Today - Thursday, December 12, 2013
1:32 PMFCC, U.S. carriers reach phone unlocking deal
- The FCC has reached a deal with major U.S. carriers (VZ, T, S, TMUS) to make it easier for consumers to unlock their phones. The deal will guarantee postpaid users can unlock their phones once their contracts end, and will reportedly also cover some prepaid phones.
- In addition, carriers will have to approve or deny unlocking requests within two business days, and (according to sources) will also have to notify consumers when their phones become eligible for unlocking.
- A big increase in the number of unlocked phones in use could results in higher customer churn, as users no longer find it necessary to buy a new phone and (if they want a subsidy) agree to a new contract to switch carriers. At the same time, it could lower phone subsidy expenses.
- Previous: FCC wants carriers to allow unlocking
1:07 PMSparton acquires electronic controls contract manufacturer Beckwood Services
- Sparton (SPA -0.3%) acquires electronic controls and assemblies contract manufacturer Beckwood Services in an all-cash deal. Terms were undisclosed.
- Beckwood generates annual revenue of $18M. Its customers include Fortune 1000 manufacturers of industrial control systems, measurement/detection equipment, analytical instruments, and military/DHS equipment.
- Sparton expects the acquisition to be accretive to earnings within the first year.
12:47 PMEU to reportedly give Telefonica/KPN deal close scrutiny
- Reuters reports the E.C. will "open an in-depth probe" into Telefonica's (TEF -0.9%) $11.9B cash/stock purchase of KPN's (KKPNF) German unit on Friday, and will reject a German proposal to handle regulatory scrutiny of the deal.
- Many expected the E.C. to closely scrutinize the acquisition, which stands to lower the number of German mobile carriers from four to three (Telefonica/KPN, Deutsche Telekom, and Vodafone). Citi has estimated the deal could produce €4B ($5.5B) in annual synergies.
12:13 PMTelus receives approval for $500M 2014 buyback
- The Toronto Stock Exchange has signed off on a Telus (TU -1.2%) proposal to buy back $500M worth of shares in 2014. (PR)
- The buyback is good for repurchasing 2.6% of the Canadian carrier's shares at current levels. Telus has already bought back $1B worth of shares this year at a weighted average purchase price of $32.07.
11:55 AMSapiens International climbs on William Blair initiation
- Sapiens International (SPNS +3.6%) climbs after William Blair initiates coverage on the Israeli insurance industry software maker at Outperform, helping the stock notch fresh 52-week highs.
- Blair is the third firm out of 3 to issue bullish coverage on the name, the other 2 being Barclays and Needham.
11:51 AMCisco lowers growth outlook, peers/suppliers fall in sympathy
- Cisco (CSCO -2.3%) is now targeting annual revenue growth of 3%-6% over the next 3-5 years, down from a prior 5%-7%, says CFO Frank Calderoni states at the networking giant's analyst meeting. In addition, Calderoni says Cisco's FY14 (ends July '14) revenue growth outlook is "basically" in-line with a Street forecast for a 4% decline.
- Cisco is now aiming for services revenue growth of 7%-10% over the next 3-5 years, down from 9%-11%; services accounted for 22% of Cisco's Oct. quarter revenue. Businesses related to "enabling the cloud" (a somewhat nebulous term) are expected to show a 12%-18% growth rate.
- Cisco, already pressured by John Chambers' macro comments, continues to trade lower. Many networking equipment peers and component/chip suppliers are also selling off; in addition to Cisco, Ciena's mixed FQ4 results and slightly soft FQ1 guidance could be playing a role here.
- Notable networking equipment/component/chip decliners: JNPR -3.1%. BRCM -2.5%. PKT -2.8%. FFIV -2.2%. ERIC -2.1%. JDSU -1.9% (getting pulled from the S&P 500). AFOP -5.5%. CAVM -1.7%. AMCC -1.8%. BRCD -1.8%. MRVL -1.6%. ARUN -1.7%. CALX -1.7%.
11:21 AMRed Hat, Rackspace higher following report of Red Hat/Dell partnership
- AllThingsD reports Red Hat (RHT +1.3%) will announce a major cloud infrastructure (IaaS) partnership with newly-private Dell later today that revolves around Red Hat's OpenStack IaaS offerings. Red Hat has moved higher, and so has major OpenStack supporter Rackspace (RAX +7%).
- Dell and Red Hat, who already have a long-standing Linux partnership, will reportedly "develop an enterprise-grade version of OpenStack" based on the new Havana release. Dell will sell systems featuring Red Hat's OpenStack software, and provide related services.
- Such a tie-up would help Dell counter rivals such as H-P and IBM, who have aggressively rolled out and/or acquired IaaS platforms. It would also help Red Hat gain IaaS share as it contends with tough competition from Amazon and a slew of smaller players.
- While Amazon towers over the public cloud IaaS market, the Red Hat/Dell solution would focus on enabling private/hybrid cloud deployments. Microsoft and VMware (among others) provide direct competition in this space.
- Red Hat's FQ3 report arrives on Dec. 19.
- Update: Dell and Red Hat have made their partnership official. Red Hat has given up its early gains, but Rackspace remains sharply higher.
11:20 AMLifeLock acquires mobile wallet solutions provider Lemon for $42.6M
- LifeLock (LOCK) acquires mobile wallet solutions provider Lemon for $42.6M in cash to expand its reach into mobile.
- The Lemon Wallet app, which allows users to digitally store their credit cards and use them for mobile transactions, has been downloaded more than 3.6M times.
- In conjunction with the acquisition, LifeLock has launched a new digital identity protection app utilizing Lemon technology called LifeLock Wallet on iOS and Android. The offering is free and offers the features of the Lemon Wallet app, with the option to add a LifeLock subscription to receive fraud alerts and insurance.
10:53 AMFairchild Semiconductor authorizes $100M share buyback program
- Fairchild Semiconductor (FCS +1.3%) shares trade up on a day that the Market Vectors semiconductor ETF is off 0.48% after the company's board authorizes a $100M share repurchase program.
- CEO Mark Thompson: "We completed a significant investment cycle to increase our 8 inch wafer fabrication capabilities last year and now expect lower capital spending for many years."
- The program would be good for reducing shares outstanding by ~6% at current price levels.
10:46 AMInstagram launches private photo/video-messaging service
- Instagram Direct, a new service being launched at the mobile photo-sharing platform's NYC event (previous), allows Instagram (FB +3.9%) users to privately send photos and videos to up to 15 users. The photos can be accessed via Instagram's main feed, and are complemented by a group chat feature.
- Om Malik previously reported Instagram was prepping a private messaging service. Though much attention is being given to how Direct compares to Snapchat, which Facebook reportedly tried to buy for $3B+, it's arguably more a response to the rise of mobile messaging platforms such as WhatsApp, Kik, Line, and Viber, particularly in international markets.
- Those messaging platforms are viewed as a threat to Facebook's mobile engagement rates, particularly as they develop app/services ecosystems around them. WhatsApp alone has 350M+ monthly active users (MAUs); Instagram reached 150M in September, and Facebook proper is at 1.19B.
- Direct is also arguably a response to Twitter (TWTR -1.3%), which recently updated its apps to support private photo-sharing, and to place greater emphasis on private messaging in general. Twitter also recently began showing image previews in its Timelines.
- Instagram hasn't announced a printing service, as was expected by many.
- Previous: Instagram focused on discovery, international growth, ecosystem
10:45 AMTrimble acquires crop and soil data provider C3| Comment!
10:20 AMCisco falls as Chambers talks of emerging markets challenges
- Though U.S. demand is starting to show signs of improvement, emerging markets remain "extremely challenged," says John Chambers at Cisco's (CSCO -2.4%) annual analyst meeting. Those comments are helping Cisco add to the losses they saw yesterday following a Citi downgrade.
- Cisco reported a 12% Y/Y drop in emerging market orders for its Oct. quarter, and 18% order drops for both China and India. John Chambers admitted at the time the NSA scandal has affected Cisco's Chinese sales, but insisted it's not a major issue elsewhere.
- Yesterday, an IBM exec provided a somewhat different macro take than Chambers, asserting the European macro climate is improving but adding North America remains "a little more uncertain."
- Chambers also issued cautious macro commentary in September.
- Meeting webcast. Presentations: I, II
10:06 AMSigma Designs plummets on Q3 miss, bleak guidance
- Sigma Designs (SIGM -17.9%) shares are selling off after the company missed expectations in Q3 and provided bleak guidance.
- CEO Thinh Tran observed on the conference call that "shipment for the majority of the new products won't begin to materialize until the first half of next year. Meanwhile, our existing product line will experience challenges in the short term." He sees demand declining for set-top boxes, DTV, and home control in Q4.
- Management guides for Q4 revenue of $40M-$44M (well below analyst expectations of $53.5M), gross margin of 59%-61%, and opex of $24.5M. Analysts currently expect EPS of $0.06.
- Following results, Needham cut its rating to Hold from Buy.
9:56 AMA roundup of tech ratings changes
- Intel (INTC +1.1%) has been upgraded to Neutral by Nomura. Citi and Drexel Hamilton upgraded shares last Friday.
- Micron (MU +2%) has been upgraded to Buy by Nomura. Shares fell yesterday following an MKM report stating SK Hynix's Wuxi, China fab will be operational sooner than expected.
- Xilinx (XLNX +1.7%) has been upgraded to Buy by Nomura. In addition, both Xilinx and rival Altera (ALTR +0.6%) have been started at Outperform by JMP.
- iRobot (IRBT +2.2%) has been upgraded to Neutral by JPMorgan.
- Synchronoss (SNCR +6.8%) has been upgraded to Strong Buy by Raymond James.
- Teradata (TDC -2%) has been cut to Sector Perform by RBC. Shares are making new 52-week lows.
- Texas Instruments (TXN -0.7%) and SanDisk (SNDK -2.3%) have been cut to Reduce by Nomura. TI provided an in-line mid-quarter update on Monday, while SanDisk fell in tandem with Micron yesterday.
- Sigma Designs (SIGM -17.8%) has been cut to Hold by Needham after missing FQ3 estimates.
- Progress Software (PRGS -7.5%) has been cut to Market Perform by JMP.
9:18 AMCanadian Solar strikes 100MW supply deal, shares +1.6% premarket
- Canadian Solar (CSIQ) is supplying 100MW of solar modules to Chinese solar systems integrator Zhenfa New Energy for use in four projects. Deliveries are expected to start in mid-December, and be finished in January. (PR)
- The announcement comes three days after Canadian said it has obtained a $40M loan to finance Japanese solar projects, and is supplying 8.7MW of modules for a Mexican project.
8:45 AMAecom Technology names Burke as CEO successor
- Aecom Technology (ACM) on Wednesday said current president Michael Burke will succeed John Dionisio as CEO in a planned succession process at the engineering and infrastructure design firm.
- One of Burke’s priorities will be to develop ACM’s brand; the firm is not widely known outside of construction and engineering circles, though it has been involved in dozens of major projects around Los Angeles.