New from PTN - Earnings Highlights: Amazon Web Services delivers big again; Qlik down 13% after hours on "revenue slippage"; Updated for Unisys & Quality Systems

Tom Paine

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Amazon Web Services, a part of Amazon (NASDAQ: AMZN) and a big part of its earnings, once again (now that its broken out) produced extraodinary results for the 3rd quarter, as revenue grew 78% year over year and profit margins reached 25%. I've already written about AWS' successes.

The AWS story reminds me, on a larger scale, of First Round Capital's Josh Kopelman's "market shrinkage theory" (nothing to do with Seinfeld). That's when you use disruptive technology (Kopelman uses Microsoft's Encarta on CD-ROM as an example) to metaphorically blow up a market and shrink it through lower pricing, hopefully growing volume through the reduced pricing and coming out as market leader in a smaller market. (Those are my words, not his.)

Whst AWS is doing to the computer industry is remarkable. I assume its momentum will slow somewhat, or else there are going to be many computer sales people out of work.

Locally based QLIK Technologies reported third quarter total revenue of $141.2 million, an increases of 8% year-over-year and 20% in constant currency (still trying to get my head around that.) The Radnor-based BI vendor produced a GAAP net loss of $16.4 million, up slightly from the year before.

For the full year, it expects revenue of between $613 and $618 million, a 10% to 11% increase over last year, and non-GAAP income from operations of $50 to $53 million. Cash and equivalents were $321.2 million at the end of the quarter.

Barron's Tech Trader Daily reported that Qlik fell 13% after hours. CEO Lars Björk said on the earnings call:

"We continue to experience healthy selling trends as strong customer appreciation for our product into September […] We did experience some slippage of larger desktop particularly in Asia-Pacific […] While we are disappointed to finish at the lower-end of our revenue guidance range, our profit performance in the quarter were strong."

QLIK shares fell another 11% on Friday.

Old-line enterprise systems provider Unisys (perhaps the oldest) saw its revenue drop 16% for the quarter, but its stock went up 15% the next day.

"There was nothing radically new," said Wm Smith & Co. analyst Ned Davis, as quoted by the website CRN about a report which preceded a late-afternoon conference call with analysts. "The company seems to be clearly on track, and that is encouraging."

I'm not quite certain where the optimism originated from, but CEO Peter Altabef seemed to convey a better grasp of Unisys' cash flow needs and indicated that the company would stop competing for some very low margin services business it had gone for in the past.

Quality Systems (NASDAQ:QSII), parent of Horsham-based NextGen Healthcare (once a high-growth star), stock was up nearly 8% at midday Friday after reaching a two-month high of 16 earlier in the day.

Quality Systems beat earnings estimates by 50%, though revenue was up only 4%. Quality also announce the borrd's decision to sell NextGen's Hospital Solutions Division. NextGen is big in mostly outpatient ambulatory care, but built
and acquired pieces of a Hospital division that many said it needed to compete for larger contracts. But it didn't take off, and thus the sale to Virginia-based QuadraMed Affinity Corp. The price wasn't disclosed.

Revenues for the fiscal 2016 second quarter reached $125.4 million, and net income was $8.3 million. Most of Quality's revenue comes from NextGen.

Don't expect to see a Comcast wireless offering soon

Tom Paine

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Don't expect to see a Comcast-branded wireless offering in your local Comcast store anytime soon, some analysts say.

"In our view, this was a formality, not an indication that the fifth wheel is being aligned. We believe Comcast was merely preserving its right to offer service through the agreement, and see no imminent move by Comcast," Jefferies analyst Mike McCormack said in a note to clients, as quoted by website FierceCable.

Comcast's interests in forming what could be a fifth major cell network (in much of the country) are not clear, and it remains to be seen how far it would go down that path by itself.

Comcast's main goal is probably to support mobile distribution of video content to its customers, although I think the understanding of what that need is has broadened to become more all-encompassing over time. But Comcast does have a potential cost advantage in its millions of WiFi hotspots, which could be combined with the Verizon LTE access it has a right to resell to create a full-fledged network. But the cost advantages would have to be overwlelming for Comcast to consider that route. Indeed, the idea of investing billions to be a reseller of another's spectrum in combinstion with using hotspots (that are in customer's homes in a majority of instances and possibly open to legal challenges down the road), seems risky.

But spectrum is spectrum and is intrinsically valuable. And Comcast is going to need a mobile strategy, if only to support the out-of-home streaming habits of its customers.

And a deal with Sprint, possibly a complete acquisition, has to be an option to be considered as well. But an expensive one.

The MVNO (mobile virtual network operator) arrangement between Comcast and other cable operators (who will mostly end up as part of the proposed Charter/TWC marriage) and Verizon dates back to a controversial 2012 spectrum sale by the cable group to Verizon that included other provisions. The agreement, some including myself argued, was intended to effectively end cable/Verizon competition in both mobile communications and high speed landline communications.

Another consideration is that terms of the MVNO itself may have to be renegotiated, perhaps to Verizon's advantage.

Comcast also needs to consider its growing business services requirements.

Thursday Highlights: SAP establishes Internet of Things business unit; HP Kills Public Cloud

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Quality Systems, Inc. Board of Directors Approves Sale of NextGen Healthcare Hospital Solutions Division

Amazon Earnings: What to Watch (Wall Street Journal: Digits)

Unisys Reports Lower Revenue, Predicts Slow Turnaround (CRN)

Verizon linemen: Company is neglecting its copper network (Philadelphia Inquirer)
As Gomer Pyle used to say, "Well, Surprise, Surprise"!

Partner alignment, Infosys discusses its position with SAP (Diginomica)

SAP establishes Internet of Things business unit

HP Kills Public Cloud, Cedes To AWS, Google, Microsoft (Information Week)

Sixers, partypoker end partnership amid daily sports fantasy surge (Philadelphia Inquirer)