Saturday, February 6, 2016
- BuzzFeed reports Twitter (NYSE:TWTR) plans to launch an algorithmic (non-chronological) Timeline view as soon as next week.
- The site adds it's "unclear" if Twitter will force users to rely on an algorithmic feed - that, in turn, has led to considerable angst among some Twitter users. However, NBC News' Josh Sternberg reports the feed will be strictly opt-in. VC/Twitter investor Chris Sacca: "There is a 0% chance Twitter eliminates the chronological feed."
- Facebook's core news feed has long used an algorithmic view - it relies on data about user activity to order content based on what Facebook thinks a particular user wants to see. While many Twitter users find its chronological firehose invaluable for providing real-time news, commentary, and one-liners about what's going on in the world, many also feel overwhelmed by it (particularly given all the posts relaying the same story/event), and struggle to stay on top of news and commentary published while they were logged out.
- Twitter began testing an algorithmic feed about two months ago. The efforts follow a mixed reaction to Twitter's much-hyped Moments feature, and with user growth/engagement concerns continuing to weigh heavily on shares. Q4 results arrive on Wednesday.
- Yesterday: Twitter among Internet stocks hammered following LinkedIn's earnings
- Last month: Twitter building feature that supports much longer tweets
- Update: Jack Dorsey has responded to BuzzFeed's report and the ensuing backlash. "Regarding #RIPTwitter: I want you all to know we're always listening. We never planned to reorder timelines next week ... I *love* real-time. We love the live stream. It's us. And we're going to continue to refine it to make Twitter feel more, not less, live! ... Twitter can help make connections in real-time based on dynamic interests and topics, rather than a static social/friend graph. We get it."
Friday, February 5, 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.
- In filings today, New York's Public Service Commission received objections from New York City and State to Altice's (OTCPK:ATCEY) $10B plan to take over Cablevision Systems (CVC -0.9%), including "key public interest questions."
- Among issues under dispute is whether NYC has any authority to OK or block the deal; Altice and Cablevision argue that it doesn't.
- The city's filing details a number of concerns, including that Altice hasn't explained how it can both save $900M in costs and continue investing in fiber-to-the-premises -- and what kind of impact such cost cuts would have on jobs and customer service.
- It's suggesting concessions including forcing the combined company to offer a $10/month, 30-Mbps broadband plan for low income families, and to keep "non-executive suite" jobs for at least four years.
- For its part, the state argues that the two companies haven't proved the deal is in the public interest and echoes many of the city's concerns, but it's not set to make a decision on the deal until April 29.
- Cablevision shares are flat in after-hours trading.
- Previously: Union tells New York regulators to kill Altice-Cablevision deal (Jan. 27 2016)
- 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)
- 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."
- Digital Realty Trust (DLR +0.5%) has launched an exchange offer for up to $950M in debt for notes issued in a private placement last October.
- The notes were issued by its operating partnership subsidiary. The registered offer will exchange up to $500M in 3.4% notes due 2020, and up to $450M of 4.75% notes due 2025, for any and all of the private 3.4% notes due 2020 and 4.75% due 2025.
- The terms of the notes are substantially identical, so the purpose of the exchange is to satisfy guarantees for the private notes about the exchange. Notes not tendered will continue to accrue interest but generally won't retain rights under the registration rights agreement.
- The offer expires on March 8.
- 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.
- Following on November's multiyear deal, Verizon (VZ +1%) says it will offer live out-of-market NBA games via NBA League Pass on its Go90 video service starting tomorrow.
- Go90 is giving registered users a free preview over the weekend, and they can buy a half-season package for $50 to keep viewing starting Monday, to cover the rest of the NBA season.
- Also starting Monday, Verizon is offering registered users up to five games on the service for no cost, whether or not they watched games in the free preview.
- Verizon and the NBA came to a multiyear content and marketing partnership in the fall that covered providing games as well as exclusive series, and made Verizon the official wireless provider of the league and affiliates.
- Previously: Verizon wins NBA content for Go90 video service in multiyear deal (Nov. 04 2015)
- 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.
- Adaptive Medias (OTCQB:ADTM) has set a new three-year employment agreement with CEO/Chairman John Strong.
- The company will pay a base salary of $72,000 initially, increasing to $225,000 next Jan. 1.
- It's also recommending to the board that Strong receive 2.25M shares in restricted stock, two-third of which will be immediately vested.
- 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)
- Citing "multiple sources with knowledge of the company and the Waterloo region," MobileSyrup reports BlackBerry (BBRY -3.5%) is laying off close to 35% of its workers in the Waterloo, Ontario area, where the company's HQ resides.
- In a statement, BlackBerry suggests it's laying off "a small number" of workers in Waterloo and Sunrise, FL. A Florida regulatory filing indicates 75 Sunrise workers are being laid off. Regarding the Waterloo cuts, MobileSyrup's sources indicate "the company’s BlackBerry 10 and Devices teams were the hardest hit, [with] the latter losing approximately 150 employees." The report follows remarks from a BlackBerry exec suggesting the company might only develop Android devices going forward.
- BlackBerry stated in 2014 it had 2,700 workers around Waterloo, down from a 2011 high of 11,000. As of Feb. 2015, the company's total headcount was 6,225. Job cuts led BlackBerry's R&D spend to drop 35% Y/Y in FQ3 (the November quarter) to $100M. Sales, marketing, and admin spend, lifted by acquisitions, rose 4% to $177M.
- Shares are lower on a day the Nasdaq is down 3.3%.
- Update: BlackBerry tells Re/code it has cut 200 jobs in Canada and Florida. The company also confirms BBM founder Garry Klassen has left the company.
- 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
- 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
- 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
- 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
- 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.
- Youku Tudou (YOKU +0.2%) has set a special general meeting to consider its buyout by Alibaba.
- Shareholders will meet March 14 at 10 a.m. local time in Hong Kong to vote on the plan. If approved, American depositary shares would delist from NYSE as the company went privately held.
- Shareholders of record at the close of business Feb. 11 will be entitled to vote.
- Previously: Youku Tudou up 9.7% premarket on Alibaba buyout's higher price (Nov. 06 2015)
- 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
- JPMorgan's Paul Coster has downgraded Cree (CREE -1.2%) to Neutral. His target is $20.
- Coster is still upbeat about Cree's long-term prospects, but thinks "at this price level it is worth reconsidering the various risks and threats this company faces, including head on competition in the high-power [LED chip] space, tangential competition from mid-power, and margin pressure from the consumer product strategy."
- The downgrade comes with Cree having easily outperformed the Nasdaq thus far in 2016, aided by a Jan. 19 FQ2 beat. Shares gained yesterday on a Northland upgrade.
- 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
Thursday, February 4, 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.
- Israeli telecom Partner Communications (NASDAQ:PTNR) says it plans to launch a new brand and provide most of its goods and services under that brand -- the next step in a process where it's terminated its brand license agreement with Orange (NYSE:ORAN).
- On Jan. 5, the company said it would provide its service and hardware under the Orange brand until further notice; the company now plans a launch event Feb. 16 to unveil the results of its marketing study.
- The carrier had said last summer that it would assess its position in Israel as part of its framework agreement with Orange, following disputes over remarks by Orange chief Stephane Richard about abandoning its relationship with Israel.
- Partner stock is up 32.4% over the past year.
- 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.
- Qorvo (NASDAQ:QRVO) is down 1.3% after hours after posting FQ3 sales roughly in-line with the guidance given in the company's Jan. 7 warning, and beating on EPS. FQ4 sales guidance of $600M is below a $620.1M consensus, while EPS guidance of $0.90-$0.95 is in-line with a $0.92 consensus. Sales expectations were low in light of the warning and Apple/Samsung's woes.
- Lifting FQ3 EPS: Qorvo spent $250M to buy back another 4.6M shares. $750M is left on the company's latest buyback authorization. Cost cuts (aided by RF Micro/TriQuint merger synergies) also helped: Non-GAAP operating expenses fell by $17M Q/Q to $139.8M. RF Micro and TriQuint had spent $150.5M between them in the year-ago period. Lower sales led gross margin to fall 180 bps Q/Q to 47.9%. GM is expected to bounce back to 50% in FQ4 - a reason EPS guidance is in-line.
- In spite of near-term sales weakness, Qorvo insists it's "growing our dollar content at our three largest mobile customers in the most anticipated marquee smartphones being released this year." and forecasts strong growth for its Infrastructure & Defense (IDP) chip unit. CFO Steve Buhaly: "I continue to be excited about our prospects, including a significant cost-reduction roadmap and great new products, including our rapidly growing BAW-based multiplexer business and other highly integrated solutions leveraging the full breadth of our product and technology portfolio."
- Qorvo's FQ3 results, earnings release
- Elephant Talk (NYSEMKT:ETAK) says in an 8-K filing that it's entered a Severance and Independent Contractor Agreement with its CTO and Mobile co-president, Martin Zuurbier, who resigned from the firm effective Dec. 31.
- Zuurbier's resignation was for personal reasons, the filing says, and not because of a disagreement with the company.
- Shares of Elephant Talk are down 25% over the past month.
- Previously: Elephant Talk -3.1% on restructuring news (Jul. 22 2015)
- Previously: Elephant Talk taps new mobile co-presidents (Jan. 29 2015)
- Pixelworks (NASDAQ:PXLW) has guided on its Q4 earnings call for Q1 revenue of $10M-$11M and EPS of -$0.13 to -$0.20, below a consensus of $12.7M and -$0.11.
- Shares haven't moved after hours since the guidance was provided. With Pixelworks having plunged on Tuesday following a Q4 pre-announcement that included downbeat Q1 comments and news CEO Bruce Walicek has resigned, expectations were low going into earnings.
- Pixelworks' Q4 results, earnings release
- 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
- According to an FCC application, AT&T (NYSE:T) is pursuing a three-year experimental license to test 5G service in Austin, Texas, which might put it on a timeline with competitor Verizon (NYSE:VZ) in pursuing the next-gen wireless standard.
- The telecom giant wants to do fixed and mobile tests with "various types of experimental wireless equipment" (but from undisclosed providers). The goal is to allow for trials (in the 3.5 GHz, 4 GHz, 15 GHz and 28 GHz bands) before standards are finalized in 2018-2019. A 5G service could provide wireless data speeds comparable to gigabit broadband.
- Last September, Verizon announced an ambitious timetable that included 5G testing in 2016 followed by "some level of commercial deployment" in 2017; the company's CFO Fran Shammo has promised they would get to 5G first. Observers have assumed commercial rollout wouldn't happen until 2020.
- This could also put some heat on upcoming spectrum auctions; tests are one thing, but commercial service means a need for more airwaves.
- Previously: Verizon announces ambitious 5G timetable; to start field tests next year (Sep. 08 2015)
- 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
- The Competition Bureau in Canada has given the go-ahead to Shaw Communications' (NYSE:SJR) C$1.6B bid for Wind Mobile.
- The news clears the way for Shaw to jump into the wireless market by acquiring the country's fourth-largest provider.
- The regulator said the deal wasn't likely to lessen competition since Shaw doesn't currently own any wireless assets.
- Shaw had considered an entry into the market as long ago as 2011 but seemed to have abandoned those ambitions and sold spectrum last year.
- Shares in Shaw have fallen 21.9% in the six weeks since it announced the bid. Shares are up 0.6% after hours in U.S. trading today.
- Previously: Canadian telecoms off sharply following Shaw's entry to wireless (Dec. 17 2015)
- Previously: Shaw Communications -9.2% in wake of C$1.6B WIND Mobile purchase (Dec. 17 2015)
- Previously: Shaw Communications buys into wireless with C$1.6B WIND acquisition (Dec. 16 2015)
- 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)
- Chinese precision sheet metal supplier DSBJ is buying circuit board contract manufacturer Multi-Fineline (NASDAQ:MFLX) for $610M, or $23.95/share, in cash. The price represents a 46% premium to MFLX's Thursday close.
- The deal is expected to close in Q3, pending approvals from shareholders and U.S./Chinese regulators. DSBJ plans to finance via existing cash, credit facilities, and new debt. The announcement has been made in tandem with MFLX's Q4 results.
- Symantec (NASDAQ:SYMC) announces in tandem with its FQ3 report P-E firm Silver Lake is investing $500M in the company, and that the company is issuing a $4/share ($2.3B) special dividend. The dividend is payable on March 22 to shareholders on record as of March 8.
- At the same time, Symantec's regular quarterly dividend is being cut in half to $0.075/share to "reflect reduced projected domestic cash flow, following the sale of Veritas, and the one-time special dividend." In addition the company is now targeting $400M/year in cost savings (with the help of job cuts?) by the end of FY18 (ends March '18).
- The news comes less than a week after Symantec closed the sale of its Veritas storage software unit to Carlyle, a deal that yielded after-tax proceeds of $5.3B. The total size of Symantec's capital return program (includes the dividend, as well as buybacks) is now $5.5B, up from a prior $4B+.
- The program is set to be finished in March 2017, and will be financed through a mixture of the Veritas proceeds, Silver Lake's money, available cash, and new debt. Silver Lake is buying 2.5% convertible senior notes due 2021. The notes sport a conversion price of $21/share. Silver Lake managing partner Ken Hao is joining the board.
- FQ4 guidance is in-line: Revenue of $885M-$915M and EPS of $0.24-$0.27 vs. a consensus of $901.7M and $0.25. FQ3 enterprise security revenue fell 3% Y/Y to $495M (+1% exc. forex); consumer security revenue fell 10% to $414M (-6% exc. forex).
- Symantec's FQ3 results, earnings release
- Update (4:39PM ET): After coming off a halt, Symantec is up 8.7% after hours.
- Likely weighing on Tableau (NYSE:DATA) post-earnings: While Q4 revenue rose 42% Y/Y to $202.8M and beat consensus by $2M, license revenue (drives future services revenue) rose 31% to $133.1M, a marked slowdown from Q3's 57% growth and Q2's 60%.
- 3,600+ new accounts were added, up from 2,600+ a year ago. $100K+ transactions rose 36% Y/Y to 414. International revenue rose 63% to $53.7M. GAAP operating expenses rose a steep 63% to $188.2M.
- Tableau has plunged to $50.00 after hours. Machine data analytics leader Splunk (NASDAQ:SPLK) is down 8.8% to $42.92. Tableau rival QLIK is down 2.3% to $24.36. Three months ago, Splunk and Qlik rallied in response to Tableau's earnings/guidance. Tableau typically guides on its earnings call (starts at 4:30PM ET).
- Tableau's Q4 results, earnings release
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