MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Thursday, June 20, 2013
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4:26 AM Sony (SNE) CEO Kazuo Kirai told the company's shareholders meeting that it will take its time in considering Daniel Loeb's proposal to partially spin off its successful entertainment division and use the funds to boost its struggling hardware operations. "The entertainment business plays an important role in Sony’s future growth" and so shouldn't be let go. Hirai said. "This proposal strikes at the heart of what kind of company Sony ultimately will become in the future." Comment!
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Wednesday, June 19, 2013
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7:58 PM Ebix's (EBIX) merger agreement with a Goldman Sachs affiliate has been terminated. The termination is the result of Ebix's receipt of a letter from a U.S. Attorney for the Northern District of Georgia stating it has "opened an investigation into allegations of intentional misconduct" found in recent shareholder class action suits against Ebix. The letter follows an SEC investigation into Ebix's accounting launched earlier this year. EBIX -25% AH. SA contributor Gotham City Research has been quite critical of Ebix's accounting for some time. 2 Comments
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7:28 PM EMC is buying Israeli storage software startup ScaleIO for $200M-$300M, TechCrunch and Geektime report. ScaleIO's software allows storage found inside servers to be pooled and managed like storage arrays on a SAN. This can lead to both cost savings and (esp. when flash memory is used) performance gains. Acquiring ScaleIO would be the latest in a string of moves from EMC to lower its traditional focus on array sales. Last month, EMC announced ViPR, a software platform for managing storage hardware/services from both EMC and rivals, and in March, the company showed off new server flash cards and caching software. Comment!
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6:41 PM Apple (AAPL) roundup: 1) Apple TV has received a software update that adds support for HBO GO, WatchESPN, and 3 other sources. iTunes Radio will arrive this fall. 2) Apple patent chief Boris Teksler has left to join France's Technicolor. 3) Apple has won a $30M contract to supply iPads for L.A. schools; iPad education sales have been a priority for Apple. 4) After using iOS 7 for a week, BGR's Zach Epstein offers a critical take that doesn't revolve around icons. "Apple’s mobile platform just isn’t getting any smarter ... What meaningful, innovative functions can iOS 7 perform that iOS 6 could not?" Dan Frommer, another early user, isn't as harsh, but offers a similar take. "The big-picture reality is that iOS 7 really isn’t very different." 13 Comments
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6:17 PM Some S&P 600 changes: CalAmp (CAMP) is replacing Palomar Medical as of the June 24 close, WageWorks (WAGE) is replacing National Financial Partners as of the June 25 close, and Associated Estates (AEC) is replacing Websense as of the June 25 close. Palomar, NFP, and Websense are all being acquired.camp. CAMP +1.5% AH. WAGE +1.5%. AEC +3%. Comment!
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6:12 PM InvenSense (INVN -1%) is "likely shut out of the iPhone opportunity this year," says Maxim's Ashok Kumar, countering several reports claiming the opposite. Kumar, who's still reiterating a Buy, says checks point to the iPhone 5S using most of the components found in the iPhone 5, which suggests current motion sensor suppliers STMicroelectronics (STM) and AKM won't be kicked out. However, he adds checks do point to a next-gen Nexus 7 design win for InvenSense, and considers a next-gen iPad Mini win possible. InvenSense only fell in line with the market today, which suggests investors (like many of Kumar's peers) are still expecting a 5S win. 1 Comment
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5:57 PM Micron (MU) -2.1% AH in spite of its FQ1 beat, as investors take profits following a 120% YTD run-up. DRAM sales +23% Q/Q in FQ1, thanks to a 16% ASP increase and 6% volume growth. NAND flash sales +7%, largely due to an 8% increase in trade NAND ASPs. The ASP gains led gross margin to jump 600 bps Q/Q and 1300 bps Y/Y to 24%. Capex was $235M (10% of revenue), and free cash flow was $389M, a big improvement from FQ4's $78M and a reversal from the cash burn reported in many recent quarters. RBC notes DRAM sales were better than expected, but adds NAND shipments were light. SanDisk (SNDK) +0.8%. 5 Comments
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5:39 PM Red Hat (RHT) guides on its FQ1 call for FQ2 EPS of $0.32-$0.33 and FY13 EPS of $1.31-$1.35, in-line with Street estimates of $0.33 and $1.34 and better than feared. Aided by strong demand from telco and cloud customers, FQ1 billings rose 14% Y/Y, a solid improvement from the 9% FQ4 growth that had disappointed some investors. Deferred revenue balance -3% Q/Q and +16% Y/Y to $1.06B, and $179M was spent on buybacks. Shares +3.9% AH, thanks in part to low expectations. (PR) (yesterday) Comment!
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5:20 PM In tandem with its FQ3 results, Jabil (JBL) is announcing a restructuring. The contract manufacturer plans to cut an undisclosed number of jobs, and record $188M in charges (cash charges will total $140M). FQ4 guidance is for revenue of $4.55B-$4.65B and EPS of $0.50-$0.58, below a consensus of $4.59B and $0.60. Jabil sees its High Velocity manufacturing sales rising 15% Y/Y in FQ4, and its Diversified Manufacturing and Enterprise & Infrastructure sales holding steady. Shares -0.3% AH. (PR) 1 Comment
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5:05 PM Microsoft (MSFT) does an about-face, dropping the Xbox One's Internet verification requirements and all of its used game restrictions. GameStop (GME) investors are very pleased, shares +7.8% AH. Microsoft's change-of-heart follows a major backlash from gamers (they were far from appeased by Redmond's initial response), and plenty of gamer enthusiasm being shown for the PlayStation 4 (SNE), both due to its lack of similar restrictions and its lower price. 11 Comments
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4:56 PM Zynga (ZNGA) strengthens its real-money and "social" gambling push by acquiring Spooky Cool Labs, a 40-person startup containing a number of online gambling industry vets. In spite of its pedigree, Spooky recently shifted its attention to developing Facebook and iOS games based on The Wizard of Oz. Its Chicago team will collaborate with Zynga's San Francisco social gaming team, which is responsible for Zynga Poker. (earlier) (Zynga layoffs) Comment!
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4:41 PM Stratasys (SSYS) is acquiring desktop 3D printing upstart MakerBot in an all-stock deal that has an initial value of $403M (based on Stratasys' Wednesday close), but which could reach $604M via performance incentives. MakerBot, which has sold 22K+ printers since '09 (11K Replicator 2 units in the last 9 months) and had Q1 revenue of $11.5M, will operate as an independent unit. The deal is expected to be slightly dilutive to 2013 EPS, and accretive by the end of 2014. The companies estimate 35K-40K desktop 3D printers were sold in 2012, and see the market doubling this year. CC at 7AM ET tomorrow (webcast). SSYS +1.7% AH. (previous) 1 Comment
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4:28 PM Finisar (FNSR) +8.9% AH following its FQ4 beat. FQ1 guidance is for revenue of revenue of $245M-$260M and EPS of $0.22-$0.26, mostly above a consensus of $248.9M and $0.20. A 150 bps Q/Q increase in gross margin to 32.2%, caused by a favorable mix, contributed to the EPS beat. Finisar says it's seeing strong demand for 10G/100G Ethernet components for datacom gear - 10G is being rapidly adopted in data centers, and some firms are starting to embrace 100G. Opex +4% Y/Y. a little above rev. growth of 2%. JDSU +3%, NPTN +4.3%, and CIEN +1% in sympathy. FN, OCLR, and OPLK could also rally. CC at 5PM ET (webcast). (PR) Comment!
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4:14 PM Nokia (NOK) +2.6% AH after the WSJ reports Microsoft (MSFT) held advanced talks to buy Nokia's phone business, and was "close to an oral agreement" at one point, but adds discussions broke down in part due to price and concerns about Nokia's competitive positioning. One source says the talks "took place as recently as this month, but aren't likely to be revived." 33 Comments
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4:05 PM Micron (MU): Q1 EPS of $0.04 beats by $0.01. Revenue of $2.3B beats by $0.06B. Shares -1% AH. (PR) 4 Comments
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4:03 PM "Nothing has changed regarding the financing ... We expect to have [$5.2B] in the next couple of weeks ... I would provide [$2B], if necessary." Thus speaks Carl Icahn, addressing reports he's struggling to line up financing for his Dell (DELL -0.6%) bid and making a case for his new $14/share tender offer. Unsurprisingly, Dell's special committee isn't enthusiastic about the tender, and says it's still waiting on requested info about Icahn's leveraged recap proposal. Some think Icahn's real motivation is getting Michael Dell/Silver Lake to sweeten their offer. "Icahn is historically known for looking for dislocations," observes one Dell shareholder. 1 Comment
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2:48 PM William Blair's Brian Drab provides a fairly positive take on 3D Systems' (DDD -2.4%) recent analyst day, but nonetheless reiterates an Underperform on account of valuation. Drab observes 3D's management talked up the expansion of its healthcare offerings (specialized/personalized products) and Quickparts on-demand parts service (new markets/geographies), and hinted price points for Cube desktop printers could fall below $1K and (in 12-18 months) $500. But with shares trading at 46x 2013E EPS, Drab considers expectations too high. (analyst day slides) 5 Comments
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