Midday Tech Roundup: AMZN, HTC, AAPL, YHOO

Tickers in this article: AAPL AMZN YHOO

NEW YORK (TheStreet) -- In Wednesday's tech roundup, Amazon  and HTC are reportedly developing a line of smartphones, Apple  has scaled back on iPhone 5c production, according to a published media report, and Yahoo!  shares are digesting third-quarter earnings.

Amazon is reportedly partnering with HTC as it moves into the highly competitive smartphone market, according to The Financial Times. The paper said one device is at an advanced stage of development, though a 2013 launch or whether it will be released at all is not known.

TechCrunch reported earlier this month that Amazon is in the process of developing two smartphones, a low-end device and another more expensive model with a 3D user interface.

At the time of publication, an Amazon spokesperson has not responded to requests for comment. 

Amazon shares are 1.2% higher to $309.92 as of 12:15 p.m. EST. Amazon will release third-quarter earnings on October 24.

TheStreet Ratings team rates Amazon.com Inc as a Hold with a ratings score of C. The team has this to say about its recommendation:

"We rate Amazon.com Inc (AMZN) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team go as follows:

  • AMZN's revenue growth has slightly outpaced the industry average of 17.8%. Since the same quarter one year prior, revenues rose by 22.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The current debt-to-equity ratio, 0.35, is low and is below the industry average, implying that there has been successful management of debt levels.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet & Catalog Retail industry. The net income has significantly decreased by 200% when compared to the same quarter one year ago, falling from $7 million to -$7 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet & Catalog Retail industry and the overall market, Amazon.com Inc's return on equity significantly trails that of both the industry average and the S&P 500.