently and own it from much lower levels, I always suggest taking a little, maybe 1/5 or even just 1/10th off the table. I’m not trimming it again just now, but I might soon.