Friday, February 12, 2016
- Price is the sticking point in what have become exclusive talks between NTT Data (NYSE:NTT) and Dell over Dell's sale of Perot Systems -- a key piece of financing for Dell's blockbuster $67B purchase of EMC, Reuters reports.
- Earlier reports had NTT Data and India's Tata as the two suitors left for Perot, after the apparent leader, France's Atos (OTCPK:AEXAF), dropped out, along with previous overtures by Cognizant Technology Solutions (NASDAQ:CTSH).
- Dell's been seeking $5B for the unit, but if a bigger deal isn't available, NTT Data may want parts of Perot Systems. A source tells Reuters talks will continue for the rest of the month.
- Dell is sticking to its guns that the EMC deal will close by October (vs. paying a $4B breakup fee). It hoped to price $10B of debt on Wednesday, but roiling credit markets are forcing a delay on that piece as well.
- Previously: Dell/EMC deal hung up on financing (Feb. 11 2016)
- Previously: EMC insists Dell deal on track; VMware hit with downgrades due to guidance (Jan. 27 2016)
- Charter Communications (NASDAQ:CHTR) -- awaiting action from California on its buyout of Time Warner Cable and Bright House Networks -- has extended its contract with CEO Tom Rutledge for another year, to Feb. 13, 2017.
- Once upon a time, the company likely hoped that Rutledge would already be chief of the combined company. Charter has an agreement with the Advance/Newhouse Partnership where it will pursue its intention to offer Rutledge the positions of CEO and chairman in a new five-year employment deal.
- Previously: Report: California speeding up Charter-TWC review (Feb. 11 2016)
- Previously: Charter -3.3% as loss widens on merger costs (Feb. 04 2016)
- In an 8-K filing, Cablevision (NYSE:CVC) says it's settled litigation with Thomas C. Dolan -- a boardmember, and member of the owning Dolan family -- over compensation issues between 2005 and 2008.
- The company will pay Thomas Dolan $21M in the agreement, and Charles Dolan (chairman) and James Dolan (NYSE:CEO) will pay the company $6M in partial reimbursement if Cablevision's merger with Altice (OTCPK:ATCEY) isn't consummated.
- Thomas Dolan is executive VP of Strategy and Development at Cablevision, and was formerly CEO of Rainbow Media -- spun off from Cablevision to become AMC networks.
- Previously: New York City, State file objections to Altice-Cablevision deal (Feb. 05 2016)
- Previously: Union tells New York regulators to kill Altice-Cablevision deal (Jan. 27 2016)
- Demand Media (DMD +7.7%) has shuffled its board classes in order to comply with the law, and in connection with naming Mitchell Stern as a director.
- Stern -- previously CEO of Freedom Communications, and before that CEO of DirecTV -- will serve as a Class II director and as chairman of the audit committee, replacing Brian Regan, who's moving to be chairman of the nominating committee.
- Correspondingly, Victor Parker resigned his Class I seat and was re-elected as a Class II director who'll face re-election at the 2018 annual meeting. That move was to more evenly distribute directors among the company's three classes, as required by Delaware law.
- Shares moved up sharply today but are still just 20% over the company's 52-week low, hit last Sept. 29.
- Web.com (WEB +10.6%) had a very good day after beating Q4 estimates and announcing it's acquiring local online ad services firm Yodle for $342M. SunTrust reacted to the news by upgrading to Buy.
- SMB online services rival Wix.com (WIX +9%) also rose sharply. Wix is now up 20% since beating Q4 estimates and issuing strong 2016 guidance on Wednesday morning.
- On its earnings call (transcript), Web.com guided for 2016 revenue of $570M-$580M and EPS of $2.62-$2.76, in-line with a consensus of $577M and $2.70. Q1 guidance is for revenue of $138M-$140M and EPS of $0.61-$0.63, below a consensus of $142M and $0.66. Full-year free cash flow guidance is at $130M.
- The guidance doesn't take the Yodle deal into account. Web.com plans to revise its guidance after the deal's closing (expected by the end of Q1).
- CEO David L. Brown talked up the cross-selling opportunities provided by Yodle. "Web.com has 3.4 million customers who are potential candidates for Yodle's high-end solutions. The reverse is also true as Web.com has solutions which can be offered to Yodle's customer base." He also observed Yodle brings with it ~$50M worth of net operating loss carry-forwards (NOLs) - as it is, Web.com expects its existing NOLs to allow its cash taxes to "remain in the low single-digit range through 2017 with a gradual increase after that."
- Beaten-up Micron (MU +3.4%) made it back above $10 today after hosting its Winter Analyst Conference this morning. Cowen and Wells Fargo were among those to provide positive reactions.
- Following major 2015 DRAM price declines, Cowen's Tim Arcuri is pleased with Micron's DRAM outlook. "Forward industry commentary remained constructive on a combination of structural supply constraints and, we think, a more candid desire from Samsung to maintain memory profits now that mobile has imploded."
- Arcuri is worried about NAND oversupply as industry 3D NAND production ramps, but likes the competitiveness of Micron and Intel's 3D NAND offerings. "[P]er our estimates, [48-layer 3D NAND] is ~60-70% more bits/wafer than 1z planar [NAND] – which reeks of an over-shoot and one where we remain very bearish on the supply side ... Relative to MU’s own solution, our field work continues to suggest a very strong offering with a truly unique 3D NAND process and is the “dark horse” in the 3D NAND battle and the one about which Samsung is most concerned."
- Wells' David Wong: "In our view, the key takeaway from the presentations is that Micron’s upcoming DRAM and NAND technology transitions could help drive bit growth over the next two years, after several quarters in which bit growth paused, while also driving down cost per bit and helping Micron’s margins."
- Wong recapped Micron's near-term DRAM/NAND bit growth and cost/bit outlook: "The FY17 vs FY15 expected CAGR for DRAM bit shipments is 20-30%. NAND bit output is expected to continue drifting sideways through much of the rest of FY16, and then ramp steadily with a fairly steep slope through FY17, driven, we think, by ramping 3D NAND output. The FY17 vs FY15 expected CAGR for NAND bit shipments is 30-40% ... The 2 year CAGR, FY17 vs FY15, for average cost per bit is expected to be down 15-25% for DRAM and down 20-30% for NAND."
- In its conference slides (.pdf), Micron forecast DRAM and NAND bit demand will respectively see ~25% and ~40% CAGRs from 2016-2019, with the high-margin server/storage market delivering 40% and 60% CAGRs. PCs are expected to account for less than 20% of DRAM bit demand by 2019.
- On its list of 2016 operating priorities, Micron includes ramping 20nm DRAM and 3D NAND, and commercializing 3D XPoint. The company forecasts 3D NAND will account for over 50% of NAND output by the fall, and is aiming for 27% 3D XPoint penetration for targeted workloads - the list includes data mining and warehousing, virtual desktops, and transaction processing - by 2022.
- VeriSign (VRSN +3.8%) closed near $77 after beating Q4 estimates and reporting it added 4.6M net new domain names - up from Q3's 1.68M and Q4 2014's 0.59M, and bringing the total base to 139.8M (+6.3% Y/Y).
- The company also disclosed it has upped its buyback authorization by $611M, raising its available funds to $1B; that's good for repurchasing over 11% of shares at current levels. $150M was spent on buybacks in Q4, and $622M over the whole of 2015.
- A slightly soft 2016 outlook is being brushed off: On the earnings call (transcript), VeriSign guided for 2016 revenue of $1.11B-$1.135B (+5-7% Y/Y) vs. a $1.14B consensus. Op. margin is expected to rise to 62.5%-63.5% from 2015's 61.5%, and the capex budget has been set at $40M-$50M.
- 12.2M new domain names were processed vs. 9.2M in Q3 and 8.2M a year ago. CEO James Bidzos attributed the Q4 domain name strength to Chinese/Asia-Pac demand - Chinese domain name investment/speculation has surged in recent months. Bidzos: "While we believe China and the Asia-Pacific region will continue to perform well, we expect these markets to return to more normal levels in 2016."
- Non-GAAP operating expenses fell by $1M Y/Y to $103M. For the whole of 2015, free cash flow rose 11% to $629M (well above net income of $405M). VeriSign ended 2015 with $1.9B in cash ($753M in the U.S.) and over $1.2B in debt.
- VeriSign's Q4 results, earnings release
- Black Box (BBOX +3.7%) is up 13% over the last two days amid disclosed purchases from director John Heller, EVP Ronald Basso, and departing CEO Mike McAndrew.
- Heller bought 5K shares on Wednesday at $8.20. McAndrew bought 12K on Wednesday at $8.49. Basso bought 2K yesterday at $9.06. (source: InsiderInsights.com)
- The purchases came with the IT infrastructure hardware provider down over 50% from a 52-week high of $22.70 (set last February). Shares fell last month after mixed FQ3 results were posted.
- FireEye (FEYE -3.3%) made fresh post-IPO lows today after posting nearly in-line Q4 results and providing a mixed bag of sales, EPS, and billings guidance. Several firms lowered their targets, but none downgraded.
- 2016 billings guidance of $975M-$1.055B implies ~20% Y/Y organic growth, in-line with FireEye's January remarks. On the earnings call (transcript), CFO Mike Barry stated recent acquisitions iSIGHT (threat intelligence) and Invotas (security orchestration/automation software) are expected to deliver 2016 billings of $60M-$65M between them. He also disclosed FireEye paid $30M for Invotas - $19M in cash and the rest in stock.
- The company asserts deal activity remains strong - 47 $1M+ transactions were closed in Q4 vs. 43 a year ago, with 85% of them featuring multiple products. Nonetheless, product (hardware/software) revenue fell 2% Y/Y. Product subscriptions (+56%), support (+57%, driven by past deals), and professional services (+60%, boosted by Mandiant) were stronger.
- Barry forecasts FireEye will "keep a good portion of our operating costs basically flat during 2016 as we move more resources to more high-growth areas." $70M-$80M in op. cash flow is expected in 2016. GAAP operating expense srose 20% Y/Y in Q4 to $245.1M, a slower growth rate than in recent quarters. $135.4M was spent on sales/marketing, $71.7M on R&D, and $38M on G&A.
- CEO Dave DeWalt insists FireEye's European sales team "bounced back very nicely" in Q4 following a rough Q3. "I feel like the organization's taking better shape. We have new leadership there."
- Oppenheimer's Shaul Eyal (Outperform rating, target cut by $4 to $35): "We remain attracted to FEYE given: 1. strength in recurring subscription and support billings (+~30% YoY); 2. improvement in EMEA/APAC; 3. an accelerated path to profitability; 4. eventual take-out candidate; and 5. compelling valuation levels of 1.5X EV/FY17 revenue."
- FireEye's results/guidance, earnings release
- CTC Media (CTCM +2.2%) said today it's gotten the last tranche of the price for its sale of 75% to the firm to UTH Russia.
- The company had planned to comply with a Russian Mass Media Law that went into effect Jan. 1 with a sale of a 75% stake to UTH, the vehicle of billionaire Alisher Usmanov, for $200M. The deal was approved in December.
- Of the $200M, $50M was held back and subject to adjustment depending on H2 2015 performance. CTC received $42.5M after a reduction, bringing the total consideration to $193.1M.
- The company's awaiting a license from the U.S. Treasury to authorize the transaction, and expects the merger will finally close a month after it gets that license.
- As for per-share amount going to stockholders, CTC says it's "unable to estimate" but it expects it will be "at the lower end of the upper half of the range approved by stockholders of $1.77 to $2.19 per share." CTC Media's trading at $1.89 on Nasdaq.
- Vonage Holdings (NYSE:VG) is up 0.4% today after a "messy" quarter, according to Oppenheimer, which cut its price target to $6.50 from a previous $8.
- The company had initially dropped off heavily, as much as 11.2% yesterday, after it supplied light forward guidance in its Q4 earnings report. But shares recovered to finish with a 1.5% gain.
- The acquisition of Icore and termination of Basic Talk hurt the guidance, says analyst Timothy Horan, but "We believe the results mask the underlying strength of the business. Business bookings in the quarter were strong, and VG is exiting unprofitable consumer products, which we believe is the correct strategy."
- The company can use free cash flow to keep making accretive acquisitions, he writes, and the company trades at a big discount to pure-play business peers.
- Shares are trading at $4.74, implying 37% upside in Oppenheimer's target. Meanwhile, FBN Securities upgraded the shares to Outperform.
- Previously: Vonage down 7.3% after guiding to lighter full-year revenues (Feb. 11 2016)
- Previously: Vonage Holdings beats by $0.01, beats on revenue (Feb. 11 2016)
- Thomson Reuters (NYSE:TRI) has amended its normal course issuer bid, in connection with a plan to buy back an additional $1.5B in shares.
- The amendment increases common shares that the company can repurchase by another 9.2M. That means up to 39.2M common shares (about 5% of issued and outstanding shares as of last May) can now be repurchased until May 27, 2016.
- Under the current NCIB, the company bought back about 25.64M shares between May 28 of last year and this Tuesday, for about $982.8M (averaging $38.34/share).
- Shares are up 3.6% today, to $35.85.
- USA Technologies (USAT +13%) is near a 52-week high of $3.71 after posting an FQ2 beat. The mobile payments/telemetry services firm is once more reiterating FY16 (ends June '16) guidance for revenue of $69M-$71M and 75K+ net new connection adds; the FY16 revenue consensus is at $71.5M.
- Metrics: 20K net new connections were added in FQ2 vs. 16K in FQ1 and 12K a year ago, bringing the total base to 369K. 350 new customers were added vs. 675 in FQ1 and 550 a year ago, increasing the base to 10,625. Transaction volume rose 9% Q/Q and 22% Y/Y to $138M.
- Financials: Free cash flow improved to $507K from $362K in FQ1 and -$3M a year ago. License/transaction fee revenue rose 30% Y/Y to $13.7M, and equipment sales 106% to $4.8M; gross margins for both businesses rose. GAAP operating expenses rose 31% Y/Y to $9.8M. USAT ended 2015 with $14.8M in cash, $7M in credit line debt, and $2.1M in long-term debt.
- USA Technologies' FQ2 results, earnings release
- Last month: USAT buys assets of vending payment tech firm for $5.6M
- Verizon (VZ +1.3%) is shuttering two cloud services it offers to the public, consolidating more customers in its other offerings.
- The carrier is closing Verizon Public Cloud Reserved Performance and Marketplace. Verizon Cloud Storage users won't be affected.
- It's encouraging bumped users to move to a similar offering, its Virtual Private Cloud, before April 12 or data will be "irrecoverably deleted."
- Ten days after reporting Apple plans to unveil a new 4" iPhone (called the 5se) and the iPad Air 3 on March 15, 9to5 Mac reports Apple (AAPL +0.2%) plans to begin selling the devices online and in retail stores on Friday, March 18. Pre-orders are said to be "unlikely."
- The 5se, which could appeal to those partial to smaller iPhones, has been rumored to sport an A9 CPU and M9 motion co-processor, an 8MP rear camera and 1.2MP front camera, and Bluetooth 4.2, 802.11ac Wi-Fi, and NFC radios. Air 3 rumors have mentioned a smart connector along with an improved display, speakers, and battery life. Apple disclosed on its FQ1 call 60% of iPhone owners haven't yet upgraded to the 6/6+ or 6S/6S+.
- Separately, sources tell The Hollywood Reporter Beats co-founder Dr. Dre is starring in and producing a six-episode TV series called Vital Signs that's being bankrolled by Apple.
- The magazine adds Dre's series will likely be distributed via Apple Music (now has over 11M paid subscribers), and that it's not clear if distribution will occur via other platforms such as Apple TV and the iTunes store. The show is said to be a semi-autobiographical "dark drama with no shortage of violence and sex."
- Variety reported in September Apple has held initial talks with Hollywood execs about financing original content - a field where Netflix and Amazon have made huge investments. Multiple sites have reported Apple has hatched and (for now) suspended plans to launch an online TV service.
- Sirius XM (NASDAQ:SIRI) is up 1.2% today, following news that its affiliate Sirius XM Canada said it was approached for a potential deal.
- The Canadian unit is in early stage talks, and Sirius XM owns about 32% of it. Meanwhile, The Globe and Mail says that top shareholders were examining a go-private deal that could value it at C$750M (about $538M).
- That's about C$4.25/share; Sirius XM Canada jumped 15.8% in Toronto to C$4.26.
- Ellie Mae's (ELLI +17.6%) big Q4 beat is accompanied by guidance for 2016 revenue of $317M-$321M and EPS of $1.79-$1.86, above a consensus of $306.6M and $1.72. Reported 2015 revenue and EPS was respectively $253.9M and $1.69.
- Q1 guidance is in-line: Revenue of $67.5M-$68.5M and EPS of $0.29-$0.31 vs. a consensus of $68M and $0.31.
- Active users of Ellie Mae's Encompass mortgage origination software rose 25% Y/Y in Q4 to 136,167, with SaaS Encompass active users rising 43% to 121,406. Revenue per average active Encompass user rose 10% to $475.
- GAAP operating expenses rose 30% Y/Y to $36.4M (compares with 39% revenue growth). Ellie Mae ended 2015 with $85M in cash and no debt.
- CEO Jonathan Corr: "We have built a powerful all-in-one mortgage management platform and network that provides one system of record for lenders to originate and fund mortgages, is deeply integrated with a broad array of vendors, investors and agencies, and allows lenders to achieve loan quality, regulatory compliance and operating efficiency." He declares his company's 2016 new business pipeline to remain "very robust."
- Ellie Mae's Q4 results, earnings release
- Cavium (CAVM +9.6%) CFO Arthur Chadwick discloses he bought 20K shares on Tuesday at $47.77, raising his stake to 68,172.
- The network processor/ARM server CPU developer is posting big gains a day after making a fresh 52-week low of $45.59. Shares rose two weeks ago after Cavium posted nearly in-line Q4 results and better-than-feared guidance, but soon gave back their gains as markets sold off.
- Knowles (KN -12.1%) has tumbled towards $10 following its Q4 report. Though officially beating consensus by $5.8M, Q4 revenue of $310.5M was just slightly above the guidance ($310M) given in Knowles' Jan. 13 pre-announcement.
- Knowles used the Q4 report to state it plans to sell its consumer electronics speaker and receiver component business. A $191.5M Q4 impairment charge was recorded related to the business, which carries relatively low gross margins.
- Q1 guidance, which excludes the speaker/receives ops, is for revenue of $170M-$190M and EPS of $0.01-$0.07. The pre-earnings consensus, which naturally includes the business, was at $265.3M and $0.09. On the earnings call (transcript), Knowles stated reclassifying speakers/receivers as a discontinued business will have an $87M Q1 sales impact.
- The rest of Knowles' MCE unit is expected to see revenue drop 30% ($34M) Q/Q due to "normal seasonality and lower shipments to a North American OEM as they adjust their inventory levels to reflect current market demand." That's almost certainly a reference to Apple, which offered light calendar Q1 sales guidance two weeks ago. Specialty component revenue is expected to drop 8% Q/Q following a strong Q4 led by hearing aid component sales.
- Gross margin is expected to rise to 36%-38% from Q4's 32.8% due to the speaker/receiver reclassification. However, GM for continuing ops is expected to drop 500 bps Q/Q due to lower volumes/capacity utilization and a lower ASP for "mature" products.
- Q4 sales benefited from "improving trends" at Chinese mobile OEMs. CEO Jeff Niew: "We expect growth from these customers in 2016 as they grow their share and we benefit from multi-[microphone] adoption and higher value audio solutions." Sales to Samsung fell Q/Q as expected. Kiew: "We continued to maintain strong microphone share at this customer, but sales remained weak due to mix shifts to lower-end handsets within their portfolio, as well as continued share loss experienced by this customer."
- Knowles' Q4 results, earnings release
- Rovi (ROVI +16.3%) has surged after soundly beating Q4 estimates. On the earnings call (transcript), CFO Peter Halt stated Q4 benefited from catch-up payments by AT&T and Sony - Rovi renewed its licensing deals with both companies in December, while also expanding the scope of the AT&T deal. The payments offset lower analog copy protection (ACP) licensing revenue and the end of a business relationship with a set-top licensee.
- For now, Rovi's 2016 guidance doesn't include revenue from Comcast and Dish, though Rovi expects to successfully renew its licensing deals with both firms. Excluding Comcast/Dish, the company expects 2016 revenue of $490M-$520M and $1.35-$1.65; consensus is at $570.1M and $2.01.
- Q4 details: The AT&T payment helped service provider revenue rise 18% Y/Y to $124M. Consumer electronics revenue fell 8% to $22.3M, with Rovi blaming "continuing challenges in the CE industry." Other revenue fell 32% to $1.6M due to the ACP decline.
Boosting EPS: Non-GAAP costs/expenses rose only 2% Y/Y to $82.3M thanks to an 8% Y/Y drop in headcount. No buyback occurred in Q4. Rovi ended 2015 with $325M in cash and $967M in debt.
- Rovi's Q4 results, earnings release
- Activision Blizzard (NASDAQ:ATVI) is down 10.1% today following yesterday's earnings miss and a laundry list of price-target cuts from analysts.
- The company hit another milestone in its $5.9B deal to acquire King Digital (KING +0.1%), though, as the European Commission has given clearance.
- Activision had gotten a required OK from South Korea on Monday.
- The key remaining hurdle is the sanction of its scheme of arrangement by the High Court of Ireland, where King is domiciled.
- Previously: Analysts lower Activision price-target after earnings miss (Feb. 12 2016)
- Previously: Activision Blizzard tanks 16% as earnings, outlook disappoint (Feb. 11 2016)
- Previously: Activision clears King-buyout hurdle as South Korea gives OK (Feb. 08 2016)
- Having gone into earnings $0.21 above a 52-week low of $4.70, Brightcove (BCOV +16.3%) has surged after beating Q4 estimates and guiding for 2016 revenue of $145M-$147M, above a $143.9M consensus and reported 2015 revenue of $134.7M.
- 2016 EPS guidance is at $0.02-$0.07 vs. a $0.06 consensus. Q1 guidance is for revenue of $34.7M-$35.2M and EPS of -$0.01 to $0.01 vs. a consensus of $35.3M and $0.00.
- Continuing recent trends, total customers for Brightcove's online video platform fell by 115 Q/Q to 5,047, while premium customers rose by 11 to 1,863. Average revenue per premium customer rose by $2K Q/Q and $9K Y/Y to $69K. New media customers included CBS Shows and Readers Digest; new digital marketing (ad) customers included AMC, Cars.com, Ford, and Starwood.
- GAAP operating expenses fell by $100K Y/Y to $23.5M. Brightcove ended 2015 with $27.6M in cash and no debt.
- Brightcove's Q4 results, earnings release
- CNBC reports Visa's (NYSE:V) stake in Square (SQ +8.5%), which was disclosed yesterday evening, stems from Visa's 2011 investment in the mobile card-reader/payment-processing firm.
- Visa was only now required to disclose the size of its Square stake; it didn't disclose the size of its investment in 2011. Square's IPO prospectus didn't list Visa as a major shareholder - Jack Dorsey and fellow co-founder James McKelvey were respectively reported to have 21.9% and 8.4% stakes, and VC firm Khosla Ventures a 15.5% stake.
- Of note: Visa only has a 9.99% stake in Square's Class A shares. Its total stake in the company is estimated to be around 1.1%.
- Regardless, Square remains sharply higher today, and is back above its $9 IPO price. Q4 results don't arrive until the afternoon of March 9.
- Though Blucora (BCOR -14.7%) slightly beat Q4 EPS estimates (while missing on revenue), the company is guiding for Q1 EPS of $0.88-$0.96 and 2016 EPS of $0.96-$1.12, below consensus estimates of $1.07 and $1.32. Q1 is a seasonally big quarter for Blucora's TaxAct tax prep software business.
- Revenue guidance is stronger - Q1 revenue of $162.5M-$167M and 2016 revenue of $444M-$462.5M vs. consensus estimates of $163.9M and $451.5M.
- Q4 details: Blucora's Wealth Management unit, the product of the recent HD Vest acquisition, saw revenue rise 4% Y/Y to $82.1M, and op. income rise 18% to $12.2M. The Tax Preparation segment, which features TaxAct, saw revenue rise 14% to $2.9M, and op. loss grow 47% to $4.5M. Q4 is a seasonally weak quarter for TaxAct.
With the HD Vest deal closed, Blucora ended 2015 with $56M in cash, $11M in available-for-sale investments, $385M in long-term debt, and $186M in convertible debt.
- Blucora's Q4 results, earnings release
- Varonis' (VRNS +16.7%) Q4 beat has been accompanied by guidance for 2016 revenue of $153.5M-$156.5M (+21%-23% Y/Y) and EPS of -$0.42 to -$0.49 vs.a consensus of $152.6M and -$0.46.
- Q1 guidance is for revenue of $28.3M-$28.8M (+23%-25% Y/Y) and EPS of -$0.38 to -$0.39 vs a consensus $28.6M and -$0.40.
- Top-line performance: License revenue (drives future maintenance/services revenue) rose 30% Y/Y in Q4 to $28.2M, on par with total revenue growth. 377 new customers were added vs. 363 a year ago, raising the total to ~4,350. U.S. revenue rose 36% Y/Y to $24.4M, and EMEA revenue 32% to $16.8M. Rest of World revenue fell 16% to $2.6M.
- Financials: GAAP operating expenses rose 21% Y/Y to $37M - $24.3M was spent on sales/marketing, $8.2M on R&D, and $4.5M on G&A. Varonis ended Q4 with $106.3M in cash and no debt (compares with a $415.5M market cap).
- Varonis' Q4 results, earnings release
- SunEdison (SUNE -21.8%) is now down 32% over the last two days amid news a New York judge has granted a request by Latin American Power investors for a restraining order blocking SunEdison asset transfers pending a Feb. 25 hearing regarding whether the hold should remain in place as the investors pursue a $150M arbitration claim.
- An exception exists for asset transfers of fair value and in the ordinary course of business. The investors have argued an asset transfer hold is necessary because SunEdison could be insolvent by the time their case ends.
- SunEdison's market cap is down to $506M. The company hasn't yet announced a Q4 earnings date.
- Yesterday: Solar stocks hammered again; SunEdison tumbles after lawsuit
- Zayo Group Holdings (NYSE:ZAYO) is 8.5% lower this morning after the data infrastructure provider posted a loss for its fiscal Q2, missing on top and bottom lines.
- Adjusted EBITDA of $218.9M also fell slightly short of an expected $220.5M. The company's noting sequential growth: Revenues are up Q/Q at a 3% annualized sequential growth rate, EBITDA is up at a 7% annualized sequential rate, and net loss of $10.8M was less than the previous quarter's loss of $15.2M.
- Capex was $172.4M, and Zayo added 7,905 route miles and 813 buildings to the network. At year-end, it had $176.2M of cash, and $440.8M available under a revolving credit facility.
- Press Release
- Cleveland Research reports checks with Palo Alto Networks (PANW -5.7%) channel partners point to moderating growth over the next several quarters, and less enthusiasm about potential upside. Talks point to growth expectations in the 30%-40% range vs. a prior 40%.
- With investors in a risk-averse mood, Palo Alto has fallen towards $120. The next-gen firewall/security service provider was among many high-growth enterprise tech names crushed last Friday and Monday following disappointing guidance from Tableau and LinkedIn. Today's selloff also comes after FireEye and CyberArk issued mixed guidance yesterday afternoon.
- Wells Fargo offered more upbeat commentary on Wednesday, stating resellers indicate enterprises are still in the early stages of buying newer Palo Alto products and predicting the company will gain more share as larger enterprises look to buy more products from a single vendor.
- ChipMOS (IMOS -7.2%) reports January revenue of $47.9M, +1.7% M/M and -10.7% Y/Y. The annual decline narrowed from the 17.4% reported for December and the 18% reported for the whole of Q4.
- The company adds it resumed normal operations on Feb. 6 following "only a very minor impact at its manufacturing operations in the Tainan Science Park following the earthquake earlier that day."
- Shares have made new 52-week lows. They fell last month after ChipMOS announced its U.S. and Taiwan-listed units are merging.
- Though IPG Photonics (IPGP -7.1%) beat Q4 EPS estimates and posted in-line revenue, the company is guiding for Q1 revenue of $200M-$215M and EPS of $0.88-$1.03, below a consensus of $225.8M and $1.09.
- The industrial laser maker is still "targeting double-digit growth" for 2016. The 2016 revenue growth consensus is at 12.6%.
- Top-line performance: IPG's core materials processing product sales rose 9% Y/Y in Q4, with strong welding/cutting application growth offsetting lower sales for marking/engraving applications. Sales for other applications fell 11%, with advanced applications weakness offsetting medical/telecom strength.
China and Japan delivered double-digit growth, and Northern and Western Europe "more moderate growth." Sales fell in Russia and Turkey. CEO Valentin Gapontsev: "We expect continued strong growth for some of our recently introduced products including the QCW lasers, high power pulsed lasers as well as the tri-focal brazing laser. The growth will be enhanced by our rich product pipeline. New product introductions for 2016 include new industrial laser systems, laser projection systems, ultra-fast pulsed, UV and mid-IR lasers."
- Financials: Gross margin fell 10 bps Q/Q and 30 bps Y/Y to 54.6%. Op. margin was flat Q/Q and down 30 bps Y/Y to 37.1%. GAAP operating expenses rose 13% Y/Y to $39M (compares with 8% revenue growth). IPG ended Q4 with $689.1M in cash and $20M in debt.
- IPG's Q4 results, earnings release
- Atlantic Equities has downgraded NetApp (NASDAQ:NTAP) to Underweight ahead of the storage hardware/software vendor's Feb. 17 FQ3 report.
- Shares are down 3.3% premarket to $21.01, putting them close to a multi-year low of $20.66 (hit on Jan. 20). NetApp now trades for only 8.2x an FY17 (ends June '17) EPS consensus of $2.55.
- Two months ago: NetApp buying flash array vendor SolidFire for $870M in cash
- Baidu (NASDAQ:BIDU) has received a non-binding offer from CEO Robin Li and Qiyi.com CEO Yu Gong to acquire Qiyi for an enterprise value of $2.8B on a cash-free and debt-free basis. Baidu, which owns 80.5% of Qiyi, has formed a special committee to review the offer.
- The proposal envisions Qiyi, a top player in the Chinese online video market along with Youku Tudou and Tencent, remaining "a strategic partner" to Baidu following a sale. Last year, Alibaba struck a deal to buy Youku Toudu that valued the latter at $3.7B net of cash.
- BIDU +4.1% premarket to $146.95. Nasdaq futures are up 1%. Baidu's Q4 report arrives on the afternoon of Feb. 25.
- Under pressure from government officials, Facebook (NASDAQ:FB) is more aggressively policing material it views as supporting terrorism.
- The world's largest social network is now quicker to remove users who back terror groups, investigate posts by their friends, and has a team that focuses on terrorist content. The unit is also helping promote counter speech, or posts that aim to discredit militant groups.
- Facebook's not the only one figuring out how to curb extremist propaganda. Twitter last week suspended 125K accounts associated with ISIS.
Thursday, February 11, 2016
- CenturyLink (NYSE:CTL) rose 10.9% today, following a Q4 report that saw the company boost earnings by a third and project EPS above analyst consensus for the coming quarter and the full year.
- In the company's earnings call, CEO Glen Post says that a "number of interested parties" are interested in its data center business if it eventually decides to sell.
- That includes "an outright purchase of our data centers and colocation business, a partnership and/or a joint venture," Post said. The benefit of a JV means that CenturyLink could provide data-center services to its enterprise customers without carrying the costs of the assets.
- Meanwhile, CFO Stewart Ewing says the company will run a trial of metered usage later this year -- an idea that has been associated with Comcast, but one that CenturyLink and others think could boost their base. "We are considering that for second half of the year," Ewing said. "We think it is important and our competition is using the metered plans today and we think that explore those starts and trials later this year is our expectation."
- Previously: CenturyLink beats with Q4 results, guides high on earnings (Feb. 10 2016)
- Previously: CenturyLink names new sales/marketing president, chief marketing officer (Feb. 10 2016)
- Previously: CenturyLink expands gigabit service to Houston-area businesses (Feb. 08 2016)
- Telefonica (TEF -2.9%) -- in the process of spinning its infrastructure assets into a company called Telxius -- says in a filing that it is considering an IPO for the new unit.
- It's analyzing "different strategic alternatives, among which is a possible initial public offering."
- In announcing the spinoff, Telefonica said the new company would hold about 15,000 towers and a lengthy fiber network including undersea cable, along with possible third-party assets.
- The Spanish carrier is looking to improve profitability along with raising cash and cutting debt.
- ADRs rose 1.2% after hours today.
- The Californic Public Utilities Commission has shortened its time frame for coming to a decision on Charter Communications' (CHTR -1%) buyout of Time Warner Cable (TWC +0.1%) and Bright House Networks, CTFN reports.
- The administrative law judge on the case has set a final decision for May 12, earlier than the previously scheduled June 10. That means a proposed decision could come April 12.
- The schedule shift comes amid grumbling by deal proponents who are eager to get it done. Industry analyst Craig Moffett had called the state's timeline "exceedingly tedious." Charter has said they are ready and willing to close on the deal and hoped for quicker action by California.
- Previously: Charter -3.3% as loss widens on merger costs (Feb. 04 2016)
- Previously: Charter-TWC: Progress inches along; Moffett raises deal odds (Jan. 28 2016)
- Ad campaign servicer Sizmek (SZMK +4.2%) beat expectations on top and bottom lines for Q4 earnings,
- The company posted a GAAP loss of $3.75/share due to a noncash charge of $111.6M tied to goodwill and asset impairment.
- Revenues grew 13.4% overall; core product revenues were up 41% (up 47% in constant currency), driven by mobile and NAM resvenues. NAM represented 60% of total revenue in Q4 and grew 29%.
- Sizmek had $42M in cash and equivalents at year's end, against no long-term debt.
- It's guiding to full-year revenues of $182M-$190M and adjusted EBITDA of $16M-$18M, both in line with expectations.
- Conference call link
- Press Release
- Having gone into earnings just $0.09 above a 52-week low of $2.15, Groupon (NASDAQ:GRPN) has jumped to $2.63 after handily beating Q4 estimates, hiking its 2016 adjusted EBITDA guidance, and reiterating its 2016 revenue guidance.
- Boosting Q4 EPS: $112.5M was spent to buy back 35.5M shares. $192.9M was spent on buybacks in Q3.
- Billings: Gross billings fell 1% Y/Y in Q4 to $1.71B (+4% exc. forex), after having dropped 2% in Q3. With revenue rising 3.8% excluding the impact of the TMON divestiture, take rate rose. North American billings remained strong, rising 10.7% Y/Y to $1.05B. EMEA billings -13.1% to $487.1M; Rest of World -21.4% to $169.5M.
- Segment performance/metrics: Local (daily deals) billings -4% Y/Y to $812M; revenue -6% to $279.7M. Goods (e-commerce) billings +4% to $720.4M; revenue +10% to $602.3M. Travel billings -6% to $174.6M; revenue -10% to $35.2M.
- Metrics: Units sold were roughly flat Y/Y at 62M. Active customers rose by 0.3M Q/Q and 1.5M Y/Y to 48.9M. Trailing 12 month customer spend fell by $2 Q/Q and $7 Y/Y to $130.
- Financials: With a mix shift towards Goods weighing, GAAP gross profit fell 2% Y/Y in spite of 4% revenue growth. Operating expenses rose 9% Y/Y to $377.2M, thanks to $5.4M in restructuring charges and a a 39% increase in marketing spend to $83.2M. 2015 free cash flow was $208.1M, up from $168.9M in 2014. Groupon ended 2015 with $853.4M in cash and no debt.
- CEO Rich Williams, three months removed from taking over the top job: "Following a stronger than expected fourth quarter, we enter 2016 with a continued focus on streamlining our global operations, reducing our reliance on low margin products in our shopping business and rekindling our customer acquisition efforts to set the stage for accelerated growth."
- Groupon's results/guidance, earnings release, slides (.pdf)
- Corus Entertainment (OTCPK:CJREF -3.5%) is planning a special meeting to consider its proposed $2.65B acquisition of Shaw Media, a unit of Shaw Communications (SJR -2.2%).
- It's set a meeting for March 9 and issued an information circular. The deal was to be financed wth cash and issuing Class B non-voting stock; Corus expecs it can maintain its current dividend of $1.14/B share and pursue $40M-$50M in annual cost savings within 24 months.
- Holders of Corus' Class A and Class B shares are entitled to vote on the deal, including issuing 71.36M class B shares that would go to Shaw in the deal.
- If approved, the deal's still conditioned on approval by regulators at the Canadian Radio-television and Telecommunications Commission.
- Previously: Shaw +15% early; Corus to buy media unit for C$2.65B (Jan. 13 2016)
- Quotient Technology (NYSE:QUOT) -- the former Coupons.com -- is up 10.1% after hours after comfortably beating revenue expectations in Q4 and guiding revenue to the high side for the coming quarter.
- EBITDA of $7.5M was down from a prior $8.3M but easily beat consensus expectations for $1.7M. Revenue from media was up 29%. Total digital coupon transaction in the quarter came to a record 469M (up 25%).
- Cash from operations was $3.7M, down from a prior-year $6.1M. It's authorized a new buyback program of $50M in common stock, through February 2017.
- It's guiding to Q1 revenue of $59M-$62M (above a consensus of $58M), and EBITDA of $2M-$3M (light of an expected $4.6M).
- For the full year, it's forecasting revenues of $250M-$260M (vs. consensus $249.6M), and EBITDA of $20M-$25M, in line.
- Press Release
- Visa (V -2.3%) is one of the top five shareholders in payments firm Square (SQ -3.1%), according to a 13G filing posted this evening.
- The world's largest payment network operator has a 9.99% equivalent stake in Square Class A. It had invested in the start-up back in 2011.
- Shortly after Square went public in the fall, billionaire Leonard Blavatnik disclosed an 11.4% passive stake in the firm.
- Previously: BTIG: Three financials to buy amid the carnage (Jan. 11 2016)
- CRAY's Q4 beat was accompanied by guidance for Q1 revenue of $100M, above a $97.2M consensus.
- Full-year sales guidance of ~$825M is once more reiterated; consensus is at $817.7M. Op. margin is expected to be up Y/Y in 2016, with gross margin rising by 100-200 bps.
- Gross margin fell to 32% from 34% a year ago. GAAP operating expenses rose 13% Y/Y to $56M. Cray ended 2015 with $285M in cash and no debt.
- CRAY +3.1% after hours to $35.00.
- Cray's Q4 results, earnings release
- Last month: Cray ups 2015 guidance, reiterates 2016 guidance
- Dun & Bradstreet (DNB -0.6%) beat expectations for Q4 profits and narrowly missed on revenue despite growing adjusted sales 10% in constant currency.
- Revenue breakout: Americas, $422M (up 10%); Non-Americas, $82.4M (down 1%). Ex-currency, non-Americas results would have been up 7%, as foreign exchange had a 7.2% unfavorable effect.
- Operating income was up 14% in the Americas business, to $174.6M, and down 16% elsewhere, to $19.6M.
- "I am pleased that our strategy is taking hold and we are seeing accelerating organic sales and deferred revenue growth, which give us momentum as we head into 2016," sadi CEO Bob Carrigan.
- The company bumped its quarterly dividend by $0.02, to $0.4825/share.
- Shares are flat in after-hours trading.
- Conference call to come tomorrow at 8 a.m. ET.
- Press Release
- Immersion (NASDAQ:IMMR) has sued Apple (NASDAQ:AAPL) and AT&T before the ITC and a Delaware federal court for allegedly infringing its haptic feedback IP.
- The iPhone 6/6+, 6S/6S+, and Apple Watch are covered by the suit. As usual, the ITC suit features a request for an import ban.
- Immersion, which has inked IP licensing deals with Samsung, Huawei, HTC, and various other Android OEMs, has previously said it "intends to license Apple." The iPhone 6S/6S+'s 3D Touch feature makes use of haptic feedback, as does the Force Touch feature found on the Apple Watch and certain MacBooks.
- Immersion has jumped to $8.00 in after hours trading.
- Amkor's (NASDAQ:AMKR) Q4 miss has been accompanied by guidance for Q1 revenue of $785M-$835M and EPS of -$0.03 to -$0.15, below a 3-analyst consensus of $864M and $0.01.
- CEO Steve Kelley: "Market conditions in Q1 remain sluggish, with particular weakness in the high-end smartphone market." Apple, which Amkor is well-exposed to, has issued soft Q1 guidance, as have various Apple chip suppliers.
- Non-GAAP gross margin fell to 15.3% in Q4 from 17.2% in Q3 and 22.9% a year ago; Q1 GM guidance is at 9%-13%. With J-Devices now on the books, Amkor is guiding for 2016 capex of $650M; as of the Q3 report, the 2015 capex budget was $525M.
- Amkor has dropped to $4.80 after hours. The 52-week low is $4.01.
- Amkor's Q4 results, earnings release
- In addition to missing Q4 estimates, QLIK has guided for Q1 revenue of $132M-$136M and EPS of -$0.12 to -$0.14, below a consensus of $141.2M and -$0.08.
- Likewise, 2016 guidance is for revenue of $695M-$705M and EPS of $0.41-$0.44, below a consensus of $718.8M and $0.49.
- Q4 license revenue growth was 12% Y/Y, even with total revenue growth. Forex had a 900 bps impact on license growth, and a 1000 bps impact on total growth.
- Shares have fallen to $18.00 after hours. They tumbled last Friday after rival Tableau missed Q4 license estimates and issued soft guidance.
- Qlik's Q4 results, earnings release
- Zillow (Z, ZG) has guided on its earnings call for Q1 revenue of $174M-$179M, below a $180M consensus. However, 2016 revenue guidance of $805M-$815M is above a $796.8M consensus.
- Top-line performance: Marketplace revenue rose 14% Y/Y to $148.3M, with real estate revenue rising 27% to $136.6M and mortgages revenue 48% to $11.7M. Display ad revenue fell 25% to $21.1M as Zillow continues de-emphasizing display ads.
- Metrics: Agent advertisers totaled 92,366 at the end of Q4, up 48% Y/Y but down 5% Q/Q. Zillow has said it cares less now about agent count than growing revenue from high-ARPA agents. Monthly unique users fell to 123.7M from Q3's 142.1M (seasonality played a role).
- Financials: GAAP costs/expenses totaled $195.7M - $77.8M was spent on sales/marketing, $55.8M on tech and R&D, and $45.9M on G&A. Zillow ended Q4 with $520M in cash and $230M in debt.
- Z -11% after hours to $16.00. ZG -10.8% to $17.10.
- Zillow's Q4 results, earnings release
5:38 PM| 5:38 PM | 1 Comment
- Along with its Q4 results, Web.com (NASDAQ:WEB) has announced it's acquiring Yodle, a provider of local online ad/marketing services for 50K+ small businesses, for $300M in cash up-front + payments of $20M and $22M at the first and second anniversaries of the deal's closing date. For reference, Web.com closed today with an $826M market cap.
- The acquisition is expected to close by the end of Q1, and will be financed using a $200M term loan and $100M in credit facility borrowings. Both the loan and the borrowings will carry an interest rate of LIBOR + 300 bps, with step downs based on leverage ratios. Web.com plans to use free cash flow to pay down the debt over time.
- Web.com states the combined company would've had 2015 revenue of $767M - with Web.com having reported 2015 revenue of $543.5M, that implies Yodle had 2015 revenue of more than $223M, and that Web.com is paying 1.5x trailing sales.
- Web.com: "Value added digital marketing solutions are a large and fast growing portion of the market where Web.com has developed a differentiated set of offerings. This market segment has been a strategic focus for us for several years, and the purchase of Yodle will solidify our position as a leading national provider in this space." Over $30M/year in synergies are expected.
- Shares appear to be halted - the last recorded trade was at 4:03PM, before Q4 results and the Yodle deal were announced.
- Web.com's Q4 results, earnings release
- Though CyberArk (NASDAQ:CYBR) soundly beat Q4 estimates, the company is guiding for Q1 EPS of $0.15-$0.16 and 2016 EPS of $0.83-$0.86, below consensus estimates of $0.17 and $0.91.
- Revenue guidance is stronger - Q1 revenue of $42.5M-$43.5M (+29%-32% Y/Y) vs. a $41.6M consensus, and 2016 revenue of $205M-$207M (+27%-29% Y/Y) vs. a $202.3M consensus.
- License revenue (drives future maintenance/services revenue) rose 35% Y/Y to $33M, a slowdown from Q3's 49% growth. Maintenance/professional services revenue rose 55% to $18.4M. GAAP operating expenses rose 49% to $33.8M.
- Shares have dropped to $32.10 after hours, making new 52-week lows in the process.
- CyberArk's Q4 results, earnings release
- Activision Blizzard (NASDAQ:ATVI) has taken an after-hours dive, -16%, after it posted a Q4 miss on profits and sales despite some well-catalogued holiday game success.
- The company guided well below expectations for Q1 profits. Non-GAAP net revenues of $2.118B were down 4% and also fell below the company's own prior outlook of $2.148B.
- Call of Duty: Black Ops 3 was the year's best-selling physical videogame despite a November release. However, casual titles -- mainly Skylanders SuperChargers and Guitar Hero Live -- were "weaker than expected, we believe largely due to greater competition in the toys to life genre and due to the casual audiences shift to mobile devices."
- Once closing on the acquisition of King Digital, though, "we will have the largest game network in the world, with over 500 million users playing our games every month," says CEO Bobby Kotick.
- For Q1, it sees non-GAAP net revenues of $800M (vs. consensus of $756M) and EPS of $0.11 (well below an expected $0.18). For the full year, it's forecasting non-GAAP net revenues of $6.25B (vs. consensus of $5.47B) and EPS of $1.75, above expectations for $1.72.
- Conference call link
- Press Release
- Though Infinera (NASDAQ:INFN) moderately beat Q4 estimates, shares have tumbled to $12.50 after hours.
- No guidance was given in the earnings release - Infinera typically guides on its earnings call, which starts at 5PM ET (webcast). It's possible markets were expecting a larger sales/EPS beat, similar to the one Infinera delivered in October.
- With the help of the Transmode acquisition, product revenue rose 43% Y/Y in Q4 to $227M, and services revenue 19% to $33M. GAAP operating expenses rose 43% to $102M, with $52.6M spent on R&D. Non-GAAP gross margin was 48.3%, up 80 bps Q/Q and 240 bps Y/Y, and above guidance of 47% (+/- 1%).
- Infinera's Q4 results, earnings release
- Update (6:27PM ET): Infinera provided in-line Q1 guidance on its earnings call Shares are now up 2.9%.
- Though Pandora (NYSE:P) beat Q4 revenue estimates (while missing EPS estimates), the company is guiding for 2016 revenue of $1.4B-$1.42B vs. a $1.42B consensus. In addition, with planned investments in an on-demand streaming service set to weigh, adjusted EBITDA is expected to drop to -$60M to -$80M from 2015's $51.7M and 2014's $58.2M.
- Q1 sales guidance of $280M-$290M is in-line with a $284M consensus. Q1 adjusted EBITDA guidance is at -$65M to -$75M.
- Metrics: Active listeners totaled 81.1M in Q4, up by 3M Q/Q but down by 0.4M Y/Y. Listener hours totaled 5.37B, up moderately from Q3's 5.14B and Q4 2014's 5.2B. Competition from Apple, Spotify, and others has been weighing on listener growth and engagement.
- Q4 details: Ad revenue +22% Y/Y to $269M. Subscription/other revenue +19% to $57M. Ticketing revenue (via Ticketfly) totaled $10.2M. Content acquisition costs rose 24% Y/Y to $142.9M (43% of revenue) ahead of 2016's higher CRB rates. GAAP operating expenses rose 49% to $122.9M.
Ad RPM (revenue per 1K listener hours) rose to $57.25 from $48.19 a year ago - PC RPM was $68.83, and mobile/other device RPM was $55.14. Pandora ended 2015 with $416.9M in cash and $234.6M in long-term debt.
- P -5.3% after hours to $8.61. Shares rose 8.2% in regular trading following an NYT report stating Pandora is thinking of selling itself.
- Pandora's Q4 results, earnings release
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