Wednesday, December 11, 2013
7:12 PMYahoo faces uproar over partial e-mail outage
- On Facebook, Twitter, and elsewhere, complaints are piling up about a two-day service outage affecting millions of Yahoo Mail (YHOO) users. Though Yahoo previously stated a fix was expected to arrive by 4:30PM ET, the issues are continuing. Moreover, a dearth of communication from Yahoo for much of the outage has made a bad PR situation worse.
- The downtime won't help Yahoo's efforts to halt Mail's share losses to Gmail. It comes two months after Yahoo provided Mail with a big revamp that included the introduction of Gmail-like conversation threads and 1TB of free storage.
6:57 PMCisco roundup: Citi downgrade, set-tops, UCS servers
- Citi's Ehud Gelblum, who just started coverage on Cisco (CSCO) with a Sell, says he's concerned about core routing competition from Alcatel-Lucent, as well as potential data center switching share loss as companies embrace non-proprietary solutions.
- Tough core/edge routing competition from Alcatel and Juniper likely contributed to 13% Y/Y service provider order drop Cisco reported last month. But the company has been maintaining its dominant position in data center switching. IDC thinks Cisco had a 62.3% share of the Ethernet switch market in Q3, and a 65.9% share in the growing 10-gig segment.
- Cisco is counting on its new Insieme platform - praised for its performance and rich feature set, criticized for its proprietary nature - to head off competition from software-defined networking platforms that enable the use of the "open" hardware Gelblum is concerned about.
- Reuters notes Cisco is facing growing pressure to unload its set-top unit, which saw a 20% Y/Y sales drop in the Oct. quarter. Cisco partly blames the drop on an IBM-like decision to shun low-margin deals, and says a stronger focus on cloud-based pay-TV video solutions will help right the ship.
- Cisco is set to roll out next-gen UCS servers that will be optimized for analytics applications and carrier cloud services, among other things.
- The UCS line, differentiated by its built-in networking gear and strong virtualization performance, has been a bright spot for Cisco. UCS sales rose 44% Y/Y in the Oct. quarter, and IDC estimates Cisco's server share is up to 5%.
6:18 PMComputer Sciences receives Wells notice from SEC
- Computer Sciences (CSC), which has already seen certain non-U.S. employees and ex-employees receive Wells notices from the SEC's enforcement division, discloses the company itself received a Wells notice today. (8-K)
- As CSC states, a Wells notice indicates the SEC plans a civil action or administrative proceeding against a company or individual, but doesn't amount to a formal accusation or wrongdoing. The company says it remains in talks with the SEC about a possible settlement.
- The SEC began probing CSC's accounting in 2011. The IT services firm paid $97.5M earlier this year to settle a shareholder suit related to its accounting issues.
6:05 PMOnline coupon/promo site Ebates reportedly planning 2014 IPO
- Bloomberg reports Ebates, a provider of digital coupons and other promotional services for online retailers (the company gets paid via affiliate fees), has hired JPMorgan (lead underwriter) and BofA/Merrill to take it public next year.
- The report comes shortly after many online retailers posted solid strong Black Friday and Cyber Monday sales. It also comes five months after Ebates rival RetailMeNot (SALE) delivered a strong IPO.
5:27 PMViolin Memory CTO leaves company
- Violin Memory (VMEM) CTO Jonathan Goldrick has left the company, Business Insider reports. A company spokesperson told the site, "I can confirm Jonathan has left on good terms. His responsibilities are being shared by Violin's Founder and CTO Jon Bennett and CTO Som Sikdar."
- Rumors have swirled that CEO Don Basile could leave soon as well. Violin's spokesperson: "that is a rumor, and we cannot comment on rumors."
- Given Violin's torrent of struggles (shares are down 61.4% since highs notched after its foray into the public markets at the end of Sept.), and Fusion-io's own problems, Nimble Storage (NMBL), which set its IPO price range at $16-$18, may get a chilly reception by investors.
5:24 PMFacebook, Alliance Data, Mohawk joining S&P 500
- Better a week late than never. Facebook (FB) will be joining the S&P 500 following the Dec. 20 close, and will also be added to the S&P 100. The social networking giant is replacing test equipment vendor Teradyne (TER).
- Alliance Data Systems (ADS) and Mohawk Industries (MHK) are also joining the S&P 500 following the Dec. 20 close. They're replacing Abercrombie & Fitch (ANF) and JDS Uniphase (JDSU).
- FB +3.9% AH. MHK +2.4%. ANF -0.8%. JDSU -0.6%.
5:11 PMIBM exec offers cautious macro view
- IT services demand "depends on what the economic climate is, and that has not been very encouraging," says Erich Clementi, head of IBM's Global Technology Services (GTS) unit. "Europe has shown signs of recovery. North America has been a little more uncertain.”
- The remarks comes less than two months after a big Q3 revenue miss blamed on a mixture of macro issues (particularly in emerging markets) and sales execution.
- Though IBM's services backlog was flat Q/Q and up 2% Y/Y in Q3 to $141B, GTS revenue fell 4% Y/Y and global business services revenue fell 5%. Together, the businesses accounted for 59% of IBM's revenue, and 51% of its op. profit.
4:51 PMSunEdison issues Q4 warning, shares -7.7% AH
- SunEdison (SUNE) now expects its chip wafer division, soon to be spun off in an IPO, to post Q4 revenue of $205M-$215M, down from prior guidance of $220M-$230M. The company blames "continued market weakness." Pricing and market share are said to be largely unchanged. (PR)
- SunEdison is also cutting its Q4 solar systems sales forecast to 209MW-234MW from a prior 234MW-264MW. However, the cut is simply due to a decision to keep more projects on the company's balance sheet. Completed systems guidance is unchanged at 209MW-234MW, and guidance for systems retained on SunEdison's balance sheet has been raised to 100MW-110MW from 75MW-80MW.
- Separately, SunEdison is announcing a debt refinancing effort. The company plans to sell $800M worth of convertible senior notes (half due in 2018, the other half in 2021), and use the proceeds to redeem $550M worth of 7.75% senior notes due 2019 and a $200M term loan sporting a 10.75% interest rate.
4:33 PMToro Investment ups NQ Mobile stake
- The chief investment officer of Toro Investment Partners discloses his firm has upped its NQ Mobile (NQ -4.6%) stake since Nov. 12. Toro, which has written bullish SA columns about NQ more than once, disclosed a 5% stake in the Chinese mobile software vendor on that day.
- Though closing sharply lower on a down for equities, NQ managed to recoup a decent chunk of the morning losses it saw after SA contributor Robert Zangrill questioned the company's financials and accused it of "round tripping" revenue.
4:17 PMDish lower; investment firm reportedly buying LightSquared spectrum
- The WSJ reports distressed investment firm Centerbridge Partners has reached a tentative deal to buy bankrupt LightSquared's spectrum, GPS interference concerns and all, for $3.3B. Centerbridge will reportedly assume $1.7B worth of liabilities as part of the deal.
- Dish (DISH -1.2%) had submitted a $2.2B bid for LightSquared, with hopes of growing its high-frequency spectrum portfolio (and thus its investment/dealmaking flexibility) as it continues evaluating its 4G network options. Charlie Ergen has stated a merger with T-Mobile USA is possible, and Sprint has left the door open to a network-sharing deal.
4:00 PMJuniper software/security division chief resigns
- Bob Muglia, head of Juniper's (JNPR -1.3%) Software Solutions Division (SSD), has resigned. No replacement has yet been named. (8-K)
- SSD. whose sales mostly revolve around Juniper's slumping security hardware/software unit, accounted for 21% of the company's Q3 revenue. Sales fell 15% Y/Y to $246.3M, with security revenue dropping 18% to $144.3M and routing software revenue dropping 49% to $14.6M (services revenue rose 2%).
- Muglia's departure could be tied to Juniper's recent CEO change. It comes as Juniper makes a big push into the software-defined networking (SDN) controller space, via its open-source OpenContrail controller.
2:43 PMFinisar upsizes, prices convertible debt offering; shares edge higher
- Finisar (FNSR +0.7%) has upsized its offering of convertible senior notes due 2033 to $225M from a prior $200M. Underwriters now have a $33.75M overallotment option, up from a prior $30M. (PR)
- The notes carry an interest rate of just 0.5%, and have an initial conversion price of $30.18. That represents a 39% premium from current levels. Finisar can't redeem the notes before Dec. 22, 2018.
2:30 PMVeeco discloses CFO's retirement, shares only down slightly
- Veeco (VECO -0.3%) CFO David Glass, 54, will be retiring in six months or less. The LED/solar equipment maker has hired a recruiting firm to help find a replacement. (8-K)
- Glass has been Veeco's CFO for more than three years. His retirement follows a lengthy accounting review that ended last month with the filing of Veeco's 2012 10-K and multiple 10-Qs.
2:18 PMDolby higher after announcing deals with Fox, Anchor Bay
- 20th Century Fox and Anchor Bay Entertainment plan to have digital content made available via the UltraViolet DRM platform support Dolby Digital Plus (DLB +3.8%) audio. (PR)
- UltraViolet, which allows purchased movies/TV shows ti be downloaded and streamed onto multiple devices, has seen a mixed reception: Disney, Apple, and certain other firms have withheld their support, and users have complained about DRM restrictions and confusing download procedures.
- But with most major studios supporting UltraViolet and offering digital copies with Blu-ray/DVD purchases, the platform could still generate healthy licensing sales for Dolby. Shares are making new 52-week highs, and are up 29% YTD.
1:55 PMNetflix outperforms following Citi PT hike
- Citi's Mark May, who started coverage on Netflix (NFLX +0.9%) with a Neutral in July, has raised his PT to $390 from $355, albeit while maintaining his original rating.
- May declares Netflix "the largest and most innovative company in the Internet TV sector," and is lifting his broadband penetration and Netflix subscriber forecasts for the streaming giant's international markets.
- He now expects Netflix's international sub base to post a 39% CAGR from 2013-2016, up from a prior 31%, and is modeling 15% growth for later years. May also continues to expect a $1/month U.S. price hike in 2016.
- Shares are trading higher on a down day for the Nasdaq. They're up 296% YTD.
1:40 PMPhotronics climbs on bottom-line beat in FQ4, management remarks on 2014
- Photronics (PLAB +12.2%) shares climb after a bottom-line beat in FQ4.
- The market may also be happy about positive comments by management looking forward. CFO Sean Smith said on the conference call that although the company is not issuing specific guidance, it "expect[s] to see substantial growth" in Q2 and Q3 of 2014.
- When asked about the quarter's strength in the mainstream ops and its sustainability, Smith observed that it is "a bright spot for us year-over-year," with a slight revenue increase in a market where units are "clearly decreasing. So we're picking up market share there. And our objective is to continue to do that."
1:28 PMJA Solar announces management shakeup, shares drop
- JA Solar (JASO -3.9%) COO Jian Xie is set to "assume broader leadership" within the company, and become its president. CTO Yong Liu will take over Xie's current job. (PR)
- In addition, CFO Min Cao is being reassigned to the role of chief strategy officer. Replacing him is Herman Zhao, who was JA's CFO from 2006-2008 and has since been the CFO of two other companies.