By Rex Crum
Amazon.com Inc. shares outpaced the broader tech market Monday,
and the online retailer was joined by gains from Electronic Arts
Inc. ahead of the video-game publisher's quarterly results, due
after the market's close.
Amazon (AMZN) shares gave up some of their gains, but remained
up $1 to $118.35 after one analyst predicted greater opportunities
for the company's Kindle, downplaying fears that Apple Inc.'s iPad
had already made the electronic reader obsolete.
EA (ERTS) shares started the week on an upbeat note, rising 41
cents, or 2.4%, to $17.67 in advance of the company's third-quarter
report. In January, EA gave a weaker-than-expected outlook for its
2010 fiscal year, saying it expects to lose between $1.94 and $2.04
a share.
However, EA and other video-game publishers feel they have a
slate of big releases coming up that will appeal to their core
customer base and get the industry back on track after months in
the rut.
For its part, EA is looking to put that forecast behind and
focus on the rest of 2010. The company already has the first big
video-game hit of the year with its "Mass Effect 2," which sold
more than 2 million copies during its first week of release in
January.
The Nasdaq Composite Index (RIXF) followed the leads of EA and
Amazon, rising 3 points to 2,143, and the tech sector of the
S&P 500 Index (SPX) added 0.4%.
Amazon got some positive reception from Collins Stewart analyst
Sandeep Aggarwal, who on Monday raised his rating on Amazon's stock
to buy from hold, mostly due to what he said are opportunities for
the Kindle and the company's Amazon Web services offerings for
businesses. Aggarwal also set a price target on Amazon's stock of
$150 a share.
Aggarwal said that competition from the likes of Apple's (AAPL)
iPad is growing, and provided a challenge to the Kindle, which has
been on the market for a little more than two years.
However, Aggarwal believes the Kindle will remain a force in the
market because "the e-book revolution is much bigger than we
previously thought."
"Competition for the Kindle is rising," Aggarwal said, noting
that there are more than 45 e-book readers on the market. "[But]
the market remains in early stage of development and Kindle is one
of the most compelling e-readers."
Aggarwal added that for this year, Amazon will ship 3.85 million
Kindles, resulting in $2.5 billion in revenue, and will soon add
color and touchscreeen function to future models. Amazon currently
doesn't disclose how many Kindles it sells.
Tech gainers
Among tech bellwethers, Dell Inc. (DELL), Hewlett-Packard Co.
(HPQ), Apple, Cisco Systems Inc. (CSCO) shares also gained.
RightNow Technologies Inc. (RNOW) shares held on to a gain of 8
cents to trade at $15.09 after Robert W. Baird analyst Steven
Ashley raised his rating on the customer-relationship management
software developer to outperform from neutral.
Ashley said RightNow stands to benefit from a new software
product that lets corporate customers monitor customers'
conversations over social-media networks in order to better
understand those customers' needs and frustrations.
Broadcom Corp. (BRCM) also got an upbeat assessment from
Citigroup analyst Glen Yeung, who initiated his coverage of the
chip maker with a buy rating and a $35-a-share price target. Yeung
said that he believes Broadcom's strategy that includes focusing on
communications chips will help extend the company's growth
streak.
However, Yeung's take on Broadcom failed to build enthusiasm for
the company's stock, as Broadcom's fell 19 cents to trade at
$29.20.