Friday, July 22, 2016
- Videogame spending fell 26% Y/Y in June, facing tough comparisons against strong launches in 2015 and with hardware making up most of the decline, according to NPD Group data.
- Overall spending was $652.2M. Videogame hardware spending came to $181.5M -- down 42% as unit sales fell 32% and prices on average dropped 15%, the firm said.
- NPD Group has begun adjusting its report to include point-of-sale info for digital game sales made via PlayStation Network, Xbox Store and Steam, to reflect a fast-growing portion of industry revenues. That means for now that Nintendo sales and mobile sales, as well as other PC stores like EA's Origin, are missing and not projected.
- In software, both videogame and PC game software fell 20%, though last June featured strong launches like Batman: Arkham Knight. Overall sales (now including digital formats) came to $322M for consoles/portable and $27.8M for PC games including Steam.
- Accessories fell 6%, and interactive gaming toys (the lead accessory type) fell by 21%, mitigated somewhat by a 6% growth in headsets/headphones.
- In individual games (now ranked by dollar sales), despite the tough comps May launches had a good second month. Overwatch (NASDAQ:ATVI) continued to top the chart, followed by Grand Theft Auto V (NASDAQ:TTWO) and Lego Star Wars: The Force Awakens (NYSE:TWX). The inclusion of digital full-game sales game GTA V a new boost.
- PlayStation 4 (NYSE:SNE) again was the top-selling console, over Xbox One (NASDAQ:MSFT) and Wii U (OTCPK:NTDOY).
- PricewaterhouseCoopers has been chosen to administer the bankruptcy of Brazilian telecom Oi (NYSE:OIBR).
- A judge chose the firm over Alvarez & Marsal and Deloitte & Touche, entrants hoping to be the in-court administrator for the country's largest ever bankruptcy ($20B in liabilities to be reorganized).
- PricewaterhouseCoopers hasn't advised on any of Brazil's biggest bankruptcy cases so far.
- Meanwhile, Oi's shareholders today reiterated their support for an in-court reorganization.
- Previously: Firms lobby for role administering Oi bankruptcy (Jul. 08 2016)
- LinkedIn (NYSE:LNKD) has set a special meeting for Aug. 19, to vote on its acquisition by Microsoft.
- In an SEC filing, the company notes that shareholders will also be asked to vote on a nonbinding proposal regarding compensation for its named executives. Earlier reports showed LinkedIn chief Jeff Weiner's hiring package could be worth up to $88M, including $19M-$21.6M for him if he's let go.
- Microsoft's $26.2B offer comes to $196/share in cash. After hours: LNKD +0.7% to $191.26.
- TerraForm Power (NASDAQ:TERP) +3.2% AH after Brookfield Asset Management (NYSE:BAM) discloses that it and Appaloosa Management will team up to bid for SunEdison's (OTCPK:SUNEQ) stake in TERP.
- BAM is TERP's largest shareholder, with 11.1M class A shares, a ~12.1% stake, and has entered into swap agreements to potentially buy nearly 11.6M additional shares, which gives it a 24.8% stake.
- Appaloosa is TERP's third ranking owner, with 8.7M shares, or 9.5%.
- RBC Capital Markets analyst Mark Mahaney issued the note with a $20 price target.
- Cites multi-platform unique visitor deceleration, a 14% Y/Y total minute per unique visitor decline, further MAU and ad revenue (approximately 90% of total revenue) growth deceleration and immaterial product updates over the past quarter.
- In Q1 2016 Twitter (TWTR) made $1.71 per MAU vs. $3.21 for Facebook. Mahaney forecasts 17% and 33% Y/Y growth in these numbers for Twitter and Facebook, respectively.
- Raymond James issued a note on the company earlier today as well.
- As other providers move away from unlimited-data plans, Sprint (S +0.4%) is quietly testing capless plans in a handful of markets at $60/month -- cheaper than it or even T-Mobile (TMUS +1.7%) offers currently.
- The "Unlimited Freedom" plan is reportedly being advertised in Milwaukee and Boston at $60/month with a second line for $40/month and additional lines at $25/month; Oklahoma and parts of Arizona are seeing that offer at $50/month for each of the first two lines and extras at $25/month.
- Sprint currently offers unlimited plans at $75/month for first, $45/month for second and extras at $30/month.
- In another positioning against T-Mobile, it looks to be throttling streaming data for those subscribers, similar to how T-Mobile runs its Binge On and Music Freedom video and music-streaming offerings.
4:14 PM| 4:14 PM | 33 Comments
- Microsoft (MSFT +1.2%) adds automatic albums, "On this day", improved search, photo folders and most interestingly, a Poké detector to its cloud photo service.
- Automatic albums populate based on time photos were taken and location. The service arranges the highest quality photos within these parameters accordingly.
- "On this day" will surface previously taken photos based on date, similar to a service provided by Facebook.
- Additional improvements include support for photo folders with large quantities of media in them and a Poké detector. This feature was built my Microsoft Research to automatically arrange Pokémon Go screenshots into the service while identifying, organizing and enabling search of 150 specific Pokémon.
- Current volume of 87.33M vs. 26.52M daily average.
- Returned to Y/Y revenue growth in Q2 for the first time since 2014.
- Shares are trading around four-year highs.
- The company is focusing on semi-custom chips geared for gaming and virtual reality as it aims to reduce a dependence on the traditional PC sector.
- Lisa Su, AMD (AMD +11.8%) CEO, sees Q3 marking the top for semi-custom chips, citing an anticipated strong holiday season, but sees this area returning to lower levels in Q4. She notes consistent execution and new products as a key focus in her approach.
- More on Lisa Su's AMD turnaround here.
- Pandora Media (NYSE:P) has rebounded and then some from a postmarket decline yesterday, up 3.8% now as analysts and others took a deeper look at underlying strengths
- Shares had slipped up to 9% after hours yesterday as the company posted a miss on revenues and saw active listeners fall 1.6%.
- Today Morgan Stanley reiterated its Overweight rating and $15 price target (implying 21% upside), as analyst Benjamin Swinburne focused more on listener hours (which grew 7% to 5.66B) than the decline in listeners -- two changes that brought the company to a record 24 hours per listener per month.
- "We believe the majority of this engagement growth is coming from product improvements," Swinburne writes, "including the success of Thumbprint radio, its new ad serving technology Chronos, and growing distribution in cars and key in-home consumer electronics.”
- Axiom and Albert Fried also each reiterated Buy ratings, each with a $16 price target. On the other hand, Pacific Crest downgraded to Underweight and set a 12-month fair value of $6: "Pandora's core operating leverage has deteriorated, and we see little prospect for meaningful profits in on-demand," says the firm's Andy Hargreaves. "While M&A is possible, we do not view it as likely at the current valuation. We do not recommend owning Pandora."
- Previously: WSJ: Liberty floated $15/share offer for Pandora to combine with Sirius XM (Jul. 21 2016)
- Following a positive quarterly report, Wells Fargo downgrades PayPal (PYPL -7.3%) to Market Perform from Outperform citing concerns surrounding the company's newly announced partnership with Visa.
- The firm believes upside earnings revisions are limited and valuations capped. Notes an inflection point as investors monitor margin pressures combining with the benefits of the partnership. Baird analyst Colin Sebastian additionally cites margin concerns.
- On the company's earnings call (transcript), management didn't offer much explanation on how the company planned to offset the more expensive payment processing method that will result from the agreement and analysts are attributing the cloudiness to today's fall.
- From Gil Luria at Wedbush Securities: "This is a phenomenal move for PayPal. However, the company didn't quantify the short-term dilution, and as we know uncertainty is worse than a bad outcome in the stock market and that's happening today. It opened up the door for people to assume the worst."
- Luria further notes the benefit to consumers and the ability for terms of the partnership to be applied to future ventures with other card companies like American Express and Mastercard.
- Nomura Securities restates a Buy rating on the company and $54 price target attributing the projection to impressive transaction volume numbers and revenue growth. Also highlights uncertainty around terms of the Visa deal but considers it an overall positive and expects more similar deals to come in the future.
- Expecting Twitter (TWTR -1.4%) to guide light on revenues for Q3, analyst Aaron Kessler cuts to Market Perform from Outperform. "We believe Q3 Street revenue estimates (+12% Q/Q) could prove aggressive given our recent ad checks and typically seasonally soft Q3 period."
- Kessler sees Q3 revenue of just $649M vs. consensus $682M.
- The team's checks also indicate continued strong growth for Facebook and Instagram, with Instagram monetization a near-term negative for Twitter sales.
- Leaks that Verizon (VZ +1%) continues to be the front-runner to close a deal for core Yahoo (YHOO +1%) have the telecom spending about $5B on the deal, vs. an earlier $3.75B-$4B.
- While earlier Verizon interest excluded Yahoo's patent portfolio and real estate, the current talks do reportedly include the real estate.
- Yahoo had set aside about 3,000 patents into a subsidiary called Excalibur for separate auction by Black Stone IP, though other bidders like AT&T (T +1.5%) or a group with Quicken Loans' Dan Gilbert (still reportedly talking with Yahoo) or an aggressive TPG might yet want to buy the IP along with core assets.
- The deal would be a "great outcome," Piper Jaffray analyst Gene Munster says, with time of the essence since "the real value here is unlocking Yahoo Japan and Alibaba (BABA +0.1%) in a cash-free transaction. And they really need to get that done before the election."
- The $5B figure is still a bit low, Munster says, as he expects the deal to be around $6B. "If you look at the tax benefit for Yahoo Japan and Alibaba, that's about a $10B or $11B tax benefit, so a billion dollars here and there doesn't make much difference; there's still upside to Yahoo shares."
- Analysts are looking past a headline earnings beat for Skyworks Solutions (SWKS -9%), and instead focusing on whether an increase in inventory to $437.6M from $267.9M nine months earlier signals supply chain issues as it relates to Apple's upcoming iPhone release.
- Mike Burton at Brean Capital has been getting a lot of concerned calls over the inventory spike, and he believes a major Skyworks customer had demanded higher capacity. Michael Walkley at Canaccord believes inventory numbers will level out through the end of 2016 but also forecasts Y/Y sales to Apple will contribute to slower growth over the upcoming quarters. Maynard Um at Wells Fargo cites Skyworks' management attribution that work in progress and not old cycle inventory is resulting in the high number, which could be read as a positive sign for iPhone 7 production, though cautioning the quarter is far from conclusive.
- Alongside the results, Skyworks boosted the quarterly dividend by 7.7% and initiated a $400M stock repurchase program.
- Q4 revenue guidance of $831M ( up 10-11% Q/Q) midpoint and EPS of $1.43.
- The sale of VisionChina Media's (NASDAQ:VISN) subway mobile TV ad business looks to have hit a hitch.
- Earlier this year, the company said it reached a deal to sell the business for 780M yuan (now about $117M) to Ledman Optoelectronic.
- Now Ledman has said it submitted an application to the China Securities Regulatory Commission to suspend the transaction, "pending uncertainties surrounding government regulatory policies pertaining to foreign-listed Chinese companies relisting in China's domestic stock market."
- Phoenix New Media (FENG -1.9%) says its Yidian unit has a strategic deal with smartphone maker Guangdong OPPO.
- Yidian is responsible for Yidian Zixun, a mobile news and lifestyle app. In the deal, OPPO will pre-install the app on its smartphones and engage in revenue sharing tied to the advertising the app generates, as well as ads from Yidian's Newsfeed (embedded in the phone's browser).
- Correspondingly, Yidian will issue Series D preferred shares to an OPPO associate.
- Proofpoint (PFPT) reported Q2 results yesterday after market close and exceeded estimates by posting EPS of $0.06, beating by $0.13, and revenue of $89.9M (+41% Y/Y) vs. estimates of $84.22M.
- Billings of $101.2M (+34% Y/Y).
- Raises guidance across FY16 billings, revenue, profitability and cash flow.
- GAAP operating loss of $32M vs. $19.1M Y/Y, citing $13.5M in expenses resulting from patent litigation.
- GAAP net income loss of $38.3M vs. $22.6M Y/Y.
- Adjusted EBITDA of $7.7M vs. $2.8M Y/Y.
- Free cash flow about even Y/Y.
- Q3 guidance for revenue of $93.5M-$94.5M, billings of $114M-$116M, adjusted EBITDA of $7.4M-$7.9M, non-GAAP EPS of $0.04-$0.06 and free cash flow of $8M-$10M.
- FY16 guidance for revenue of $361.5M-$363.5M, billings of $445M-$448, adjusted EBITDA of $24.5M-$25.5M, non-GAAP EPS of $0.06-$0.10 and free cash flow of $34M-$38M assuming $31M-$33M in capital expenditures.
- While Facebook (NASDAQ:FB) remains one of the only ways to play the shift of legacy media ad dollars to mobile, a dramatic rise in investor expectations over the past year has set the bar too high, says BTIG's Rich Greenfield, downgrading to Neutral from Buy.
- He removes his $117 price target.
- Shares -1% premarket to $119.41.
- Nintendo has “plenty of doubters”; short interest levels have almost tripled to a new yearly high, Markit says in a note.
- Short interest as percentage of free float is now at 2.57%. ADR short sellers are at 3.5x levels seen a week ago.
- Firm notes that GameStop shares, up 22% in the last month on the coattails of the Nintendo rally, haven't seen a similar rise in short demand.
- Still, GameStop short interest as percentage of free float is 19%, down from 50.8% in December.
- Aided by a strong performance in Spain and Germany, Vodafone (NASDAQ:VOD) reported a better-than-expected Q1 increase (2.2% to €12.3B) in organic service revenue, marking the eighth straight quarterly rise in its main growth measure.
- The mobile operator also confirmed its outlook for the full year, stating its European markets were stable, with growth of 0.3% despite the impact of cuts in roaming charges.
- VOD +4.4% premarket
- The Billington Automotive Cybersecurity Summit kicks off today in Detroit, where industry executives and government officials will discuss rising auto cyber concerns and hacking.
- Cars have essentially become supercomputers on wheels, and more of them are linked to the internet, posing many security risks.
- Among the speakers: GM's Mary Barra, Transportation Secretary Anthony Foxx and the NHTSA's Mark Rosekind.
- Pokemon GO has finally launched in Japan, the birthplace of the little virtual monsters.
- Besides Nintendo (OTCPK:NTDOY), which owns stakes in both The Pokemon Company and game developer Niantic, shares of McDonald's Holdings Japan are getting a big boost from the news.
- Its fast food restaurants across the country are set to become "gyms," where players can train their Pokemon for virtual fights.
Thursday, July 21, 2016
- Morningstar (MORN -0.4%) revenues declined and missed expectations in its Q2 earnings, and profits fell slightly but met consensus on a per-share basis.
- "Headwinds" won't keep the firm from focusing on key investment areas, says CEO Joe Mansueto, who pointed to "negative trends in industry-wide issuance volume for commercial mortgage-backed securities" tamping down revenue in its credit rating business, along with revenue declines in investment management products and Internet ad sales.
- Revenue fell 1.9% to $198.2M; organic revenue fell 1.3%.
- Premium subs to Morningstar.com fell 2.6%, to 119,019; registered users grew 3.8% to 8.699M.
- Morningstar Office licenses slipped 3.3% to 4,157, while Morningstar Direct licenses grew 11.3% to 12,064.
- Cash from operating activities was $71.4M; free cash flow was $55.5M (down $8.2M from the prior year).
- Press Release
- Comcast (NASDAQ:CMCSA) says it will sell prepaid cable and Internet, borrowing a model from wireless companies' approach to low-income households and borrowing Boost Mobile (NYSE:S) stores to do so.
- Xfinity Prepaid Services don't require a credit check or contract, and can be topped up like a prepaid phone after an initial setup charge.
- The TV plan will have two tiers: a 45-channel plan ($80 for setup and first 30 days, plus refills of $15 for seven days or $45 for 30 days) and a 140-channel plan ($120 for start-up, $30 for seven days, $90 for 30 days). Internet will start at $80, with $15 for a seven-day refill and $45 for a 30-day refill.
- The offering will roll out later this year to Illinois, Michigan, Georgia, Florida and Indiana, though Comcast's deal with Boost Mobile says it will offer it through Boost's 4,400-store Comcast-overlapping footprint by the end of 2017.
- The move could appeal to the 14M-16M homes that can't pass the necessary credit check for standard contract-based pay TV.
- Crown Castle International (NYSE:CCI) posted Q2 earnings where funds from operations rose 15% on an adjusted basis and revenues grew 7% and beat.
- Revenue breakout: Site rental, $804.6M (up 9.2%); Network services and other, $157.8M (down 2.8%).
- Site rental gross margin was $552M, up 10%.
- For Q3, it expects site rental revenues of $805M-$810M, site rental gross margin of $549M-$554M, adjusted FFO of $400M-$405M (vs. expected $399M) and EBITDA of $557M-$562M (vs. consensus for $554.8M). For the full year, it's forecasting site rental revenues of $3.2B, adjusted FFO of $1.61B, and EBITDA of $2.2B.
- Conference call to come tomorrow at 10:30 a.m. ET.
- Press Release
- Reported revenue of $1.02B (+23% Q/Q, +9% Y/Y), beating estimates by $68.71 and EPS of -$0.05, beating estimates by $0.03.
- From Advanced Micro Devices (AMD) president and CEO Lisa Su: "In the second quarter we accomplished a significant milestone as we returned to non-GAAP operating profitability based on solid execution and strong demand for our semi-custom and graphics products."
- Gross margin of 31% (-1% Q/Q).
- Operating loss of $8M vs. $68M in Q1.
- Net income of $69M.
- Q3 guidance of +18% revenue +/- 3%.
- Credits $150M derived from a joint venture with Nantong Fujitsu Microelectronics Co., Ltd. to sequential and yearly earnings improvements.
- Presentation slides.
- Comms firm 8x8 (NASDAQ:EGHT) is up 2.8% after hours after beating on top and bottom lines and grew margins in its fiscal Q1 earnings.
- Revenue hit a record $60M; in mid-market and enterprise customers, service revenue grew 44% (now 52% of total service revenue), and monthly recurring revenue sold to those customers by channel sales teams rose 62% (58% of total MRR).
- Revenue breakout: Service, $55.3M (up 25.1%); Product, $4.75M (up 27.4%).
- Average monthly service revenue per business customer rose to $399 from the prior year's $353. gross monthly churn (organic basis) of 0.5% vs. a year-ago 1%.
- It reaffirmed full-year guidance for revenue of $249M-$253M (in line) and non-GAAP net income of $16M-$20M (6.5% to 8% of revenue).
- Cash and equivalents were $167M as of June 30 vs. a year-ago $157M.
- Press Release
- PayPal (PYPL) is +1.45% in extended trading on the release.
- Revenue of $2.65B (+15.2% Y/Y).
- GAAP EPS of $0.27 (+7% Y/Y), non-GAAP EPS of $0.36 (+11% Y/Y).
- GAAP operating margin of 14%, non-GAAP operating margin of 20%.
- Operating cash flow of $696M; Free cash flow of $495M.
- Active accounts up 11% to 188M (29 transactions per account, +13%).
- Processed transactions up 25% to 1.4B.
- Total payment volume of $86B.
- Partnership with Visa will allow PayPal's digital wallet to be used at any location Visa contactless transactions are accepted and will enable Visa tokenization capabilities for in-store transactions.
- PayPal and Venmo users with Visa debit cards linked to a bank account will also be able to move money instantly in and out of the services.
- From PayPal President and CEO Dan Schulman on the partnership: "Our agreement with Visa enhances our capabilities, offers the potential to establish new contexts for our consumers and merchants, and lays the foundation for additional partnerships."
- Raises FY16 revenue guidance to $10.75B-$10.85B.
- Anticipates FY GAAP EPS of $1.11-$1.14 and non-GAAP EPS of $1.47-$1.50.
- Expects Q3 revenue range of $2.620B-$2.670B.
- Forecasts Q3 GAAP EPS of $0.25-$0.27 and non-GAAP EPS of $0.33-$0.35.
- Conference call at 6:30pm ET.
- AT&T (T -0.4%) is off 1.3% after hours following a Q2 report where the company met profit expectations but missed slightly on revenues that grew nearly 23% thanks to DirecTV.
- Entertainment group revenues rose 120% Y/Y, again thanks to the acquisition of DirecTV, which saw 342,000 adds. Total video declined 49,000 as the company continued to steer customers from its U-verse platform to the more profitable DirecTV.
- In Mobility, the company posted 2.1M net adds in North America (1.4M in U.S., including 257,000 postpaid and 365,000 prepaid). In Mexico, 780,000 branded net adds to hit about 10M subscribers.
- Business Solutions revenues were down 0.5% but flat after adjusting for divestiture and foreign exchange. Wireless service revenues rose 2.7%; strategic services revenue was up 8.4%.
- The company say it's "on track to meet or beat" guidance for full 2016 even with a ramp up in its Mexico investment.
- Conference call to come at 4:30 p.m. ET.
- Press Release
- A report by IDC describes a 32% fall in the global smartwatch market and a steep 55% decline in Apple's (AAPL -0.5%) Watch sales from Q2 2015 to Q2 2016.
- According to this report's data global smartwatch shipments in Q2 were 3.5M vs. 5.1M Y/Y with Apple contributing 1.6M (-55% Y/Y) and Samsung (SSNLF) 0.6M (+51% Y/Y) to that number. Lenovo (+75%) and LG Electronics (+26%) each shipped 0.3M and the remaining shipments were contributed by Garmin (+25%) and other undisclosed companies.
- A concern going forward as it relates to this sector, whether this data is accurate or not, is the extended product refresh period Apple has so far adopted for its Watch offering. More than a year after launching (April 2015), a second generation Watch has not been released. With an already extended refresh cycle for the iPhone and though an upgrade is rumored to be released in fall of this year, it remains to be seen what time frame will eventually be adhered to for the Watch.
- Apple has not commented on this report and has not released official figures regarding Watch sales since April 2015.
- Ahead of its earnings after the bell, Pandora Media (NYSE:P) has given up a bump fueled by a buyout-offer story, now down 0.7%.
- It had risen as much as 10.3% (to $13.62) following a report that Liberty Media (LMCA -0.1%) had floated a $15/share offer to buy the company and combine it with Sirius XM (SIRI -0.2%).
- Combining the two radio services could benefit from "hidden synergies," says Piper Jaffray's Stan Meyers. Sirius XM could take advantage of a strong ad sales team as it thinks about an ad-supported service, and it could tap a data-rich environment at Pandora to convert some of that company's 100M-plus users into paid customers.
- Meyers has Overweight ratings on both companies and a price target of $5.25 on SIRI (implying 26% upside) and a target of $18 on Pandora (47% upside, and closer to Pandora's feelings of true value around $20/share).
- Liberty Sirius XM Group shares: LSXMA +0.4%; LSXMB +0.4%; LSXMK -0.1%.
- TerraForm Global (GLBL +0.9%) is upgraded to Neutral from Sell with a $3.25 price target, raised from $1.50, at Goldman Sachs, which sees a higher probability of M&A now that the company has reported preliminary results.
- Goldman says the 8-K filing represents GLBL's first step in financial clarity in nearly a year, and revealed the company was undertaking the process for a potential sale of stakes, including SunEdison’s B shares.
- The firm notes that the preliminary results reflected better than anticipated cash available for distribution, with the other headline metrics coming in within 10% of estimates.
- Goldman Sachs sets a 12-month $900 price target for Amazon (AMZN -0.1%) (current price: $745.45), retaining a Buy rating.
- Analyst Heath Terry sees Q2 revenue of just $29.4B vs. consensus $29.5B when the company reports on July 28, but is looking past these results and weighing investments in Amazon Web Services, logistics and infrastructure more heavily in its forecast.
- Forecasts 58% Y/Y revenue growth for AWS, and 28% and 17% revenue growth for North American and International e-commerce, respectively.
- Qualcomm (QCOM +8%) reported EPS $0.19 above expectations and revenue +3.4% Y/Y of $6.03B.
- MSM chip shipments of 201M vs. 175M-195M expected. Though beating this quarter's estimates, this figure is down from the 225M MSM chips shipped in Q3 2015. The company guides chip shipments of 195M-215M and revenues of $5.4B - $6.2B for Q4.
- CEO Steve Mollenkopf cites headway with Chinese licensees and OEM growth in the Chinese market. Also notes investments in 5G and other technologies as a base for future earnings potential.
- eBay (EBAY +11.7%) registered a 5.7% increase Y/Y in revenue with GAAP EPS of $0.38 and non-GAAP EPS of $0.43.
- Repurchased $500M of common stock and announced approval for an additional $2.5B buyback.
- StubHub revenue of $225M, +40% Y/Y.
- Raised Q3 net revenue guidance to $21.6B-$2.19B and non-GAAP and GAAP EPS to $0.42-$0.44 and $0.35-$0.37, respectively.
- Raised FY16 net revenue guidance to $8.85B-$8.95B and non-GAAP and GAAP EPS to $1.85-$1.90 and $1.60-$1.65, respectively.
- GAAP operating margin +23.8% vs. +20.3% Y/Y.
- Generated operating cash flow of $764M and free cash flow of $617M.
- The company reached the 1B live listing milestone during the quarter and reasserts its focus on enhancing its platform in regard to experience and discovery.
- The recent acquisitions of Expertmaker and SalesPredict were noted as the company continues to build machine learning and artificial intelligence capabilities into its platform.
- Pandora Media (NYSE:P) has jumped 3.8% on news that Liberty Media (NASDAQ:LMCA) chief Greg Maffei discussed a $15/share offer to buy the streaming radio company in recent months, according to The Wall Street Journal.
- Pandora's board rejected that offer as too low, however, thinking last fall's value of $20/share was more accurate. Shares are up to $12.79 currently on today's news.
- Maffei's offer looked to be a "fishing expedition," one source said, rather than a formal offer.
- People at a private investor meeting in June said Maffei was talking up the benefits of tying up Pandora with Liberty-controlled Sirius XM (NASDAQ:SIRI), saying "you'd have to ask the Pandora board" why there wasn't a deal yet, the WSJ says.
- Sony (SNE -1.9%) is trimming jobs from its U.S. operation, The New York Post says, which may be connected to marketing budget cuts on movie projects from a studio showing lackluster results of late.
- Shares finished down 0.6% in Tokyo.
- Sony Corporation of America has already cut about 100 from a 700-person workforce, the Post says, with "most of the senior vice president titles and above" on the way out. “The parent company is taking over," its source said. "They don’t need a corporate structure in the U.S."
- The American unit includes Sony Pictures, Sony Music and Sony Electronics. Sony Pictures is currently in fifth place in studio market share this year.
- Sony's ADRs hit a 52-week high of $31.33 last week; they're up 21.9% YTD.
- The FCC is "pausing" its 180-day review of Verizon's (NYSE:VZ) $1.8B deal to buy XO Communications' fiber-optic business as it looks for more information.
- The carrier came to the deal to buy the fiber business of Carl Icahn's XO in February, along with an agreement to lease XO wireless spectrum and an option to buy.
- Later in the spring, Dish Network pressed the FCC to reject the deal, saying it would give Verizon near-exclusive control of 5G spectrum as well as dampen current and future competition between Verizon and XO in a number of markets.
- Needham & Company restates a Buy rating and $38 price target citing FY guidance that remains largely intact and expects improvements in Intel's (INTC -4.2%) data center group, memory and IoT businesses.
- Brean Capital restates a Buy rating and upgrades its price target to $38 from $36 also attributing the guidance reiteration and a 10% Q/Q revenue outlook on better-than-expexted seasonality for the upcoming quarter. The firm also notes improvements in operating expenses Intel has yet to realize as it continues restructuring its workforce down 11%.
- Credit Suisse restates an Outperform rating with a $40 price target and projects 15% growth acceleration in the company's data center group in H2.
- Rogers Communications (NYSE:RCI) is leading telecom gainers today, +4.7%, after managing a beat on profits in its Q2 earnings.
- Revenue by segment: Wireless, $1.93B (up 1%); Cable, $870M (flat); Business Solutions, $97M (up 3%); Media, $615M (up 6%).
- Wireless postpaid net adds were 65,000 (improved by 41,000) and churn improved for the third straight quarter, by 5 basis points. Wireless service revenue improved by 5% both with more subscribers and higher postpaid average revenue per account (attributed to the "Share Everything" plans).
- Cable revenue was stable because growth in Internet of 15% offset declines in TV and phone. "We continue to see an ongoing shift in product mix to higher-margin Internet services."
- Cash flow from operating activities was $1.12B. Free cash flow was $495M, up from a year-ago $476M, as lower cash tax payments added to a higher adjusted operating profit.
- Press Release
- Cellcom Israel (NYSE:CEL) has taken a sharp turn into the red in U.S. trading, down 1%, following news that it got a temporary injunction it sought in the quest to acquire Golan Telecom.
- The injunction freezes an agreement signed by Golan Telecom and Hot Mobile, which Cellcom argued violated its agreement to acquire Golan.
- Cellcom will deposit a bond of 200K shekels to cover damages in case the court rules for Golan.
- Also today in Israel telecom: PTNR -2.5%; OTCPK:BZQIY -0.9%; BCOM -0.9%.
- Bundled in a note announcing a new Oregon Cloud Region (us-west1) for its Cloud Platform, Google (GOOG, GOOGL) also shared news on language and speech machine learning APIs the company has been working on.
- Cloud Natural Language and Cloud Speech are now in open beta.
- Cloud Natural Language has the ability to analyze sentiment within blocks of text and identify people, organizations, locations, events, product and media. It is also capable of recognizing structure and meaning of text.
- Here is a demo of the Cloud Natural Language API evaluating text from The New York Times and Harry Potter.
- Cloud Speech API will enable speech-to-text rendering in 80+ languages, citing IoT devices and apps as use cases for the service. The technology the API is built on has already enabled voice recognition in Google Now and Google Search.
- Beta version includes new feature allowing recognition of custom phrases used to command an action within a specific context (i.e "rewind", "fast-forward" while a movie is playing). Additional enhancements to simplify development of apps using the API also noted.
- The beta release of these APIs adds to the company's growing portfolio of machine learning powered services with Google Translate API and Cloud Vision API among those already available.
- From Pokemon onesies to Disney frocks, comic and film fans are getting their costumes primed for their annual pilgrimage to Comic-Con, which opens today in San Diego.
- The event has evolved in recent years into a showcase for Hollywood studios, which are clamoring for the attention of an army of nerds expected to exceed 130K.
- Virtual reality will also have a big presence: FX Networks (FOX, FOXA) is promoting American Horror Story with a VR experience and Warner Bros. (NYSE:TWX) has similar plans for Suicide Squad.
Wednesday, July 20, 2016
- AT&T (NYSE:T) and Orange (NYSE:ORAN) are working together to push software-defined networking and network function virtualization, two areas that will benefit increasing standardization in network deployment.
- That will add flexibility and simplicity to network service provisioning (and reduce costs along the way) by pursuing open-source solutions.
- The two said they would concentrate on equipment for customer premises, on streamlining onboarding for virtual network functions, and on making APIs that should ease interoperability of different SDN architectures.
- Needham & Company forecasts Apple (AAPL) could see $3B in revenue over the next 12-24 months generated exclusively by Pokémon Go.
- Laura Martin, Needham's Managing Director, cites the mobile phenomenon's surge in U.S. popularity and factors expected international expansion into her projection.
- More notably, the success of Pokémon Go indicates a potential bonus for both Apple and Google (GOOG, GOOGL). The App Store and Google Play are the base of any successful games running on the companies' respective platforms and money made through in-app purchases is subject to 30% cuts on both. However, revenues generated from App Store and Google Play are famously incongruous and so are the dollar amounts spent by users of iPhone vs. Android. It is misguided to assume what occurs on one platform will occur on the other. Until actual numbers and monetary breakdown of the game as it relates to either App Store or Google Play revenues is unveiled, it is only worth noting the potential such a momentum generating piece of software can have on these platforms.
- Apple and Google are squarely in the middle of any existing and subsequent hits housed on their respective app marketplaces. A success like Pokémon Go was a big time effort from those involved in its creation and Apple and Google are in positions to immediately share in its prosperity. Going forward, apps can fail with little effect on these companies' bottom lines, but when a knockout comes around, they only stand to gain.
Visit Seeking Alpha’s new Earnings Center
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs