Berkshire Hathaway raising its Apple AAPL stake, Cisco’s CSCO earnings, Amazon AMZN becoming the 3rd largest U.S. company, Google Stories and WhatsApp payments in India were the top stories last week. Here are the details. 

Warren Buffet Loves Apple

Apple’s fourth largest shareholder, Warren Buffett’s Berkshire Hathaway, has given its vote of confidence to Apple. The firm increased its stake by a whopping 23.3% to 165.3 million Apple shares, according to a 13F filing.

Apple has faced some bashing in recent days related to product delays, battery replacements and even security (wasn’t really a scare, but still). But its strong balance sheet, huge cash balance, considerable cash generation abilities and growing services business lend stability to its earnings and future growth prospects.    

There was also the thumbs down to IBM because the firm went ahead and sold 94.5% of its remaining stake in the company, retaining just 2.05 million shares worth about $314 million. The IBM strategy is nothing new because Berkshire has been reducing its stake in the company since January of last year. Interesting though is the fact that IBM’s recent revenue growth, that increases confidence in its turnaround plan focused on analytics, cloud, mobile and security, doesn’t appear to have changed the sentiment.

As Jim Cramer said on Squawk on the Street, “Warren Buffett does not flee with the wind… He makes judgments.” No wonder share prices are soaring.

Cisco Earnings

Cisco’s revenue and earnings were both ahead of the Zacks Consensus Estimate, although it was a narrow beat on the top line. The transition to the subscription based model continues so there will be some negative impact from that in the near term. Positive impact from new products and growing prowess in security are points to note.

Topline guidance for the third quarter was encouraging, especially given that it was attributed to strong orders and improving traction of the subscription-based model.The $1.9 billion Broadsoft acquisition is also no doubt a positive, adding to its recurring revenue base.

As a result of the new tax law, Cisco will repatriate $67 billion of cash back to the U.S. during the third quarter, of which $44 billion will be returned to shareholders through share buybacks ($25 billion) and dividends ($13 billion). The current buyback authorization was thus increased by $25 billion to $31 billion, all of which will be used for buying back shares within the next 18 to 24 months.

Of course, this will also lower the share count significantly, with a corresponding positive impact on the EPS. Cisco hasn’t said what it will do with the rest of the cash, but it has shown appetite for acquisitions.

Amazon Third Largest U.S. Company

Amazon became the third largest company by market capitalization, when its shares rose 2.6% last Wednesday, lifting its market capitalization to $702.46 billion. The company moved past Microsoft in the process to take the spot behind Apple and Alphabet.

Amazon has long outgrown its image as the leading online retailer and today is known as a leading technology company as well, offering cloud infrastructure services, digital entertainment, voice controlled devices, logistics and shipping services, and what not. It has also displayed an uncanny ability to anticipate emerging market trends and capitalize on them long before other players. It only makes sense therefore that investors are willing to pay more while taking greater risk to get into the action.

Google Stories

Alphabet’s GOOGL Google is extending its Accelerated Mobile Pages (AMP) into a stories-like feature. So basically, tools to create image rich pages that load faster than normal text will be offered by the company so publishers can create easily swipeable content that together tell a story.

The company’s eventual goal is to make these stories a part of searchable content that shows up on the search results page. It’s still in the very early days, so the partner list is relatively small: CNN, Conde Nast, Hearst, Mashable, Meredith, Mic, Vox Media and The Washington Post. Moreover, it is still working on ad support. Once that’s done, the format that was introduced by Snapchat and copied so well by Facebook’s Instagram, should become a roaring success Google as well.

WhatsApp Payments in India

Facebook’s FB WhatsApp is poised to leverage its largest daily active user base of over 200 million in India to launch a peer-to-peer payments service. The unified payment interface (UPI)-based service is now in beta, with most Indian banks already signed on. The goal is to test the service with a million users before a public launch.

The digital payments landscape in India is ripe for harvesting, according to a recent Credit Suisse report as quoted in Business Today: “Digital payments [in India] currently aggregate less than $200 billion, of which mobile is still at just $10 billion in financial year 2018 (estimated)” (the financial year ends in March). “Payment integration into popular apps in India will drive the digital payment market in India to $1 trillion over the next five years.” 

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