CWEB – Uber Wins Landmark Victory in Federal Court

By Leslie Cohen
Managing Editor

Uber Technologies Inc. the peer-to-peer ridesharing just has just had a landmark victory when a federal judge U.S. District Judge Michael Baylson ruled Thursday, April 12th, 2018, that UberBlack drivers will not be classified as employees. Razak v. Uber Technologies was filed in February 2016.   The ruling states that under the Fair Labor Standards Act, Uber does not maintain enough control over the drivers, and they will be classified as independent contractors. This is the first case in the ridesharing segment of the new economy.

Judge Baylosn stated that since the drivers make their own hours, they are not employees under the Fair Labor Standards Act guidelines.

Uber drivers do not get the benefits of workers who are full-time employees that can receive health insurance, 401K plans, vacation time, and other benefits that come with full-time employment.

Jeremy Abay, one of the lawyers for the plaintiffs will appeal the decision in Philadelphia-based 3rd U.S. Circuit Court of Appeals. Should the appeal fail, the ruling could set precedence for the entire ride-sharing industry and the associated gig economy.

Sprint And T- Mobile Merger Talks Begin – CWEB.com

By: Leslie Cohen
Managing Editor

Sprint Corp. (S)and T-Mobile US Inc. (TMUS) have rekindled merger talks. After four years, the two companies that have been fierce rivals are exploring a combination for the third time in four years.

Shares of Sprint Corp.  (S)  , +18.00% spiked higher in midday trade, Tuesday 4/10/2018. Last time, merger talks were left in disarray after the companies could not agree on who would take control over the combined entity. Japan’s Softbank Corp. owns about 85 percent of Sprint and T-Mobile  (TMUS)  is controlled by Germany’s Deutsche Telekom AG.

Looking to expand into the 5G wireless technology, a merger between Sprint    (S)  at T- Mobile  (TMUS)  can give it an edge to compete and serve 127 million customers if combined. Sprint stated back in March that $6 billion annually, over the next several fiscal years would need to be spent on upgrades.

While under CEO Marcelo Claure, states Sprints growth has occurred due to massive and heavy discounting. It looks like Sprint just can’t get up to scale without a T- Mobile partnership.

Regulatory- and antitrust hurdles would exist under the current political climate with a Sprint- T- Mobile merger. The merger between AT&T Inc.(T) – and Time Warner Inc. (TWX) – is up against hurdles, and fighting this battle in court.

CWEB Analyst’s have initiated a Hold Rating for  Sprint Corp. (S)  , and a Price Target of $5.40    

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Boeing Delivers – CWEB.com

By Leslie Cohen
Managing Editor

Boeing Co. U.S.: (BA) was able to deliver record setting results for commercial aircraft deliveries in 2017. The tax law changes implemented by President Trump have given Boeing the ability to invest billions of dollars into its business.

Lion Air Group, the budget airline based in Indonesia announced Tuesday the order for 50 Boeing Co. 737 Max 10 jets, adding more seats to its planes with the growth of travel in the country. The contract is worth $6.24 billion.

Boeing increases first-quarter deliveries by nearly 9 percent. It has acquired $11.5 billion in free cash flow. We could see an upside of 20%-25% annual growth over the next five years.

As of April 10^thmany top analysts rate it a buy including Cowen % Company, Edward Jones, Jeffries and Co., JP. Morgan Securities and Morgan Stanley.

CWEB Analyst’s have initiated a Buy Rating for  Boeing Co. U.S.: (BA), and a Price Target of $400 within 12 months.

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Reasons To Consider General Motors A Buy – CWEB.com

General Motors (GM) has    an impressive dividend yield that has free cash flow support.

GM outperformed the domestic automakers in January.

GM outsold more light trucks than Ford.

With a robust portfolio of electric vehicles projected over the next half decade, GM is positioned at the front of the pack in this rapidly growing space.

General Motors  (GM)  shares enjoy enormous upside potential due to record-setting profitability, robust free cash flow generation, reduced correlation to the overall North American automotive market, a strong position in electric cars and huge business in China.

GM China (NYSE:GM) reports sales increased 2.0% in March to 352,346 units.

Cadillac sales rose 46% to 18K units (monthly record) to help offset drops for the Wuling and Baojun brands.

GM China YTD sales +7.9% to 986,052 units.

General Motors reported superb March results for the U.S. market. Crossover and pickup demand is strong and will likely continue to support GM in a rising economy that is accompanied by cyclical consumer spending growth.

CWEB Analyst’s Reiterates a Buy Rating for  General Motors (GM) and Price Target of $59 within 12 months

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Viacom Reject Takeover Offer From CBS Below Its $12.5 Billion Valuation – CWEB.com

By: Leslie Cohen

Managing Editor

CBS Corp. (CBS) makes an offer for Viacom with an all stock purchase offer with the contingency it keeps it the same management team leading the organization- at least for now. Viacom’s (VIA)  current valuation is $12.5 billion. Viacom rejected this offer of 0.55 shares of CBS in an all-stock deal for each share of Viacom.

CBS proposes that eventually current CEO Bob Bakish would no longer run the company, and that Chief Executive Leslie Moonves and President Joe Ianniello would run the combined company for the foreseeable future.

Sumner Redstone’s holding company National Amusements Inc., holds an 80% voting stake in CBS and Viacom Redstone’s daughter, Shari Redstone has wanted the two companies to be combined for quite some time.

CBS  (CBS)  shares have not been rising. Viacom    (VIA)  is still valued at a bargain with 8x forward P/E with a firm grip on streaming and content development plans moving forward.

While Viacom is a value stock at this point valued at less than 10 times earnings, it also carries an array of impressive brands owning Global Entertainment Group which broadcasts The Comedy Chanel, Spike, MTV, and Nickelodeon. It also has a sweet deal coming up with Netflix for streaming content. Viacom’s assets also include Paramount Pictures Corporation, BET Networks is a division of Viacom that runs the Black Entertainment Television (BET) channel, Nick Records and Comedy Central Records

Viacom’s huge library of iconic brands, and the fact that the company plans to start a Netflix (NASDAQ:NFLX) style streaming service in the near future, are all compelling arguments to buying into a beaten-down value stock at less than 10 times forward earnings and the fact that is looks to grow in the online streaming market.

CBS has been has lost more than 23% in the past year, but still ahead of its peers. Viacom shares are down32%.

CWEB Analyst’s Reiterates a Hold Rating for CBS Corp. (CBS)  

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Is Kraft Heinz A Buy At This Levels – CWEB.com

Shares of The Kraft Heinz Company (KHC) have had a rough year.

With high $90s almost a year ago, shares are at 52-week lows trading around $63.

The brand portfolio is robust, and the dividend is yielding much higher than historical norms.

Organic growth is weak, likely due to the company’s lack of expansion efforts outside of North America.

The yield is highly competitive, but is likely not enough of a buffer in the short term.

Kraft Heinz  (KHC)  ended 2017 on a softer note after the third-quarter results provided reasons to become more upbeat.

The only bright news is the fact that the valuation has continuously come down, reducing expectations along the way.

Company has started to aggressively pay down debt.

Interest rate on the debt is 3.8%, which is an expense that will not impede future dividend increases.

The dividend has increased an average 12% per year since 2013.

Even if we reduce future dividend growth by 25%, our growth model still shows a 9.14% total annual return to 2021.

CWEB Analyst’s have initiated a Buy Rating for  Kraft Heinz Company (KHC) and a Price Target of $90 within 12 months.

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Apple Touchless Control – CWEB.com

Apple (NASDAQ:AAPL) the technology giant is also developing curved screens for its phones, according to a story Wednesday.

A new report out of Bloomberg this morning suggests that Apple is developing two new pieces of technology for future iPhone models: one is touch less gesture control and the other is a curved display. Both projects are said to be at the early stages of research and development, at least two years away from potentially making it into consumer devices.

The control feature would let iPhone users perform some tasks by moving their finger close to the screen without actually tapping it. The technology likely won’t be ready for consumers for at least two years, if Apple chooses to go forward with it, a person familiar with the work said.

Apple (NASDAQ:AAPL) is also on the path to $1 Trillion Market Cap.

CWEB Analyst’s Reiterates a Buy Rating for Apple (NASDAQ:AAPL)  and a price target of $350 within 12 months.

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Spotify IPO Goes To Wall Street – CWEB.com

Spotify (NYSE:SPOT) opened for trading on the NYSE today at $165.90.

With 184 million shares outstanding, this implies an approximate market value of between $37-$41 billion, far higher than its last reported valuation of $19 billion.

MKM Partners has initiated the streaming-music giant at Buy and set a price target of $200 ahead of the start of NYSE trading Tuesday.

RBC initiated  an Outperform rating and $220 price target.

The new price target adds another data point to what could be volatile trading, as Spotify’s  (NYSE:SPOT)   doing a rare direct listing rather than a bank-led IPO that would feature an opening pricing.

Pandora is still the market leader in the U.S. for ad music streaming and still has more combined users in North America than any other music streaming app.

Pandora’s competitor, Spotify  (NYSE:SPOT)  , is growing revenues at a faster rate but its operating expenses are also growing.

Spotify  (NYSE:SPOT)  closed its first day of trading at $149.01, near the low of the day but still 12.8 percent higher than the IPO reference price.

Spotify  (NYSE:SPOT)   revenue rose by 39 percent in 2017 to 4.09 billion euros ($4.99 billion), but  losses more than doubled  to 1.24 billion euros.

Spotify  (NYSE:SPOT)  it’s still paying out two-thirds of revenue as royalties amid declining ARPU which investors should take into serious consideration.

CWEB Analyst’s have initiated a Sell Rating for  Spotify  (NYSE:SPOT)    

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Mark Zuckerberg hits back at Tim Cook – CWEB.com

Facebook CEO Mark Zuckerberg rejected Apple CEO Tim Cook’s critique of his company’s business model.

It’s ‘extremely glib and not aligned with the truth.

“You know, I find that argument, that if you’re not paying that somehow we can’t care about you, to be extremely glib,” Mr Zuckerberg   sais on interview published by  Vox  today. “And not at all aligned with the truth.”

He took a swipe at Apple’s notoriously expensive products, adding that Facebook was “squarely in the camp of the companies that work hard to charge you less and provide a free service that everyone can use” and “if you want to build a service which is not just serving rich people, then you need to have something that people can afford.”

Tim Cook the Apple CEO last week went against the social media giant for selling people’s data to third parties, amid growing controversy over how Facebook operates.

Zuckerberg said that Cook’s opinion – that Apple offers a better business model as it sells products to users rather than user data to advertisers – was “extremely glib, and not at all aligned with the truth.”

Nike A Good Buy Or Goodbye – CWEB.com

Nike (NKE) reported strong third quarter numbers after the bell on Thursday.

However, growth prospects are relatively limited, with material margin enhancement unlikely due to the already expensive pricing of the company’s core products.

The stock is overvalued at this levels and with the current trade war with China    Nike (NKE)    will take a big hit.

So Nike has demonstrated some excellent growth over the past several years, though that growth has become choppy recently.

Investors would be wise to avoid the name until the price comes down because the market is assuming a high perpetual growth rate.

• Revenue up 3% on a currency-neutral basis.
• Gross margins declined 70 basis points.
• SG&A increased 11% led by a 15% surge in demand creation expenses.
• Income before taxes plunged 12% to only $1.2 billion.

Nike actually needs China to hide slumping North America results.    However, in North America, sales fell from last year.

Mark Parker, CEO and Chairman:

As we close Q3, we now see a significant reversal of trend in North America, as momentum accelerates through the scaling of new innovation platforms and differentiated NIKE Consumer Experiences expand across the marketplace.

Nike (NKE)  continues to struggle as a result of fierce competition in North America, particularly from Adidas.

Adidas (OTCQX:  ADDYY) continues to outperform Nike (NYSE:  NKE) in the key North American market.

A trade war with China will be a negative result for  Nike (NKE)  since the company has huge growth in the international markets so far.

CWEB Analyst’s have issued a Hold Rating for    Nike (NKE)    

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