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Luxoft Holding soars on DXC deal; Netflix, Apple investors look toward earnings

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Luxoft Holding soars on DXC deal; Netflix, Apple investors look toward earnings

Shares in global software developer Luxoft Holding Inc. skyrocketed for the week ended Jan. 11 after the company said it will be acquired by information technology firm DXC Technology Co. Meanwhile, early earnings anticipation and strong performances at the annual Golden Globes fueled movement elsewhere in the technology, media and telecommunications sector.

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DXC on Jan. 7 agreed to buy Luxoft for about $2 billion, representing a near-100% premium on Luxoft shares based on the last trading day prior to the deal's announcement. DXC will pay $59 per share in cash to Luxoft shareholders, and the transaction is expected to close by June. Speaking on a call with analysts this week, Luxoft President, CEO and Director Dmitry Loschinin said the deal will give Luxoft a "unique opportunity" to work with DXC's clients and strengthen the company's engineering offerings.

"DXC has more than 6,000 clients, with hundreds of them a strategic relationship," Loschinin said. "Luxoft is an engineering company … so I believe the combination gives tremendous opportunity for our business to grow."

Likewise, John Lawrie, DXC's chairman, president and CEO, said on the same call that the merger will allow DXC to expand Luxoft's global reach while also bolstering his own company's portfolio of digital offerings including business analytics, the internet of things and blockchain.

Luxoft shares were up 80.81% as of midday Jan. 11, trading at $57.32 per share; DXC stock was trading at $60.28, up 5.16% for the week.

Elsewhere in the tech space, Apple Inc. weathered production-related concerns for its newest iPhone models this week. In spite of that development, Apple shares were trading in the black midday Jan. 11 as CEO Tim Cook said the company's long-term growth trends remain solid.

Apple this week told its suppliers to reduce production of new iPhones for the March quarter by about 10%, trimming its manufacturing plans for the second time in two months, Nikkei Asian Review reported, citing sources with knowledge of the matter.

The company cut production orders for all three of the iPhone models that it unveiled in September 2018 — iPhone XS and iPhone XS Max, which retail for $999 and $1,099, respectively, and the cheaper iPhone XR, which starts at $749. The overall production volumes of old and new iPhones will be reduced to 40 million to 43 million units for the March quarter, down from an earlier projection of 47 million to 48 million, the report said.

The request was reportedly sent out a week before the company revealed Jan. 2 that it will miss revenue forecasts at the end of 2018. Apple now expects revenue of $84 billion for the quarter ended Dec. 29, 2018, down from its earlier guidance of $89 billion to $93 billion.

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Cook assuaged some investor fear, saying in a CNBC interview that the stock market is "quite emotional in the short term" and that Apple's strong ecosystem and brand loyalty "is something that is probably underappreciated."

As of midday Jan. 11, Apple stock was trading at $152.62, up 2.94% for the week.

Netflix Inc. shares, meanwhile, notched gains amid optimistic analyst notes looking ahead to the company's Jan. 17 earnings.

Piper Jaffray analyst Michael Olson said in a Jan. 7 note that Netflix could see domestic subscriber growth jump 11.5% year over year, compared to consensus estimates of 10%, based on his analysis of online search trends. Internationally, Olson's model indicates 46% year-over-year growth, compared to 36.7% consensus.

"There will be increasing competition and unforeseen hurdles, but we think Netflix has reached 'escape velocity,'" Olson wrote. "As the consumer content dollar shifts from traditional TV to internet delivery, we believe the market will support multiple players, with Netflix leading the way."

Further giving the streaming service a boost, the company won big at the 76th annual Golden Globe Awards Jan. 6. Netflix, which allocated some $13 billion on original TV productions and film projects in 2018, scored a win for "The Kominsky Method," which won for best comedy series, with Michael Douglas recognized as the best actor in that genre. Richard Madden collected the best TV actor drama trophy for "Bodyguard," which premiered on BBC One (UK) before becoming accessible on Netflix. Netflix also won for best foreign film with "Roma," while Alfonso Cuarón won the best director award for his semiautobiographical film.

As of midday Jan. 11, Netflix shares were trading at $338.59, up 13.79% for the week.

Also a big winner at the Golden Globes was 21st Century Fox Inc. Fox properties, which will become part of Walt Disney Co. when its deal to purchase Fox's entertainment assets is completed, claimed six Golden Globes at the ceremony, three apiece for TV and film. FX Network (US) notched the best drama award for the final season of "The Americans" and also won two awards for "The Assassination of Gianni Versace: American Crime Story." "Versace" won best limited series or movie made for television, and Darren Criss won the category's best performance by an actor award.

Fox's "Bohemian Rhapsody," the biopic of Queen singer Freddie Mercury, meanwhile, was hailed as the best motion picture, drama, with Rami Malek recognized as best actor for his portrayal of the rock group's late frontman. Olivia Colman had the best performance by an actress in a musical or comedy motion picture for Fox Searchlight Pictures Inc.'s "The Favourite."

21st Century Fox shares were trading at $48.74 as of midday Jan. 11, up 1.4% for the week.