Thursday, June 22, 2006

Calls of Note Part 2

- JP Morgan comments on Adobe Systems (NASDAQ:ADBE) after the co announced a multi year agreement with Google to offer Google Toolbar with Macromedia Shockwave replacing the current Yahoo! Toolbar offer. Acrobat Reader and Flash will still have the Yahoo! Toolbar but the firm thinks a transition to Google is possible. Estimates $16-48M of annual contribution possible but 2006 guidance included impact.

According to the firm most likely scenario is just over $30M to 2007. The 2006 impact was factored into management guidance, but they are increasing firm's 2007 revenue by $32M and pro-forma EPS by a penny.

Notablecalls: ADBE was up almost 1pt in after hours trading. I don't see it moving up any further on this deal.

- Bear Stearns notes that based on the combination of recently released industry data from comScore and their own proprietary statistical analysis, they believe Google (NASDAQ:GOOG) is experiencing a strong 2Q and could be on pace to grow sequential net revenues north of 11%, to $1.7B. Hence the firm ise raising their net revenue estimate to $1.7B from $1.63B and PF EPS to $2.31 from $2.23, which would exceed industry consensus of $1.62B and $2.18 respectively.

Firm points out that their analysis would only imply an outperformance of consensus estimates by 8% and other data release by comScore already implies a QTD sequential queries growth of 30%. They also note that consensus estimates have historically varied widely from actuals reported. Hence, recommends buying Google prior to the 2Q quarterly report. Maintains Outperform.

Notablecalls: Not actionable but good to know category.

- CIBC notes that despite the near-term setback Finisar (NASDAQ:FNSR) shares have taken since the company lowered its fiscal 2007 gross margin outlook largely due to product mix, they remain optimistic that new products in metro/telecom, 10 Gigabit Ethernet and network testing will boost the company average in 2HFY07.

Finisar has posted over 10 quarters of sql. revenue growth, with many of those quarters coming in above management's guidance. CIBC believes the fiscal 2007 guidance is conservative and does not factor in upside success from new products, thus are estimates are at the high end of the range.

Firm's positive outlook for FNSR has not changed following our meetings. They continue to believe that the datacom market offers the best visibility for optical component vendors and see Finisar's 55%-60% market share as a clear way to play SAN/LAN growth with upside coming from telecom. Maintains Sector Outperformer and $6 tgt.

Notablecalls: Not actionable but good to know category. My gut is telling me FNSR needs to see some more selling before one can safely buy.

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