Friday, February 5, 2016
- Realtor.com -- part of Move Inc. (NWS -6.7%, NWSA -9.1%) -- said after a record year of growth that its site drew 50M unique users in January.
- Unique visitors via desktop and mobile grew more than 40% Y/Y in 2015, the year in which News Corp. made investments in rapid expansion of the real-estate service. It had previously peaked at 48M uniques in July.
- The January total was also 34% bigger than the company's previous biggest January: 37M uniques a year ago.
- Digital real estate services was the only revenue gainer among segments in News Corp.'s earnings report yesterday, growing 35% to bring $208M in sales (by comparison, Cable Network Programming drew just $106M in revenue). CEO Robert Thomson calls News Corp. the world's largest player in digital real estate.
- News Corp. shares tumbled today after its results showed overall revenue dropping for the fourth quarter in a row, amid continuing declines in core advertising.
- Previously: News Corp. reports fourth straight quarter of revenue decline (Feb. 04 2016)
- Telstra (OTCPK:TLSYY -1.8%) and Optus Mobile were the big spenders in Australia's competitive 1800-MHz spectrum auction, which drew A$543.5M in spending from the country's big four providers.
- Optus led all comers with A$196M, just ahead of Telstra at A$191M. TPG (OTC:TPGTF) spent A$88M, and Vodafone (VOD -2.4%) the least at A$68M.
- The auction was set to improve 4G coverage in regional and remote Australia; currently, Telstra, Vodafone and Optus use the 1800-MHz band to deliver their 4G networks in metropolitan areas.
- Vodafone, which skipped the digital dividend auction in May 2013, has been looking at regional expansion after refarming spectrum in Australian Capital Territory, the coast of New South Wales and the Blue Mountains, and switching on 850 MHz 4G in sites across Queensland.
- Vodafone (VOD -2.4%) finished lower for the second straight day after earnings, swept up in market downdrafts despite a chorus of analysts signaling approval for the company's recovering European business.
- The FTSE 100 finished 0.9% lower in London and a tech-stock downdraft sent the Nasdaq down 3.3%.
- Meanwhile, a wide number of firms reiterated buys on the stock. Barclays and JPMorgan Chase reiterate their Overweight ratings, while Buys were also reinforced at HSBC and Beaufort Securities.
- Nomura raised its price target to 255 pence/share. Among the other firms' price targets, they range from Barclays' 250-pence price through RBC's 255 pence, HSBC's 260 pence and JPMorgan's 275 pence.
- Shares closed in London today down 1.6% at 207 pence, implying 21-33% upside in the various targets.
- Don't count on broadcast networks' live musical events going away anytime soon, as Fox (FOX -4.5%, FOXA -3.9%) has nailed a hit with its production of Grease: Live this week.
- In live-plus-three-day viewing, the live musical grew from initial estimates to total 14.6M viewers. That's a strong gain from 12.2M first-day viewers, as delayed views on VOD, Hulu and Fox Now (somewhat ironically) pumped up the live show's initial total.
- It also beat NBC's (NASDAQ:CMCSA) latest production, The Wiz, which drew about 11.1M total viewers in December (though The Wiz was up against NFL football). NBC has pioneered the investment in big-production live musical events, drawing millions to watch The Sound of Music Live, Peter Pan and The Wiz.
- Fox will encore Grease: Live on March 27 -- Easter Sunday -- and is also working on Tyler Perry's biblical The Passion for March, and The Rocky Horror Picture Show later this year.
- Previously: NBC sets 'The Wiz' as next live musical event (Mar. 30 2015)
- In an 8-K filed after the bell, Apollo Education (NASDAQ:APOL) discloses "a Second Investigative Subpoena from the Office of the Attorney General of the State of California in the Matter of the Investigation of For-Profit Educational Institutions, following the Investigative Subpoena we received in August 2015."
- The second subpoena seeks "the production of documents and information regarding a broad spectrum of the business and practices of Apollo Education Group, Inc. and each of our subsidiaries, including University of Phoenix, Inc., relating to marketing, recruiting, compensation of enrollment advisors, complaints, financial aid, compliance, accreditation, other governmental investigations, private litigation and other matters, as well as additional information relating to marketing and services to members and former members of the U.S. military and California National Guard, for the time period of July 1, 2010 to the present." Apollo is naturally cooperating with the probe.
- Shares have dropped to $6.59 after hours. The 52-week low is $6.31.
- Though Tableau (NYSE:DATA) naturally saw many target cuts as its shares lost nearly half their value in response to the company's soft Q4 license revenue and below-consensus Q1/2016 guidance, the company didn't get any downgrades. Bulls argued today the company's competitive position and growth opportunity remain intact; others voiced concerns about both rivals and declining sales productivity.
- Maxim's Nehal Chokski, who smartly launched coverage with a Sell rating just a day before earnings, estimates Tableau's sales productivity fell 17% Y/Y in Q4, a larger drop than the 9% averaged over the prior 12 months. He isn't ready to declare Microsoft responsible for Tableau's recent issues, but argues there could be another 50% of downside if Microsoft is indeed responsible and Tableau's challenges spread to international markets.
- Credit Suisse's John DiFucci (Hold rating) wonders if the Desktop version of QLIK's Sense self-serve BI solution is weighing on Tableau Desktop, given Qlik Sense Desktop is free (Sense Enterprise isn't). Nonetheless, he thinks "this market is big enough for both Tableau and Qlik to be successful," and also doesn't believe new offerings from Microsoft, Amazon, and Salesforce are having a big impact. He also believes Tableau's valuation (previously the reason for his Hold rating) is now much more reasonable. Qlik closed down 14.9% today.
- Drexel Hamilton's Brian White, who launched coverage on Tableau at Buy in October (when shares were at $79.56): "We continue to see attractive growth drivers on the horizon for Tableau, including the secular trend toward Big Data, increased market penetration, new opportunities with larger enterprises and international expansion. Given our attendance at a plethora of trade shows over the past few years, we have noticed that Tableau is rapidly becoming an essential layer in the Big Data fabric at both customers and partners."
- Emmanuel Tahar, head of research firm Third Bridge: "Our research suggests [Tableau] sales sentiment remains steady, but we are not seeing same level of enthusiasm from resellers as last year. Many believe that Microsoft BI could prove a threat to Tableau in the near future, and together with another key competitor QlikView, pricing pressures could weigh heavy on Tableau in the year ahead."
- Interestingly, Tableau's earnings coincided with the release of Gartner's 2016 BI Magic Quadrant report. As in 2015, Tableau made the "Leaders" quadrant, this time joined by only Microsoft and Qlik (9 firms made the quadrant last year). However, Tableau's position on the "Ability to Execute" axis fell noticeably. Its position on the "Completeness of Vision" axis improved moderately.
- Gartner declares Tableau "continues to execute better than any vendor in the BI market," and praises the deployment and data source connectivity options for its platform. However, it also notes Tableau's "pricing and packaging is being more heavily scrutinized," and that survey data suggests Tableau is "experiencing the growing pains that often accompany rapid growth."
- Earlier: Enterprise software and security firms hammered following Tableau/LinkedIn's earnings
- Verizon (VZ +1%) is following in the footsteps of T-Mobile's (TMUS -7.9%) Binge On -- at least partway -- by offering Verizon's postpaid customers the chance to watch content from the Go90 video service without touching the monthly data allowance.
- The latest versions of Go90 apps (for iOS/Android) are tied to Verizon's FreeBee Data 360 sponsored data service, a form of "zero rating" content so it doesn't detract from a data limit.
- Binge On still is more expansive, offering free streaming (downcoded) video from a variety of partners instead of only Go90. But it's an interesting step for Verizon, especially with the FCC taking a closer look at zero rating and its relation to new net neutrality regulations.
- Verizon notes that video streaming is free of the cap, but other app activity, including commenting, download, etc., will count against data plans.
- Previously: Wheeler: FCC's look at data exemptions is still lower level (Jan. 28 2016)
- Previously: Verizon informs FCC of sponsored data plans (Jan. 20 2016)
- Sprouts Farmers Markets (NASDAQ:SFM) will replace SolarWinds (about to be taken private) in the S&P MidCap 400 following Monday's close.
- Sprouts has risen to $24.39 after hours in response. Q4 results arrive on the morning of Feb. 25.
- Up in after hours trading yesterday following the company's FQ2 report, Paylocity (NASDAQ:PCTY) finished with steep losses today. Many other enterprise software firms, including cloud HR peers Workday, Ultimate Software, and Paycom, saw even bigger losses following weak guidance from Tableau and LinkedIn.
- Paylocity has guided for FQ3 revenue of $66.5M-$67.5M and EPS of $0.13-$0.15, above a pre-earnings consensus of $64.5M and $0.12. FY16 (ends June '16) guidance is for revenue of $223M-$225M and EPS of $0.18-$0.19, above a consensus of $212.6M and $0.07.
- The company attributed its FQ2 performance to strong sales execution and growing demand for its ACA Enhanced compliance offering. GAAP operating expenses rose 43% Y/Y to $32.4M (compares with 61% revenue growth).
- Paylocity's FQ2 results, earnings release
- Symantec (NASDAQ:SYMC) closed up 3% after posting an FQ3 beat, issuing in-line FQ4 guidance, disclosing a $500M Silver Lake investment, announcing a $4/share special dividend and a 50% regular dividend cut, boosting the size of its total capital return plan, and unveiling plans for fresh cost cuts. The gains came in spite of a 3.3% Nasdaq decline.
- Possibly helping: The WSJ has reported well-known tech activist Elliott Management has "amassed a big stake" in the security software/services firm. The paper adds Elliott supports the Silver Lake deal and yesterday's other announcements.
- Separately, CEO Michael Brown promised Symantec will be "very judicious" in pursuing acquisitions with its Silver Lake and Veritas deal proceeds. Brown previously suggested Symantec plans security acquisitions following the Veritas deal's closing.
- FBR's Dan Ives (Market Perform rating) is cautiously optimistic about Symantec's turnaround efforts. "We believe the confluence of M&A, aggressive buybacks and a tighter operating model finally puts this company on the right path after a decade of pain. This remains a work-in-progress name, but we are now starting to be more optimistic that better days could be ahead for a ‘leaner and more focused’ Symantec."
- After having closed up 5% yesterday following the premature announcement of a Q4 beat and above-consensus Q1 EPS guidance (sales guidance was in-line), Inphi (NYSE:IPHI) more than gave back its gains today amid a 3.3% Nasdaq drop.
- Possibly weighing: On the earnings call (transcript), CFO John Edmunds mentioned chip sales related to the DDR3 memory market "began to fall off in Q4" due to weak end-market demand. As a result, total high-speed memory revenue is expected to be "relatively flat" in Q1 and Q2, before DDR4 growth (boosted by the pending launch of Intel Broadwell server CPUs) drives a 2H16 pickup.
- CEO Ford Tamer stated sales of Inphi's core telecom infrastructure products saw 50% organic growth in 2015, aided by strong multi 100G linear driver demand and metro network product ramps. Meanwhile, data center networking interconnect revenue is expected to benefit from 100G clock data recovery and gearbox chip ramps.
- Tamer: "I'm cautiously optimistic about 2016. While there are some warnings of impending market weakness, particularly from China, we at Inphi have seen a resumption of growth based on the renewed build-out of telecom and cloud infrastructure." (earnings release)
- Mexico is giving clearance to AT&T (T +1%) and Carlos Slim's America Movil (AMX -2.4%) to take part in a wireless spectrum auction there.
- The sale process will begin Feb. 15. IFT, the country's telecom regulator, says the two companies can put in bids for 80 MHz of spectrum in a pair of bands: 1710-1780 MHz, and 2110-2180 MHz.
- The two companies are also competing with Telefonica (TEF +1.1%) in Mexico's tender for a large wholesale mobile network.
- Microsoft (NASDAQ:MSFT) says it has struck a licensing deal with GoPro (NASDAQ:GPRO) related to "certain file storage and other system technologies." Terms are confidential.
- GPRO +4.3% after hours to $10.39, after rising 1.8% in regular trading on an ugly day for markets. The action camera leader sold off yesterday after issuing weak guidance in its Q4 report.
- In recent years, Microsoft has struck licensing deals with Samsung, ZTE, and many other Android OEMs. The shares of the licensees generally haven't risen in response.
- Buffalo Wild Wings (BWLD -8.1%) shares fell as much as 12.7% shortly before the close after Kansas health officials confirmed one case of norovirus at a BWLD restaurant in the Kansas City area.
- At least 10 people reported becoming sick after eating at the restaurant in Overland Park, Kan., late last week; additional results are pending lab confirmation.
- Earlier: Jittery trading on Buffalo Wild Wings ahead of earnings and behind illness report (Feb. 3)
- Add Red Hat (RHT -8.1%), Autodesk (ADSK -6.9%), and Teradata (TDC -8%) to the list of enterprise tech firms nosediving following weak Q1/2016 guidance from business intelligence/data visualization software firm Tableau and professional social networking/online jobs leader LinkedIn. The Nasdaq is down 3.4%, and the S&P 2%, in the wake of this morning's jobs report.
- Other big decliners include Varonis (VRNS -13.4%), Gigamon (GIMO -9.7%), Pegasystems (PEGA -10.3%), SGI (SGI -7.5%), LogMeIn (LOGM -8.6%), inContact (SAAS -10.8%), Attunity (ATTU -14.4%), Textura (TXTR -6.8%), and Tableau rival MicroStrategy (MSTR -6.6%). A slew of other enterprise names were previously covered here - the group includes many cloud software and security tech firms.
- Teradata is just a day removed from rallying in the wake of a Q4 sales beat and healthy 2016 guidance.
- GrubHub's (GRUB -1.9%) Q4 earnings yeaterday boosted the stock nearly 13% on the strength of margins and some improving guidance, but Oppenheimer is worried about the food firm's competition.
- Oppenheimer's Jason Helfstein downgraded GrubHub to Market Perform, from Outperform. He's got a raised price target of $30, implying 42% upside from today's price of $21.13.
- Margins were nice, but "GRUB will see margin compression on reduced order rates, more expensive customer acquisition costs and lower commission rates" with competitors like Amazon.com and Uber starting to "aggresively pursue food delivery." Other companies' moves into New York could affect revenues and profitability in the next 12-18 months, and Amazon already has a larger user base.
- Elsewhere, Brean and Canaccord Genuity reiterated their Buy ratings. Canaccord has a $35 price target, implying 66% upside.
- Previously: GrubHub up 8% after revenue strength, solid guidance (Feb. 04 2016)
- Cliffs Natural Resources (CLF -4.1%) is reiterated with a Sell rating at Deutsche Bank, with a reduced $1 stock price target cut from $1.50, citing potential downside risks to its base case iron ore outlook and unsustainable debt levels.
- "While a successful execution of recently announced debt exchange offer could be a short-term catalyst, it may not alter medium-term solvency concerns," Deutsche Bank analyst Jorge Beristain writes.
- A fully-successful exchange could reduce CLF's debt by $925M and generate ~$40M/year in savings, but the company's net debt to EBITDA still would be ~11x, Beristain calculates; also, he does not expect a fully subscribed exchange offer, believing the offering will be less than 50% subscribed.
- Sling TV and Dish Network (DISH -5%) are opening a software development office in downtown Denver, part of an effort to expand its in-house capability to build and support the tech side of its platform, including the on-demand Sling service and popular Hopper DVR/receiver.
- Renovations are under way on about 20,000 square feet in lower downtown to create an open work environment along with a demo center.
- The new facility is expected to be operational by June and Dish is recruiting to add 100 tech jobs there.
- Supernus Pharmaceuticals (SUPN +19.5%) heads north on more than triple normal volume in response to the news of a favorable court ruling in a patent infringement case against Actavis [now Allergan (AGN +0.5%)] involving Supernus' epilepsy drug Oxtellar XR (oxcarbazepine) extended-release tablets.
- The court ruled in favor of Supernus on two patents ('898 and '131), but favored Actavis on a third ('600).
- The company sued Actavis in August 2013.
- Canada’s government will make a decision by the end of this year on Kinder Morgan’s (KMI -1.3%) Trans Mountain oil pipeline expansion after additional consultations and considering the country’s national interest, Natural Resources Minister Jim Carr says.
- The government has added four months to the National Energy Board regulatory process in order to provide more assessment of the project, Carr says; TransCanada’s (TRP -1.3%) Energy East also will face a longer review period, while Enbridge’s (ENB -2.7%) Northern Gateway was approved by the previous government but the company has not yet made a final investment decision.
- "When we’re done, we want Canadians to be heard, that it was a responsible and thorough process which we hope will lead to a better result... We are not asking the proponents of these prjects to go back to square one," Carr says.
- Tesoro (TSO -4.4%) agrees to pay $8M to 769 United Steelworkers union members at refineries in California and Washington state who were denied bonuses while on strike in 2015, the U.S. National Labor Relations Board says.
- Complaints were filed last year with the NLRB by workers at TSO's Carson, Calif., and Anacortes, Wash., refineries alleging failure to pay the bonuses was done in retaliation for the strike and an unlawful modification of the agreement.
- USG Corp. (USG +7.1%) shares are sharply higher after the maker of building materials reported better than expected Q4 earnings, citing margin expansion in its gypsum and ceilings businesses, as well as cost discipline.
- USG says it sees continued strength in its markets this year, with overall demand improving 5% in most of its key markets, and stresses that it will continue its "relentless cost control program" in 2016.
- In its earnings conference call last week, USG peer Eagle Materials (EXP +0.7%) said its gypsum customers were reporting 5%-7% increases in volume needs for 2016.
- The announcement last week sent the Nikkei skying and the yen plunging, but the yen has surged since, and is now stronger than before the BOJ move. As for the Nikkei, it's more than given back its gains.
- "More symbolic than dramatic," says CLSA's Chris Wood of the BOJ action. He points to Europe - where there's been negative deposit rates for some time - and notes bank deposits at the ECB have barely fallen in the face of a negative rate of 0.3%. While European base money growth is up 41% Y/Y, broader M3 is ahead only a fraction of that. Households and businesses continue to sock money away because investment opportunities just aren't there.
- Japan is seeing similar action between base money and broad money supply.
- Citi Research today, downgraded Japan's Big 3 megabanks to sell - not necessarily because of negative rates which should have limited impact on earnings - but due to the perception that the BOJ will cut even more.
- ETFs: DXJ, EWJ, FXY, YCS, DBJP, NKY, JYN, JPNL, EZJ, JEQ, EWV, HEWJ, YCL, JPP, DXJF, FJP, JPN, JPNH, JPXN, HGJP, HEGJ, FXJP, HFXJ
- Atlantic Equities, BMO, Cowen, JPMorgan, Mizuho, Monness Crespi, Raymond James, RBC, SunTrust, and Susquehanna have downgraded LinkedIn (NYSE:LNKD) to neutral ratings after the company offered weak Q1/2016 guidance with its Q4 beat, and suggested several factors related to hiring solutions, online ad, and subscription growth were to blame. Shares have crashed to levels last seen in 2012.
- Raymond James' Justin Patterson, who previously had a Strong Buy rating: "While guidance likely contains some conservatism, LinkedIn’s now provided cautious guidance for three of the past four quarters and earnings quality is poor (i.e. [stock compensation[ now represents >60% of EBITDA, with revenue growth decelerating). Thus, we believe the after-hours reaction is warranted and that LNKD shares are likely range-bound until growth reaccelerates, guidance volatility subsides, and earnings quality improves."
- Citi's Mark May (Neutral): "While 4Q15 results could be characterized as mixed, three of the last four quarters have now included ‘issues’ ... Even considering mgmt’s history of conservatism, guidance implies a meaningful deceleration in revenue growth to the 20-30% range from 35-40% recently, as well as 30% incremental margins for 2016, below the 32% incremental margins in 4Q15."
- Pac Crest's Evan Wilson (Overweight rating): "LinkedIn has rarely given investors a reason to own the stock in 1H and it has happened again ... we think its outlook will most likely end up being conservative as it usually is. We think for its data alone, LinkedIn is a worthy acquisition for any number of enterprise software companies at this valuation." Wilson is, however, critical of LinkedIn's decision to shutter its standalone Lead Accelerator B2B ad product. "Now Sales Navigator really is LinkedIn's only big near-term opportunity to materially increase the monetization of its data set. Ugh."
- BMO's Dan Salmon: "[W]e came away from 4Q results with less confidence in our long-term thesis. Moreover, while US employment trends are still relatively strong, an uncertain air surrounding near-term hiring appeared to develop toward year-end ... Looking more closely at the long-term product roadmap, the path to engaging new groups of power users (B2B marketers, salespeople) has been bumpier than expected."
- Stifel's Scott Devitt (Buy, $220 target) is still a believer. "Investors may question its strategy, but LinkedIn is narrowing its focus on high value, high impact initiatives and jettisoning those investments that do not provide acceptable returns. Although its marketing business will likely face distractions this year, we think LinkedIn’s talent, sales, and learning & development businesses are poised for a strong year."
- As is Needham's Kerry Rice (Buy, $200 target): "[W]e believe our estimates could prove conservative due to: 1) LNKD’s core products remain healthy; 2) LNKD continues to have a strong product pipeline, including Lynda and Sales Solutions, the full potential of which we believe is yet to be realized; and 3) management continues to stay focused in terms of both execution and resource allocation."
- Prior LinkedIn coverage
- Marathon Petroleum (MPC -6.7%) plunges to another 52-week low, capping an 18% drubbing in the three days since releasing disappointing Q4 results and guidance for slower distribution growth at MPLX (MPLX -10.3%), the MLP formed by MPC to invest in pipelines.
- MPC is downgraded to Neutral from Overweight with a $44 price target, cut from $62, at J.P. Morgan, which says it did not anticipate that management would halve its 2016 growth outlook and defer all 2017 commitments; making matters worse, MPC may now be on the hook to provide even more support to MPLX - up to $500M in 2016 beyond the marine dropdown - just to keep MPLX at ~4x leverage.
- Cowen’s Sam Margolin says MPLX’s capital requirements to achieve growth targets have created "functional commodity leverage" for MPC, something that would not be the case if MPC were simply a refiner.
- Level 3 Communications (NYSE:LVLT) is pulling back a bit, down 3.5%, after a strong 6.9% gain yesterday post-earnings.
- Stephens upgraded the firm to Overweight from Equal Weight and raised its price target from $52 to $63, implying 30% upside from its current price of $48.29.
- Valuation is improved after a recent sell-off (Level 3 has declined 10% over the past month), says Stephens' Barry McCarver, who notes revenue growth is picking up after the company achieved its synergy target from integrating TW Telecom.
- “EMEA and Latin America should continue to improve as the company invests in its network and has opportunities for more acquisitions," McCarver notes. "Headwinds from International revenue have neutralized and may become tailwinds this year.”
- The company guided to significantly higher cash flow in the coming year, and some analysts think that could mean not only a possible repurchase program but also acquisitions.
- The company could go after privately held XO Communications, says Cowen's Colby Synesael, or it could be a target itself -- for a buyer like Comcast (NASDAQ:CMCSA).
- Previously: Level 3 up 7% as revenues, profits grow (Feb. 04 2016)
- Previously: Level 3 EPS in-line, misses on revenue (Feb. 04 2016)
- Following a 2-day 25% drop that followed Synchronoss' (SNCR +11.5%) Q4 beat and soft 2016 guidance, shares are rebounding today. Possibly helping: Yesterday afternoon, Synchronoss announced a $100M buyback program.
- The program is expected to be used over the next 12-18 months, and is good for repurchasing 9% of shares at current levels. Synchronoss had $214M in cash/investments at the end of 2015, and $230M in convertible debt.
- Beaten-down home automation system provider Control4 (NASDAQ:CTRL) has soared after providing healthy Q1/2016 guidance to go with nearly in-line Q4 results. The company also announced it has bought Pakedge Device & Software, a provider of networking hardware (switches, router, Wi-Fi access points) and software designed for A/V and home automation systems, for $32.7M in cash.
- Pakedge had 2015 sales of $18.5M, and is expected to be accretive to 2016 gross margin and EPS. The company sells its products through a network of 1,700 dealers, 560 of which are also Control4 dealers.
- Control4 praises Pakedge's technology: "[Pakedge] Connect+ incorporates proprietary artificial intelligence-based algorithms to detect, diagnose, self-repair and resolve network problems. Pakedge virtualization technologies enable network devices, whether within a single network or across multiple networks, to be uniquely grouped and managed in new ways. Pakedge advanced software, such as Pakedge Zones, creates new networking capabilities for prioritizing network use for audio, video, communication, security, bulk-data and management applications. The cloud-based management technology, BakPak, enables remote management and maintenance."
- With Pakedge on board, Q1 guidance is for revenue of $38.5M-$41.5M and EPS of -$0.04 to $0.04 vs. a consensus of $36.5M and -$0.05, and 2016 guidance is for revenue of $198M-$202M and EPS of $0.67-$0.76 vs. a consensus of $175.8M and $0.42.
- Also: Control4 has pushed out the expiration date for its $20M buyback program to June 30, 2017 from May 13, 2016. $9M has been spent on buybacks through the program thus far.
- Control4's Q4 results, earnings release
- Callaway Golf (ELY +7%) jumps after posting double-digit revenue growth and topping consensus EPS estimates with its Q4 report.
- The biggest pullout of the company's report and conference call is that Callaway's golf brand market share in the U.S. is at a 13-year high of 21%.
- Despite being written off as being in slump by some, golf rounds played increased 2% last year in the U.S.
- Previously: Callaway Golf beats by $0.03, beats on revenue (Feb. 04 2016)
- Gray Television (GTN -4.8%) has wrapped (quietly, relative to recent dramas) new retransmission consent deals that had expired at 2015's end with four cable operators, including Time Warner Cable and Buckeye Cable.
- The deals cover more than 900,000 subscribers tied to affiliates of the Big Four broadcast networks, in 16 markets.
- "While retransmission negotiations are never easy, these operators shared our commitment to find common ground quickly and quietly to ensure that our mutual customers continue to enjoy uninterrupted delivery of our local television stations," says Gray's deputy general counsel, Robert J. Folliard III.
- There's one more expired agreement Gray needs to settle, the company says, and it covers a "relatively small" number of customers.
- It doesn't have any material retransmission deals expiring before the end of 2016.
- On a day the Nasdaq is down 2.4%, Internet stocks are seeing outsized losses after LinkedIn (down 41.3%) issued weak Q1/2016 guidance with its Q4 beat.
- The professional social networking leader forecast its corporate hiring solutions business would see slower growth in 2016 (international macro issues were blamed). It also noted display ad sales fell by a high-30s % Y/Y in Q4 amid ongoing secular industry pressures, and reported just 7% Y/Y unique visitor member growth.
- Facebook (FB -5.5%), which soared last week after blowing away Q4 estimates on the back of 57% Y/Y ad revenue growth, is among the casualties. As is Amazon (AMZN -4.9%), which sold off last week after missing Q4 estimates and issuing in-line Q1 sales guidance, is also down sharply. As is Twitter (TWTR -5.3%), which reports in five days and continues trading near post-IPO lows amid growth/engagement concerns.
- Other decliners include Yelp (YELP -7.9%), TripAdvisor (TRIP -6.3%), Expedia (EXPE -6%), LendingClub (LC -8.3%), Wix.com (WIX -6.8%), Wayfair (W -7.6%), Groupon (GRPN -4.9%), Shopify (SHOP -6.3%), and Zillow (Z -6%), as well as ad tech firms Criteo (CRTO -8.9%) and TubeMogul (TUBE -7.6%). The aforementioned companies are generally expected to post Q4 results in the coming weeks.
- Earlier: Enterprise software and security stocks hammered after Tableau/LinkedIn's earnings
- Ku6 Media (KUTV -3.1%) has hired Weil, Gotshal & Manges as legal counsel and Duff & Phelps Securities as a financial adviser as it considers a buyout proposal from Shanda Interactive Entertainment.
- Shanda has offered to acquire Ku6 and take it private for about $51.5M -- about $1.08 per ADS. The company's depositary shares are trading at $0.83 today.
- Shares have gained 18.6% since Monday's proposal for the transaction.
- Previously: Ku6 Media gets buyout proposal from Shanda (Feb. 01 2016)
- TIM Participações (NYSE:TSU) is 6.1% lower after Q4 earnings where revenue disappointed expectations after sliding more than 20%.
- Revenues came in at 4.12B reais (about $1.05B), short of an expected 4.33B reais by about 4.9%. EPS of 0.19 reais beat consensus for 0.12 reais.
- The company said it moved in 2015 to cover 411 cities with 4G, up from 45 in 2014, and 4G users reached more than 7M lines (about 11% of total). Smartphone penetration has hit 68% of its base, up from 2014's 49%.
- In Mobile Services, data services now make up 38% of net revenue (up from 31% the prior year).
- Capex for 2015 came to 4.7B reais (about $1.2B).
- Press Release
- Neustar's (NYSE:NSR) Q4 beat was accompanied by guiding for 2016 revenue of $1.22B-$1.26B (+16%-20% Y/Y, boosted by acquisitions) and EPS of $5.03-$5.39, in-line with a consensus of $1.24B and $5.20. Nonetheless, shares have tumbled on a day the Nasdaq is down 2.4%.
- Business performance: Marketing services revenue +23% Y/Y to $51.1M. Security Services +12% to $44.8M. Data Services +7% to $55.9M. Number portability services +8% to $128.4M.
- Financials: Operating expenses rose 30% Y/Y to $231.9M, thanks partly to M&A-related expenses and fees related to Neustar's common short codes contract; for the full year, opex rose 9% to $763.4M. $104.2M was spent in 2015 to buy back 3.8M shares at an average price of $27.65.
2015 free cash flow totaled $323.2M. Thanks to acquisitions and buybacks, Neustar ended 2015 with just $89.1M in cash, and $1.11B in debt.
- Neustar's Q4 results, earnings release
- Outerwall (NASDAQ:OUTR) is down 15.5% as analysts react to an earnings report where the company noted Redbox rentals crashing 24%, which paced an overall revenue drop of nearly 12%.
- Roth Capital has gone to Sell on the company, while Piper Jaffray downgraded to Neutral from its previous Overweight rating. Piper's cut its price target to $32, from a previous $57; shares are trading today at $27.64.
- “Redbox faces secular headwinds, and while we do not expect a 'fall off a cliff' scenario, we believe the trend is accelerating and will continue to drive Y/Y revenue and EPS decline,” says Piper's Michael Olson. “Given lack of visibility on the Redbox content slate and pace of secular decline, the company is no longer providing revenue guidance.”
- EPS guidance provided was well below consensus, but Olson notes there could be upside in share buybacks that aren't accounted for. The company expects to return 75-100% of free cash flow to shareholders this year.
- Wedbush and JPMorgan Chase both slashed price targets today; Wedbush dropped its target to $40, from $59, while JPMorgan cut its target to $29, from $48.
- Previously: Outerwall call: Price hikes still on table; Olympics presses guidance (Feb. 04 2016)
- Previously: Outerwall sinks 14% after Q4 revenues slide (Feb. 04 2016)
- Lions Gate (NYSE:LGF) has hit a three-year low, tumbling 30.6% in its worst decline since going public, after a dim Q3 earnings report that showed weakness in its film results. The move is knocking half a billion dollars off the studio's market cap.
- Starz (NASDAQ:STRZA) -- now back in merger talks with Lions Gate -- has tanked 15.7% as well so far today.
- FBR & Co. has cut its price target on Lions Gate twice since Thanksgiving -- first from $43 to $38 at the end of November, and then from $38 to $31 on Monday. Shares closed at $25.45 yesterday and are trading at $17.72 today.
- Stifel Nicolaus this morning cut its price target to $35, from $42. It holds a Buy rating on the stock, as does FBR. B. Riley on Wednesday reiterated its Buy rating and $50 price target.
- Previously: Lions Gate down 5.3% as movie weakness spurs Q3 misses (Feb. 04 2016)
- Previously: Lions Gate Entertainment misses by $0.07, misses on revenue (Feb. 04 2016)
- The unprecedented buildup of surplus crude oil supplies in Cushing, Okla., is causing logistical difficulties for companies moving crude between thousands of steel tanks in the most important U.S. storage hub, Reuters reports.
- Enterprise Products Partners (EPD -2.5%) is said to have told at least some counterparties that it is experiencing delays in delivering crude from its tanks.
- The disruptions are attributed to the unusually high level of oil collecting in Cushing; the EIA said stockpiles rose to a record 62.4M barrels as of last week, just 9M barrels shy of their theoretical limit.
- EPD is a relatively small operator in the Cushing market relative to the likes of Enbridge Energy Partners (EEP -0.7%), which has more than 20M barrels, but traders reportedly first noticed that something was amiss when EPD began bidding to buy the Feb./March WTI cash roll early Thursday, indicating that they were potentially short barrels for immediate delivery.
- The delivery delays are unusual but apparently not yet severe enough to trigger contractual disputes.
- Nippon Telegraph & Telephone (NYSE:NTT) is up 1.7% after beating expectations on top and bottom lines in its fiscal Q3 report, paced by strong gains in international communications and a solid increase in mobile.
- Quarterly revenue of ¥2.91T beat an expected ¥2.83T and EPS gained nearly 50% to ¥108.06 from the prior year's ¥73.12. For the first nine months, revenue of ¥8.5T was up 3.9% Y/Y.
- Operating revenues rose for the sixth straight year to hit record levels. For the nine months, net income of ¥604.1B was up 34%.
- Revenue breakout (nine months): Regional communications, ¥2.52T (down 2%); Long distance and international communications, ¥1.68T (up 15.8%); Mobile communications, ¥3.38T (up 1.7%); Data communications, ¥1.15T (up 7.6%); Other, ¥872.7B (down 2.4%).
- With the sale of shares in NTT DoCoMo and a surplus from NTT East, the company revised its fiscal 2015 forecast: It bumped its forecast for operating revenues and operating income by ¥100B and raised guidance for net income by ¥393B, to ¥681B.
- Press Release
- A long list of enterprise software and security tech names are off sharply after business intelligence/analytics software upstart Tableau (down 45.3%) reported slower-than-expected license revenue growth and issued below-consensus Q1/2016 guidance.
- Also possibly weighing: LinkedIn (down 39.6%), which derives a large % of its revenue from cloud-based recruiting and sales tools for enterprises, issued weak Q1/2016 guidance.
- Given the magnitude of the drops, margin calls and forced selling by funds could be playing a big role. The Nasdaq is down 2.2%.
- Tableau suggested its growth slowdown has to do with softening IT spend and a need to improve sales productivity, but analysts have raised questions about competition from the likes of Microsoft, Amazon, and Qlik. LinkedIn forecast a growth slowdown for its field sales hiring solutions business, while blaming European/Asian macro pressures. The company also noted its display ad business continues declining amid weak industry growth.
- Major enterprise software decliners include Splunk (SPLK -23.7%), Workday (WDAY -15.1%), Adobe (ADBE -7%), Zendesk (ZEN -15.2%), ServiceNow (NOW -13.6%), NetSuite (N -12.4%), Salesforce (CRM -11.2%), Paycom (PAYC -10.6%), Ellie Mae (ELLI -11.5%), Cornerstone OnDemand (CSOD -7.8%), Veeva (VEEV -7.7%), Ultimate Software (ULTI -9%), Luxoft (LXFT -7.5%), Manhattan Associates (MANH -8.5%), Box (BOX -6.6%), Guidewire (GWRE -13.6%), Demandware (DWRE -9.3%), Hortonworks (HDP -9.7%), and Tableau rival Qlik (QLIK -16.6%). The casualty list includes many cloud software firms, as well as several analytics software plays. Previously covered: New Relic, Atlassian.
- Major decliners among security tech firms: Palo Alto Networks (PANW -12%), FireEye (FEYE -8.9%), Rapid7 (RPD -8.6%), CyberArk (CYBR -8.3%), Proofpoint (PFPT -8%), Imperva (IMPV -8.3%), Fortinet (FTNT -6.9%), and Vasco (VDSI -5.1%). The selloff comes in spite of an FQ3 beat and in-line FQ4 guidance from Symantec, which has been losing share to various upstarts.
- Micro cap Immunomedics (IMMU +32.4%) jumps out of the blocks this morning on a 6x surge in volume in apparent response to the news that the FDA has designated Fast Track-tagged IMMU-132 a Breakthrough Therapy for the treatment of triple negative breast cancer (TNBC), a type that is particularly resistant to therapy.
- In clinical studies, interim results from a Phase 2 study showed a 72% disease control rate in TNBC patients who had at least two prior lines of therapy. The disease control rate is the proportion of the patient population comprised of complete responders, partial responders and those with no cancer progression.
- IMMU-132 (sacituzumab govitecan) is an antibody-drug conjugate (ADC) consisting of an monoclonal antibody that binds to a protein found on the surface of many types of cancer cells called TROP-2. Specifically binding to the cancer cell enables the precise delivery of the cytotoxic payload, SN-38, the active metabolite of the chemo agent irinotecan. Its value proposition is the ability to deliver the drug over repeated cycles of therapy since SN-38 is less toxic than other chemotherapies.
- Breakthrough Therapy status provides for more intensive guidance from the FDA review team, the involvement of more senior agency personnel and a rolling review of the New Drug Application (NDA).
- It also announced a clinical trial collaboration with Merck in ovarian cancer yesterday which, no doubt, is adding fuel to the up move. Merck is basically just supplying product so the "collaboration" won't develop unless the early-stage study is successful.
- Previously: ImmunoGen to evaluate combo of lead product candidate and Merck's Keytruda in ovarian cancer (Feb. 4)
- ConocoPhillips (COP -5.5%) continues its slide following yesterday's dividend cut decision just two months after the company said the “dividend remains the highest priority use of our cash.”
- Scotia Howard Weil downgrades COP to Sector Perform from Sector Outperform with a $40 price target, lowered from $55, seeing a near-term window where the story will screen poorly relative to other options in the energy space.
- RBC Capital cuts its price target to $50 from $61, expecting investors to remain on the sidelines for now with the dividend more or less in line with its E&P peers (Briefing.com).
- UBS cuts its price target to $38 from $42, noting that COP materially lags Chevron in production growth as well as dividend yield while trading at a ~2x premium.
- Barclays maintains an Overweight rating with a $50 price target, expecting shares to recover over the following couple of weeks and outperform peers.
- New Relic (NYSE:NEWR) has tumbled in spite of beating FQ3 estimates and guiding for FQ4 revenue of $49.8M-$50.8M, above a $48.9M consensus. EPS guidance of -$0.23 to -$0.25 is in-line with a -$0.24 consensus.
- Possibly worrying the Street: Paid business accounts rose by just 286 Q/Q in seasonally strong FQ3, less than the 400 added in FQ2. When asked about account growth on the earnings call (transcript), CEO Lew Crine suggested New Relic's focus on landing enterprise and higher-value SMB customers played a role - annualized revenue per paid business account was up 8% Q/Q and 38% Y/Y to $14,700. "The SMBs we're attracting are, I think, the customers who want to have a relationship. That all having been said, there's no doubt we have an opportunity to do better."
- GAAP operating expenses rose 45% Y/Y to $56.2M. New Relic ended FQ3 with $191M in cash and no debt. With the help of a major GE expansion deal, The deferred revenue balance rose 147% Y/Y to $58.1M.
- New Relic's selloff comes on a day many high-growth enterprise tech names are seeing stop losses in the wake of Tableau and LinkedIn's earnings/guidance.
- New Relic's FQ3 results, earnings release
- Sharply lower this week as the Fed and markets continue to walk back expectations for tighter monetary policy, the dollar (UUP +0.6%) is moving higher following this morning's jobs numbers.
- Jobs gained of 151K was a sizable miss, but the unemployment rate fell to 4.9% (even with labor force participation rising), and annualized wage growth topped 5%.
- Fixed-income and currency markets, for now, are focused on the strength in the report, with the 10-year yield up three basis points and the dollar ahead vs. the other major currencies.
- ETFs: UUP, UDN, USDU
- Hess (HES -10.7%) plunges more than 10% at the open after pricing its concurrent public offerings of 25M common shares at $39 and its 10M depositary shares at $50.
- Hess says the net proceeds from the common stock offering and the depositary shares offering will total ~$945.8M and $485.3M, respectively; it plans to use the proceeds to strengthen its balance sheet and fund longer-term capital needs.
- David Faber tweets: "In 2014, Hess bought back 62.7M shares at avg. price of $83, after settling a proxy fight with Elliott Mgmt... Today $HES sold 25M at $39."
- There's some extra volatility with staffing stocks after today's jobs report and with LinkedIn's tumble in the background.
- Data has shown swings in the staffing sector are common after the NFP print.
- Decliners include TrueBlue (NYSE:TBI) -6.7%, Monster Worldwide (NYSE:MWW) -3.0%, DHI Group (NYSE:DHI) -1.6%, and On Assignment (NYSE:ASGN) -1.1%.
- In its first report as a public company, Atlassian (NASDAQ:TEAM) beat FQ2 estimates and guided for FY16 (ends June '16) revenue of $443M-$447M and EPS of $0.30-$0.31, above a consensus of $425.3M and $0.20. However, it's worth noting initial post-IPO analyst estimates are often conservative.
- FQ3 guidance is for revenue of $113M-$115M and EPS of $0.05-$0.06 (compares with FQ2's $109.7M and $0.11). FY16 free cash flow guidance is at $80M-$83M.
- FQ2 details: 2,600 net new customers were added, bringing the total count to 54,262 (+27% Y/Y). Subscription revenue totaled $33.9M, perpetual software license revenue $15.7M, maintenance revenue $15.6M, and other revenue $6.6M. GAAP operating expenses rose 47% Y/Y to $87.7M, with $47.8M spent on R&D.
Free cash flow rose 12% Y/Y to $28.8M, topping net income of $19.1M (a common occurrence for cloud software firms). Thanks to its IPO, Atlassian ended FQ2 with $682M in cash/short-term investments and no debt.
- Shares are now trading near Atlassian's $21 IPO price, and are 24% below a post-IPO opening trade of $27.67.
- Atlassian's FQ2 results, earnings release
- Update: Atlassian's selloff comes on a day many other high-growth enterprise tech names (including a slew of cloud software firms) are seeing steep losses following Tableau and LinkedIn's earnings.
- ChannelAdvisor (NYSE:ECOM) has jumped to $13.00 premarket after beating Q4 estimates with the help of 22% Y/Y customer GMV growth. The beat is overshadowing Q1 sales guidance of $24.6M-$25M (below a $25.4M consensus) and 2016 guidance of $111M-$113M (mostly below a $112.9M consensus).
- Q1 adjusted EBITDA guidance is at -$2.5M to -$1.5M. Full-year guidance is at $0-$3M (compares with 2015 adjusted EBITDA of $1.4M).
- On the earnings call (transcript), CEO David Spitz mentioned trailing 12 month average revenue per customer rose 10% Y/Y to more than $34,500, and that top-100 customers accounted for 29% of revenue (up from 26%) in Q3. Variable revenue rose 32%, something Spitz attributed to Amazon's share gains (Amazon is now ECOM's largest channel), pricing policy changes, strong growth at emerging marketplaces, and a mix shift towards larger clients.
- Lifting EPS: GAAP operating expenses fell by $600K Y/Y to $23.5M. ChannelAdvisor ended Q4 with $60.5M in cash and no debt.
- ChannelAdvisor's Q4 results, earnings release
- The headlines from Genworth's (NYSE:GNW) Q4 report aren't pretty, but they're overshadowing a number of positives, says BTIG's Mark Palmer, reiterating a Buy rating, but slashing the price target to $5 from $10.
- Among those positives are much-needed stability in the troubled long-term care unit, as well as the Australian and Canadian mortgage insurance operations.
- Isolating LTC from the rest of the company will be far easier, says Palmer, if operating performance is stable, and that's what it was in Q4 - the unit posting net operating income of $19M, the third profitable quarter in the past four.
- Australia and Canada units both performed well despite the effects of the commodity crash on those economies. Aussie NOI of $22M was up $1M from Q3, and Canada NOI of $37M lost $1M.
- Palmer's $5 price target is 0.25x book value (ex-AOIC) of $20.07.
- Shares are lower by 28% premarket to $2.03.
- Shares of Elizabeth Arden (NASDAQ:RDEN) are sharply lower after a dismal earnings report.
- Revenue for the company's product category which included celebrity fragrances fell 10% during the quarter. Celebrities with a brand at Elizabeth Arden include Justin Bieber, Mariah Carey, Nicki Minaj, and Taylor Swift.
- Adjusted EBITDA margin rate fell 260 bps to 6.4% in FQ2.
- Previously: Elizabeth Arden misses by $0.50, misses on revenue (Feb. 04 2016)
- RDEN -28% premarket to reach a multi-year low of $5.80.
- The numbers were mixed, with payroll gains of just 151K missing the 190K estimate, but the unemployment rate slipping to 4.9% vs. 5% expected. Wage growth was speedy - up more than 5% on an annualized basis.
- Up a hair ahead of the number, U.S. stock index futures are now lower by about 0.4% across the board. The 10-year Treasury yield is now climbing, up three basis points to 1.87%.
- ETFs: SPY, QQQ, DIA, SH, SSO, SDS, VOO, IVV, UPRO, SPXU, PSQ, TQQQ, SPXL, RSP, SPXS, QID, SQQQ, QLD, DOG, DXD, UDOW, RWL, EPS, SDOW, VFINX, DDM, BXUB, QQEW, QQQE, SPLX, SFLA, BXUC, QQXT, SPUU, LLSP, UDPIX, OTPIX, RYARX
- Previously: Yields edge lower after mixed news from jobs report (Feb. 5)
- Previously: Payrolls miss, but UE rate dips to 4.9% (Feb. 5)
- ArcelorMittal (NYSE:MT) -6.7% premarket after confirming plans to seek $3B in new capital from shareholders to shore up its finances following FY 2015 losses of nearly $8B.
- MT blames the loss - which includes a $6.7B setback in Q4, with $4.8B in impairment charges mostly related to its iron ore operations - mainly on falling steel prices that were depressed by a surge of Chinese exports, and to writeoffs in the company’s mining business.
- In an indication of continuing difficult conditions, MT forecasts FY 2016 EBITDA of at least $4.5B, compared with $5.2B in 2015, amid relatively weak demand for steel this year, with only the U.S. market showing growth.
- MT is tapping shareholders for funds rather than focus on asset sales because there are signs the steel market has bottomed out, CFO Aditya Mittal says.
- MT also will sell its 35% stake in Spain’s automotive metals component firm Gestamp Automoción for ~$1B by the end of June as part of its attempt to pay down debt; the company says it wants to reduce net debt to less than $12B from $15.7B at the end of December.
- Earlier: Bloomberg: ArcelorMittal preparing €3B capital raise (Feb. 4)
- Along with 151K jobs gained in January vs. estimates for 190K, December's 292K job gain was revised down to 262K, and November's 252K gain was revised higher to 280K. We'll call the revisions a wash.
- The unemployment rate fell to 4.9% vs. 5% expected, and the labor force participation rate edged higher to 62.7%.
- The broader U-6 unemployment rate held steady at 9.9%. It was 11.3% a year ago.
- The average workweek rose by 0.1 hour to 34.6 hours. Average hourly earnings gained a big $0.12 to $25.39 (more than 5% annualized). On a Y/Y basis, wages were higher by 2.5%.
- Initially maybe keying on the dip in unemployment and fast wage growth, the 10-year Treasury yield popped to 1.87%, but has since fallen to 1.84%. TLT +0.3%, TBT -0.6% premarket
- Previously: Payrolls miss, but UE rate dips to 4.9% (Feb. 5)
- Vertex Pharmaceuticals (NASDAQ:VRTX) is down 3% premarket on increased volume in response to its announcement that it received a Complete Response Letter (CRL) from the FDA in response to its supplemental New Drug Application (sNDA) seeking clearance for the use of KALYDECO (ivacaftor) in patients at least two years old with cystic fibrosis (CF) who have one of 23 residual function mutations in the cystic fibrosis transmembrane conductance regulator (CFTR) gene.
- The data supporting the sNDA was generated in preclinical studies and in an exploratory 24-subject Phase 2a trial in which 19 of the 24 patients expressed eight of the 23 mutations proposed in the application. Based on this information, it is not surprising that the FDA rejected it. The reviewers will need to see confirmatory evidence of KALYDECO's efficacy relative to all 23 mutations.
- A CRL means that the application is not approvable in its present form. The company intends to meet with the FDA to determine a path forward.
- KALYDECO is currently cleared in the U.S. for the treatment of CF patients at least two years old with one of 10 mutations in the CFTR gene.
- Tyson Foods (NYSE:TSN) reports total sales volume dropped 6.8% in FQ1.
- Segment Sales: Chicken: $2.636B (-5.2%); Beef: $3.617B (-17.7%); Pork: $1.213B (-21.2%); Prepared Foods: $1.896B (-11.1%); Other: $99M (-67.5%).
- Segment Volume change: Chicken -0.5%; Beef -3.8%; Pork -2.2%; Prepared Foods -7.7%.
- Segment Average Price change: Chicken -4.7%; Beef -14.4%; Pork -19.5%; Prepared Foods -3.6%.
- Gross margin rate improved 430 bps to 9.91%.
- Operating margin by segment: Chicken 13.6%, Beef 2%, Pork 13%, Prepared Foods 10.9%.
- Adjusted operating margin rate grew 330 bps to 8.5%.
- The company expects overall domestic protein production to increase ~2% to 3% (Y/Y) in FY2016.
- FY2016 Guidance: Sales: ~$37B; Chicken operating margin: ~ more than 11%; Beef: normalized range of 1.5% - 3%; Pork operating margin: normalized range of 6% - 8%; Prepared Foods operating margin: normalized range of 10% - 12%; Other operating loss: ~$70M; Adjusted EPS: $3.85 - $3.95; Capital expenditure: ~900M; Net interest expense: ~$245M; Liquidity: in excess of $1.2B.
- Kirkland's (NASDAQ:KIRK) reports comparable-store sales rose 1.3% in Q4. The company ran up against a tough comparable with last year's holiday-period comp came in at +8%.
- "Promotional levels were higher during the quarter, as we had anticipated," noted CEO Mike Madden.
- Kirkland's now expects FY15 EPS of $0.89 to $0.96 vs. $0.88 to $0.95 prior view and $0.89 consensus.
- Full earnings will be released on March 11.
- KIRK +2.36% premarket to $12.14.
- Linn Energy (NASDAQ:LINE) -45% premarket after saying it would explore strategic alternatives to shore up its balance sheet and that it exhausted its credit facility by drawing down the remaining $919M.
- Stifel downgrades LINE and LinnCo (NASDAQ:LNCO) to Sell from Hold with a zero valuation, seeing a growing likelihood of a reorganization process or outright sale of the company, with no residual value under a reorganization as it estimates the partnership has ~$10B of debt outstanding vs. an estimated 2015 PV-10 valuation of $6.4B.
- Hedgeye's Kevin Kaiser believes the announcement means Linn likely will file for bankruptcy protection soon.
- LINE traded at more than $40/unit in 2012 and at $30-plus as recently September 2014 before oil prices began plummeting; units closed yesterday at $1.20.
- LNCO -53% premarket.
- Estee Lauder (NYSE:EL) reports net sales rose 8% in FQ2 excluding the impact of foreign currency translation.
- Revenue by geography: The Americas: $1.227B (+2%, +4% on a constant currency basis); EMEA: $1.268B (+5%, +13% on a constant currency basis); Asia/Pacific: $629.4M (flat, +6% on a constant currency basis).
- Revenue by segment: Skin Care: $1.232B (-3%, +2% on a constant currency basis); Makeup: $1.251B (+6%, +13% on a constant currency basis); Fragrance +9% to $470.6M (+7%, +12% on a constant currency basis); Hair Care: $149M (+9%, +14% on a constant currency basis); Other: $21.8M (+27%, +28% on a constant currency basis).
- Gross margin rate flat Y/Y at 81.2%.
- Adjusted operating margin rate flat Y/Y at 20.8%..
- FQ3 Guidance: Net sales: +2% to +3% (+6% to +7% on a constant currency basis); Diluted EPS: $0.50 to $0.55; Adjusted EPS: $0.53 to $0.58.
- FY2016 Guidance: Net sales: +4% to +5% (+9% to +10% on a constant currency basis); Diluted EPS: $2.98 to $3.05; Adjusted EPS: $3.09 to $3.12.
Thursday, February 4, 2016
- Stock in kiosk firm Outerwall (OUTR -2.8%) crumpled after hours, slipping 16.6% to quote at $27.25, lower than the stock has been in six years.
- On the company's earnings call, CEO Erik Prusch said the company was facing challenges in a secular decline in physical video vs. on-demand, but said there was a side to Redbox that shouldn't be overlooked: new release value.
- "In fact, the vast majority of our customers use Redbox as a complement to, not instead of digital alternatives," Prusch said. He added that physical discs still play a big part in studios' window strategy to maximize revenue.
- Asked whether they should take a more proactive approach to price increases, with VOD hitting $6-plus and Redbox still at $1.50, Prusch said they'd continue to look at price as a lever. "We've got tests going on. We know what results we're going to achieve in a nationwide rollout well in advance of actually doing the rollout. But it is one of the levers. ... We see the increase that we did at the end of 2014 having been accretive overall to revenue. So, the offset or the decline in rentals versus the price increase, the price increase more than offset that."
- The firm switched last year to annual guidance only and for 2016 declined to forecast revenue. It did say -- based on its estimates for release schedule for Q1 and rest of the year, which features a video release-damping Olympics -- it expected core EBITDA of $340M-$380M (short of a consensus for $414.5M), core diluted EPS of $5.00-$6.30 (vs. expected $6.83) and free cash flow of $140M-$190M vs. an expected $212.5M.
- The stock's fall has been precipitous this winter, with shares losing 44.8% of value just over the past two months.
- Previously: Outerwall sinks 14% after Q4 revenues slide (Feb. 04 2016)
- Charter Communications (NASDAQ:CHTR) has priced $1.7B in senior notes.
- The company is issuing the unsecured notes, due 2024, at an interest rate of 5.875%/year, and at 100% of principal.
- The offering is expected to close Feb. 19.
- Overall, Charter reported total debt increased to $35.9B as of Dec. 31, and the company held $21.8B of proceeds from debt in escrow for its pending deals with Time Warner Cable and Bright House Networks. Charter's credit facilities provided about $961M of additional liquidity.
- The stock finished down 3.4% today after posting a wider loss for Q4.
- Digital Realty Trust (DLR +0.6%) has named Cindy Fiedelman its chief human resources officer.
- Fiedelman came in on in interim basis in September, replacing the retiring executive, Ellen Jacobs. She had previously served as VP of People and Diversity at American Airlines, and has held similar positions at Avaya, Sun Microsystems and Comcast.
- She'll be responsible for talent management, leadership development, and compensation and benefits programs, as well as human resources integration efforts related to mergers and acquisitions.
- Shares are up 5.2% after hours.
- In addition to missing FQ3 sales estimates (while beating on EPS), Deckers (NYSE:DECK) is guiding for 7.2% Y/Y FQ4 revenue growth (7.9% exc. forex) and EPS of $0.07, below a consensus for 13% growth and EPS of $0.36.
- Along with the numbers, Deckers has announced a restructuring featuring office consolidations, brand management "realignment," and 20 retail store closings. The company is aiming for $35M/year in cost savings, with plans to reinvest $10M.
- CEO Angel Martinez: "Our third quarter was more challenging than we expected as warm weather and weak store traffic across retail pressured demand." USS brand sales +1% Y/Y to $743.2M; Teva +3.2% to $14.1M; Sanuk -17% to $17M; other brands +48.4% to $21.6M.
- U.S. sales +3.2% o $543.3M; international -2.2% to $252.6M. Gross margin fell 380 bps Y/Y to 49.1%; it's expected to be up 80 bps Y/Y in FQ4 to 45.5%. Inventories +26.1% to $370.6M. Deckers ended FQ3 with $263M in cash and $23.5M in borrowings.
- Deckers has tumbled to $43.80 after hours. Crocs (NASDAQ:CROX) has dropped to $8.75.
- Deckers' FQ3 results, earnings release
- Hanesbrands (NYSE:HBI) disappointed in Q4 after sales fell off for both the activewear and innerwear product lines. The sales drop was more pronounced in the international segment due to F/X translation.
- The company expects to deliver EPS of $1.85 to $1.91 this year vs. $1.90 consensus.
- Execs rolled out the warm weather excuse as a factor for weak demand in key categories.
- Previously: Hanesbrands misses by $0.02, misses on revenue (Feb. 4)
- Shares of HBI fell over 11% in the after-hours session.
- Ubiquiti (NASDAQ:UBNT) has surged to $33.20 after hours after soundly beating FQ2 estimates and issuing strong FQ3 guidance - revenue of $160M-$170M and EPS of $0.53-$0.60 vs. a consensus of $158.8M and $0.51.
- Top-line performance: Lifting FQ2 sales: Service provider revenue rose 10% Y/Y to $109.6M, after having dropped 4% in FQ1. Enterprise revenue (driven by Wi-Fi hardware) fell 2% to $52.3M, after having grown 12% in FQ1. North American, South American, EMEA, and Asia-Pac sales each rose Y/Y.
- Financials: Gross margin rose to 48.8% from FQ1's 48.5% and the year-ago period's 45.1%. GAAP operating expenses rose 23% Y/Y to $22.6M - $15.4M was spent on R&D and $7.4M on SG&A, and another $257K was recovered from last year's fraud loss.
Ubiquiti ended FQ2 with $496.7M in cash and $125.5M in debt. The company's $50M buyback program (announced with the FQ1 report) has been completed.
- Ubiquiti's FQ2 results, earnings release
- In addition to missing Q4 estimates, Sierra Wireless (NASDAQ:SWIR) is guiding for 2016 revenue of $630M-$670M and EPS of $0.60-$0.90, below consensus estimates of $673.7M and $0.98. Q1 guidance is for revenue of $135M-$145M and "slightly negative to slightly positive" EPS, worse than consensus estimates of $149.4M and $0.10.
- Sierra on Q4: "[W]e experienced softer demand at select OEM customers [in Q4]. We believe this reflects increased caution on the part of some customers in the face of an uncertain macro-economic environment. Notwithstanding the current environment, we expect our business to gain strength over the course of the year as we enter commercial production on a number of new customer programs, and continue to bring new industry-leading products and solutions to market."
- Q4 details: OEM Solutions revenue fell 6.2% Y/Y to $121.5M. Enterprise Solutions fell 15.3% to $16.5M. Cloud and Connectivity Services revenue totaled $6.8M.
Non-GAAP gross margin fell 240 bps Y/Y to 31.2%. Operating expenses rose by $1.8M to $41.9M. Sierra ended Q4 with $93.9M in cash and no debt.
- Sierra uses its Q4 report to disclose the Toronto Stock Exchange has approved a normal course issuer bid to buy back up to 3.4M shares (9.7% of outstanding shares).
- Shares have tumbled to $11.75 after hours, making new 52-week lows in the process.
- Sierra's Q4 results, earnings release
- Tableau (NYSE:DATA) has guided on its earnings call for Q1 revenue of $160M-$165M and 2016 revenue of $830M-$850M, below consensus estimates of $179.5M and $871M. Q1 and 2016 EPS guidance is respectively at -$0.08 to -$0.12 and $0.22-$0.35, below consensus estimates of $0.06 and $0.62.
- CFO Tom Walker: "[W]e saw some softness in spending [in Q4] especially in North America. We did see our customers continue to expand their use of Tableau in the organizations but not at the same cadence we historically experienced ... Based on what we see in the environment and the buying patterns of our customers we are taking a prudent stance as we begin the year."
- When asked about the remarks, Walker insisted competition isn't an issue, and suggested sales execution could improve. "More caution in how [customers] were spending and how they were allocating dollars ... With respect to overall competitive market if you look at the internal data that we collect our win rates are not changing at all actually ... As you know we have been growing at a very fast pace over the last few years. You would expect productivity numbers to come down but there are things we have to do to tighten our approach."
- The remarks follow a 2015 in which Amazon and SAP unveiled new BI/data visualization software tools, and Microsoft significantly overhauled its offerings. They also shortly follow news long-time sales chief Kelly Wright is retiring by year's end.
- Mizuho's Abhey Lamba (Neutral, $80 target for now), commenting on Q4: "Tableau’s revenues and EPS came in slightly above consensus but all important license sales were marginally below. We note that the management team had been delivering significant beats since IPO and expectations were for a material license beat. The quarter’s performance could imply tougher competitive environment especially from Microsoft."
- Tableau is now down to $45.17 after hours.
- Tableau's Q4 results, details
- Linn Energy (LINE, LNCO) says it has started a process to explore strategic alternatives to strengthen its balance sheet and maximize the value of the company, and has hired Lazard as its financial adviser.
- LINN also says it recently borrowed $919M from its credit facility, which is the remaining undrawn amount that was available.
- LINE -8.3%, LNCO -10% AH.
- While discussing its 2016 guidance, LinkedIn (NYSE:LNKD) says it expects its field sales hiring solutions business to see mid-20% growth in 2016, after exiting 2015 at 30% growth. The outlook is said to reflect "continued pressure in EMEA and APAC given current global economic conditions," and single-digit growth for self-serve products. It also doesn't assume "meaningful contribution" from LinkedIn's Referrals and new Recruiter products.
- Also: For its Marketing Solutions (ad) business, LinkedIn is shuttering its Lead Accelerator product as a standalone offering, and incorporating its technology into the Sponsored Updates ad product. The move is expected to have a short-term revenue impact. Nonetheless, LinkedIn forecasts Marketing Solutions will "accelerate in 2016."
- Meanwhile, spending will stay aggressive: Capex will equal a high-teens % of 2016 revenue, and aggressive investments will be made for LinkedIn's Sales Solutions and Learning & Development (formerly Lynda.com) platforms.
- Q4 sales/traffic details: Talent Solutions revenue (62% of total) +45% Y/Y to $535M - hiring revenue +32% to $487M, Learning & Development revenue totaled $49M. Over 3K corporate solutions accounts were added, raising the total above 42K (+29% Y/Y); LinkedIn won't disclose this metric going forward. The add-on/renewal rate "decreased moderately" Y/Y.
Marketing Solutions +20% to $183M, with Sponsored Updates surpassing 50% of segment revenue and display ad sales dropping by a high-30s % amid ongoing "secular-driven headwinds." Premium Subscriptions +19% to $144M, with Sales Navigator providing a lift. LinkedIn notes general subscriptions are now growing only at a single-digit rate as subscribers migrate to products such as Job Seeker and Recruiter Lite.
Registered members rose by 18M Q/Q to 414M. Unique visiting members only rose 7% to 100M (57M mobile). Member page views +26% to 37B. The U.S. was 61% of revenue.
- Financials: 2015 free cash flow was $300M, up from just $21M in 2014. GAAP costs/expenses rose 39% Y/Y in Q4 to $877.9M. On a non-GAAP basis, sales/marketing spend was 31% of revenue, R&D 18%, G&A 11%, and cost of revenue 12%. LinkedIn ended 2015 with $3.1B in cash and $1.1B in convertible debt.
- In other news, LinkedIn has announced it's buying Connectifier, a startup that has developed A.I.-based search technology for helping recruiters find job candidates. LinkedIn, which bough job search engine/listing platform Bright in 2014, says Connectifier will "further strengthen our core products and accelerate our product roadmap, leveraging powerful machine learning-based searching and matching technology to help recruiters and hiring managers find the perfect talent fit."
- LinkedIn has tumbled to $139.46 after hours.
- LinkedIn's results/guidance, earnings release, slides (.pdf)
- With just a few days before Super Bowl 50, somebody blinked: Nexstar Broadcasting (NASDAQ:NXST) and Cox Communications have a new retransmission deal, ending a blackout that began last weekend.
- As usual, financial terms weren't disclosed. Nexstar's network and local programming will resume as soon as possible on Cox systems, including the two CBS affiliates (in Las Vegas and Springfield, Mo.) that will broadcast the Super Bowl.
- The stations involved number 13, in nine markets.
- Nexstar shares declined 3.6% during market hours and are flat so far in after-hours trading.
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