MARKET CURRENTS
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MARKET CURRENTS
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Tuesday, June 18
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7:31 PM Dish (DISH) is all but officially abandoning its bid for Sprint (S). In a fresh update, the satellite TV provider says the revised SoftBank (SFTBF.PK) deal makes it "impracticable" for it to submit a new offer by Sprint's June 18 deadline, and that it will now focus its "efforts and resources" on the Clearwire (CLWR) tender offer. It increasingly looks as if SoftBank will end up with Sprint (vote on June 25), and Dish with a big minority stake in Clearwire that it could use to obtain a 4G network/spectrum deal with the 3 other parties in this saga. S -1.8% AH. CLWR +1.8%. (previous) 14 Comments
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7:09 PM IBM is launching a slew of cloud apps/services it says are aimed at C-Suite execs, but is light on specifics. Big Blue says its SmartCloud Solutions portfolio now offers 100+ business functions for decision-making execs such as CFOs, CMOs, procurement/supply chain officers, and HR chiefs to leverage. A new social media analytics solution for CMOs (will compete against CRM's Radian6 and ORCL''s Collective Intellect) is among them. The announcement comes on the heels of IBM's ~$2B acquisition of cloud infrastructure provider SoftLayer, which the company plans to integrate with its SmartCloud unit. Comment!
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6:50 PM Alcatel-Lucent (ALU) CEO Michel Combes will use tomorrow's strategy update to unveil plans to cut €1B ($1.34B) worth of costs, and to divest €1B worth of assets over the next 3 years (less than some investors have been hoping), Les Echos reports. Combes will also announce plans to focus on the router and mobile infrastructure markets - the former has been a bright spot for Alcatel thanks to strong edge router sales, and the latter has been faring better lately thanks to growing 4G orders. (earlier) 4 Comments
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6:39 PM Mellanox (MLNX) responds to a shareholder vote forcing CEO Eyal Waldman to give up the role of chairman by naming lead director Irwin Federman its new chairman. Federman is a partner at VC firm U.S. Venture Partners, and also serves on SanDisk and Check Point Software's boards. Also: Mellanox boasts the number of systems on the TOP500 supercomputer list using its FDR InfiniBand hardware has risen 3.3x over the last year, and that 205 of the systems uses InfiniBand. Comment!
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6:19 PM Agilent (A) announces and prices a $600M offering of senior notes due July 2023; they carry a yield of 3.875%, and have been rated BBB+ by Fitch. Agilent says it will use the proceeds to pay down debt due next month, as well as for restructuring expenses and buybacks. The test equipment giant had $2.36B in debt as of April 30, and $2.64B in cash/investments. Comment!
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6:07 PM Red Hat (RHT +2.1%) rallied ahead of tomorrow's FQ1 report after SA Pro contributor/former hedge fund analyst Josh Burwick offered a bull case, and Piper made cautiously optimistic remarks. Burwick argues fears about the impact of Amazon Web Services on Red Hat are overblown, that slowing billings growth is offset by major growth in unbilled revenue, and that newly-announced OpenStack cloud infrastructure and app platform offerings should fare well. Piper says checks indicate FQ1 billings could be light, but adds Red Hat will make up for it in FQ2, and sees shares bottoming in the $40s. Comment!
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5:46 PM Facebook's (FB) monthly active advertiser base is now above 1M, the social networking giant boasts. Though impressive, that figure still suggests only a small portion of the 16M local businesses that have set up Facebook pages are buying ads. Facebook is hoping to reel in more clients in part by streamlining its ad offerings, creating more mobile-friendly business pages, and giving advertisers more data on its users' non-Facebook activity. BIA Kelsey estimates over half of U.S. small businesses promote themselves via Facebook, and 16% buy ads. 1 Comment
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5:27 PM In a strategy shift, Nvidia (NVDA) is offering to license its Kepler GPU architecture, as well as "visual computing" IP, to other chipmakers looking to power mobile hardware. Kepler serves as the foundation for much of Nvidia's PC/workstation GPU lineup, as well the GPU within its next-gen Tegra 5 (Logan) processor. Nvidia's move puts it into competition with GPU core licensing leader Imagination (IGNMF.PK), and also ARM's (ARMH) fast-growing Mali GPU core business. Potential licensees include Qualcomm (uses home-grown GPUs), Intel (ditto), Apple (Imagination client), and Samsung (Imagination and Mali client). Tough competition for Tegra may have influenced Nvidia's decision. 4 Comments
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5:05 PM The next version of Surface RT (MSFT) will rely on both Qualcomm (QCOM) and Nvidia (NVDA) CPUs, Bloomberg reports. Though details are scant, one likely possibility is that Nvidia (the sole supplier for the first-gen RT) will power Wi-Fi-only models, and Qualcomm will power 3G/4G-capable models. The report comes as all signs indicate Qualcomm is set to displace Nvidia as the Nexus 7's CPU supplier. Meanwhile, Microsoft is selling the 32GB version of RT for just $199 (a 60% discount) to schools until Aug. 31, the latest in a string of aggressive promotions ahead of a refresh that could be announced at the upcoming BUILD conference. 4 Comments
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4:43 PM A little more on Adobe: Marketing Cloud bookings +25% Y/Y. 26% of Digital Marketing transactions now mobile (25% in FQ1). 42% of Adobe's (ADBE) Document Services (Acrobat) revenue subscription-based; 1M+ paid subs. 3.9M shares repurchased. R&D spend +12% Y/Y to $203M, sales/marketing spend +4% to $402M. Company on track to reach goal of 1.25M Creative Cloud subs by end of FY13; 93% of CC subs on annual (rather than monthly) plans. Deferred revenue -1% Q/Q to $691.3M. 35% of company's revenue recurring at end of FQ2, up from 31% at end of FQ1. (PR) Comment!
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4:35 PM More on Adobe: FQ3 guidance is for revenue of $975M-$1.025B and EPS of $0.29-$0.35, vs. consensus of $1.01B and $0.35. FY13 guidance is for revenue of $4.1B and EPS of $1.45 vs. consensus of $4.11B and $1.44. Paid Creative Cloud subs +221K Q/Q to 700K in FQ2, better than FQ1's +153K. CC annual recurring revenue +$123M Q/Q to $356M (rose $80M in FQ1), 81% of subs use full suite. Digital Media revenue -18% Y/Y to $670M (shift to subscriptions), Digital Marketing (Omniture, AdLens) revenue +11% to $285M. ADBE +3.9% AH, CC at 5PM ET (webcast). (slides) (datasheet) (prepared remarks) (PR) Comment!
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4:02 PM Huawei says in an e-mailed statement it "has no plans" to acquire Nokia (NOK +4.6%). Shares have given back a big chunk of their earlier gains, but they still closed up sharply. Huawei consumer group chairman Richard Yu qualified his remarks about his company being willing to buy Nokia by suggesting Nokia's commitment to Windows Phone could be an issue. "Whether Windows Phone will be successful is difficult to say ... It has a very small market share." Huawei launched the W1, a low-end WP8 device, earlier this year. 21 Comments
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3:50 PM Is a bidding war breaking out for Kabel Deutschland? Bloomberg reports Vodafone (VOD +0.4%) has raised its preliminary bid for the German cable giant to €7.5B ($10B), or €85/share, matching an offer recently made by Liberty Global (LBTYA -0.1%). Vodafone is said to be studying Kabel's books "before it presents an official offer in the coming weeks." Kabel closed at €85.51 in Frankfurt, up 3.7%. (previous) Comment!
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2:48 PM U.K.-based Facebook/mobile game developer Midasplayer has hired banks to pursue a U.S. IPO, the WSJ reports. Midasplayer, better known as King, is the developer behind Candy Crush Saga, which has 15.4M daily active Facebook users (per AppData) and has also done quite well on mobile. Midasplayer/King says it had 70M DAUs for all its games last month, which is more than the 52M DAUs Zynga (ZNGA) had in Q1. Not surprisingly, the company is trying to diversify. 3 Comments
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2:37 PM Ahead of this afternoon's FQ2 report, Adobe (ADBE +0.3%) has sent out a survey to customers asking whether they'd be interested in paying $30/month for Creative Cloud, or $10/month for the Photoshop app, for 3 years, after which they'd get a permanent copy of Creative Suite 6. Those prices are more aggressive than the $50/month and $20/month Adobe currently charges (some discounts are available), and suggest it's trying to address a backlash caused by its decision to abandon CS license sales in favor of CC subscriptions. The survey comes as Adobe rolls out a Creative Cloud update; it includes cloud file-syncing, Behance integration, and a blur-removal tool. Comment!
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2:11 PM More on Goldman and Palo Alto Networks (PANW -1.5%): Analyst Greg Dunham notes Palo Alto's "growth story is taking longer to play out and there are questions over execution" (presumably thanks to recent numbers). He also thinks Juniper's suit against Palo Alto (filed in 2011) is proving "a bigger investor concern than we had anticipated." Nonetheless, Dunham reiterates a Buy, believing "investors are underestimating the strength in PANW's subscription businesses" and its long-term growth potential. 1 Comment
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2:00 PM Alcatel-Lucent (ALU -2.1%) slips after the WSJ's Renee Schultes writes new CEO Michel Combes is likely to place a greater emphasis on cost-cutting than asset sales when outlining his strategy tomorrow. However, no sources are cited in the column. ALU has already unloaded some major assets, and there have been multiple reports about the company's submarine optical cable unit being on the block. But some analysts think the debt-laden company needs to do more. JPMorgan Cazenove, for example, raises the idea of ALU also unloading its mobile infrastructure and enterprise units. 9 Comments
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1:38 PM Rackspace (RAX +6.4%) is rallying, apparently on rumors it has bagged Fidelity as a customer for its OpenStack cloud infrastructure offerings. Cowen thinks the deal will be announced at the June 19-20 GigaOm Structure conference. Rackspace could definitely use a big OpenStack customer win, given its recent news flow. 11.3% of the float was shorted as of May 31. Comment!
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1:30 PM Brocade (BRCD -2.3%) slides on news Americas sales chief Tom Ellery has resigned. The departure comes 4 months after Brocade hired Juniper's Jeff Lindholm to be its new global sales chief, and a year after Lindholm's predecessor, Ian Whiting, left to join Riverbed. Wells Fargo views Ellery's resignation as a negative. "We believe he was well respected in the Ethernet sales organization and his resignation may lead to additional turnover in the business." The firm also notes Brocade is trying to cut costs and focus its Ethernet efforts on high-margin areas, actions that could lead to near-term disruption. Comment!
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1:14 PM Nokia (NOK +9.3%) soars after the chairman of Huawei's consumer business group says his company would be open to buying Nokia in an off-hand remark. Any offer from Huawei would face intense EU scrutiny, given long-standing worries about the company's Chinese government/military ties. Is this a repeat of BlackBerry/Lenovo? 26 Comments
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1:07 PM Carl Icahn has bought 72M Dell (DELL +0.4%) shares from would-be buyout partner Southeastern Asset (half its stake), and is proposing a $14/share tender offer for 62% of Dell's outstanding shares (1.1B shares). The Southeastern deal makes Icahn Dell's largest outside shareholder. Dell, whose shareholder vote on Michael Dell/Silver Lake's LBO offer remains set for July 18, has edged higher to $13.45. (previous) 3 Comments
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12:56 PM Ascent Solar (ASTI +5.2%) rallies to $0.76 after announcing a deal to sell $6M worth of preferred shares at a price of $0.80, and issue 3-year warrants to buy 2.625M shares at an exercise price of $0.90 (potential proceeds of $2.36M), with an unnamed "high net worth private investor in Asia." Ascent, which has been steadily burning cash, says it will use the proceeds to "fund the continued expansion of its retail channels" of its EnerPlex solar charger/accessory line. (PR) Comment!
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12:38 PM BlackBerry (BBRY +4.3%) gets a lift from a positive note from RBC's Mark Sue (Market Perform), who now thinks 3.5M BB10 phones were shipped in the May quarter (up from a prior 2.75M) thanks to new Z10 carrier deals and channel fill. Sue adds "BB10 demand appears to be mixed by region," with the U.K., Canada, and the Middle East seeing the strongest sales, and U.S. demand weaker. He now expects BlackBerry to report above-consensus FQ1 revenue and EPS on June 28, and thinks heavy short interest (32% of float shorted) could lead to a squeeze. (Deutsche) 15 Comments
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12:29 PM VeriFone (PAY +4.1%) pops after director Alex Hart discloses he bought 10K shares on Friday at $15.72. Shares of the payment-processing hardware vendor remain down 45% YTD thanks to a lot of bad earnings news. Comment!
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12:24 PM More on SolarCity: The company continues its financing binge by announcing a $175M offering for convertible senior notes due 2018. The announcement comes shortly after SolarCity (SCTY +2.9%) obtained a $100M loan to finance new panel installations, and a month after it reached a $500M+ financing deal with Goldman. Comment!
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12:14 PM A Swiss court gives Suntech's (STP +5%) European unit a 6-month moratorium on creditor claims; the unit had been given a 2-month reprieve on April 9. Suntech's Chinese subsidiary remains in the midst of bankruptcy proceedings. Shares have more than tripled from a March 21 low of $0.30. Comment!
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12:07 PM T-Mobile USA (TMUS) will be the exclusive U.S. seller of Sony's (SNE +2.8%) Xperia Z Android phone, which has posted strong international sales taken a big chunk of the high-end Japanese smartphone market. Together with a recent exclusive for Nokia's Lumia 925, the deal suggests T-Mobile is having more luck with smartphone OEMs following the MetroPCS merger. Also: Canaccord has launched coverage on T-Mobile with a Hold and $22 PT. The firm views T-Mobile as an attractive M&A target for the company that fails to acquire Sprint/Clearwire, but considers shares fully valued. Comment!
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11:49 AM More on AMD: Though Seattle is dominating headlines, the company remains committed to the x86 server CPU market. Berlin, an x86 CPU platform due in Q114, will feature 4 cores based on AMD's next-gen Steamroller architecture, and will be offered as both a CPU and APU (integrated graphics), with the APUs being the first to offer uniform memory access for the chip's CPU and GPU. AMD promises big improvements in performance/watt. Also due in Q114 is Warsaw, an enterprise-class offering said to be ideal for Facebook's Open Compute Platform (previous). AMD has been bleeding share to Intel in the x86 server CPU space (PR) Comment!
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11:35 AM AMD's first ARM-based server CPU, codenamed Seattle, will enter production in 2H14, the chipmaker announces. Seattle CPUs will feature 8 or 16 of ARM's (ARMH) high-end Cortex-A57 cores, with each running at 2GHz. or more. AMD claims the chips will "offer 3-4x the performance" of its new Opteron X-Series parts, and will integrate 10G Ethernet links and SeaMicro's Freedom Fabric tech. Seattle, aimed at the budding microserver market, will face competition from fellow ARM licensees AppliedMicro (AMCC +6.5% - appears to be rallying on the news), Marvell (MRVL), and startup Calxeda, and also Intel's Atom CPUs. Look for H-P to consider Seattle for its Moonshot server line. Comment!
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11:06 AM Goldman yanks Palo Alto Networks (PANW -1.7%) from its Conviction Buy list, leading the next-gen firewall leader to make fresh post-IPO lows. The firm defended Palo Alto late last month, after shares were clocked thanks to an FQ3 revenue miss (blamed on macro) and soft FQ4 guidance. 2 Comments
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10:55 AM Reuters backs up the WSJ in reporting Siemens (SI +0.8%) is talking to P-E firms TPG, KKR, and Blackstone about selling its 50% stake in Nokia Siemens; the news service adds past attempts to sell to P-E firms have failed due to price disagreements. Meanwhile, Goldman is assigning NSN a value of €6B, based on a valuation of 6x 2014E EV/EBITDA. Comment!
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10:49 AM Amazon (AMZN +1.2%) tries to profit from the growing use of Facebook (FB +2.8%) as a "social gifting" platform by launching Amazon Birthday Gift, a solution that allows Facebook users to send a friend Amazon credit for his/her birthday, and then lets other friends to add to the pot. The product is separate from Facebook's Gifts platform. Also: 1) Leveraging existing content deals, Amazon is adding videos and games from Disney, Viacom, Warner Bros., and Electronic Arts to its Kindle Freetime kids' platform. The move comes shortly after a major deal was reached with Viacom for kids' shows. 2) AdAge reports Facebook's video ads will be delayed until fall. The magazine reported in April Facebook plans to charge up to $1M per daily ad slot. 1 Comment
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10:20 AM CommVault (CVLT +3.3%) rallies after Pac Crest starts coverage with an Outperform and $92 PT. The firm notes CommVault is gaining share (IDC's figures back that up), and expects the high-end backup software vendor to benefit from a new product cycle - CommVault announced a new version of its flagship Simpana backup/archiving software platform in February. 1 Comment
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10:01 AM Todd Bradley, the well-respected head of H-P's (HPQ +1%) PC/printer unit, is leaving that position to head H-P's Chinese ops and work on expanding its global channel partner deals (his official title will be EVP, Strategic Growth Initiatives). Asia-Pac PC/printer chief and former Lenovo exec Dion Weisler will take over Bradley's current job. The shakeup follows a quarter in which H-P's PC sales fell 20% Y/Y, and more share was lost to Lenovo. Printer sales fell 1%, an improvement from recent quarters. Bradley's name has occasionally come up when high-profile job openings at rivals are discussed. 4 Comments
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9:48 AM Yahoo (YHOO +1.1%) is looking to buy address book app developer Xobni for $30M-$40M, and video creation app developer Qwiki for $50M, Kara Swisher reports. Xobni, reported to be on Yahoo's shopping list earlier in June, is said to consider Yahoo "the most natural home for it, given its strong e-mail offerings." Qwiki originally built a site and iPad app that automatically created multimedia "stories" for reference topics (a deal was reached with Yahoo partner Bing), but has since shifted its attention to an app for creating movies out of a user's photos and videos. Regardless, its video automation tech likely intrigues a company that just bought Summly. 1 Comment
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9:26 AM Fusion-io (FIO) -1.6% as in spite of a bullish coverage launch from Needham, as investors continue mulling negative sell-side commentary and the resignations of founders David Flynn and Rick White from the company's board (following their May resignations as CEO and CMO). RBC declares Flynn's departure serves to "validate investor concerns, that the transition wasn’t as amicable as one would expect." Needham argues investor sentiment is bottoming, says checks indicate FIO "remains in the pole position" in the hyperscale data center realm, and that product launches this year and next "should re-establish FIO as a technology innovator." Comment!
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9:10 AM LinkedIn (LNKD) +1.4% after Pac Crest starts coverage with an Outperform and $215 PT. ITG Research raised its estimates for the company on Friday. 1 Comment
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7:54 AM The rumored iWatch will be more "hobby" than major product line for Apple (AAPL), says Jefferies' Peter Misek. Likely not having a cellular chip, the iWatch would need to be paired with an iPhone for full functionality. Starting with some pricing assumptions and then slapping a 5% penetration on the installed iPhone base of 250M would move the EPS needle by only about 1%. 15 Comments
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7:15 AM Skullcandy (SKUL) says it will it has started a search for a new CFO to replace the resigned Kyle Wescoat and shuffled other key execs. As part of its transition, the company will align certain product, marketing and sales functions. 1 Comment
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3:18 AM As expected, France Telecom's (FTE) board yesterday kept Stephane Richard as CEO despite French authorities placing him under investigation for his role in the suspected misuse of public funds. Richard's status was pretty much assured after the government said they would back him. The board said it doesn't believe that Richard's legal problems "impede his ability to fully and effectively" manage France Teleom. (PR) Comment!
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1:55 AM Sony (SNE) repeats that it will review Daniel Loeb's proposal that the company float its entertainment business after Loeb's Third Point hedge fund increased its stake in the electronics firm to 7% from 6.5%. In the past, Sony has said that its film and device units are better together - CEO Kazuo Hirai believes they have valuable synergies - and that it would consider Loeb's spin-off idea. Comment!
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