Today - Thursday, March 5, 2015
12:00 AM| Comment!
Wednesday, March 4, 2015
- Both boards have signed off on AbbVie's (NYSE:ABBV) $21B surprise acquisition of Pharmacyclics (NASDAQ:PCYC), announced a short while ago amid speculation that Johnson & Johnson (NYSE:JNJ) (or, earlier, Novartis (NYSE:NVS)) would be the one to acquire the cancer biotech.
- With the deal, AbbVie gets Pharmacyclics' blockbuster Imbruvica drug for hematologic malignancies -- which logged $548M in revenues in 2014 (Q4 earnings) and might go all the way to $5B/year. Imbruvica has received four indications in less than 15 months -- the latest being for Waldenström's Macroglobulinemia at the end of January.
- And with Imbruvica, AbbVie can lessen its reliance on its key drug Humira, an aging rheumatoid arthritis medication.
- The acquisition is expected to close in the middle of the year.
- Question: What happened to Pharmacyclics' Imbruvica partner JNJ on this deal?
- Previously: Pharmacyclics Q4 revenue up 135%, Imbruvica growing exponentially (Feb. 18 2015)
- AbbVie (NYSE:ABBV) says it will be the one to acquire cancer biotech Pharmacyclics (NASDAQ:PCYC), with a surprise bid of about $21B: $261.25/share in cash and equity.
- Pharmacyclics closed up 6.3% today to $230.48 (and gained another 2.9% after hours) on rumors that Johnson & Johnson (NYSE:JNJ) was making a bid for the $17B company.
- Previously: Pharmacyclics up on rumored J&J interest (Mar. 04 2015)
- Previously: Pharmacyclics up on potential buyout (Feb. 25 2015)
- Press release
- DreamWorks Animation's (NASDAQ:DWA) Chinese joint venture is "incredibly important" to the troubled company, CFO Fazal Merchant said today as attention turns from a rough Q4 to the next two years for the studio.
- Thanks to co-founder Jeffrey Katzenberg's frequent visits to China, they're in a "blessed place" with Oriental DreamWorks, the partnership the studio formed with China Media Capital, Shanghai Media Group and Shanghai Alliance Investment to create family-friendly content.
- The venture's first project, Kung Fu Panda 3, is due in 2016. The first two films in the Kung Fu Panda series drew worldwide grosses of $632M and $665M respectively, off production budgets of $130M-$150M.
- Merchant was speaking at Morgan Stanley's Technology, Media & Telecom Conference and also proclaimed Netflix (NASDAQ:NFLX) "incredibly pleased" with their deal through 2017 (a good thing if DWA is as dependent on the streamer as rumored). "If there were issues, I don't think they'd be shy about telling us."
- Shares finished the day up 5.7%.
- Earlier: DreamWorks up 7.7%, on two-day surge as planning takes shape (Mar. 04 2015)
- Previously: DreamWorks rallies -- but too dependent on Netflix? (Feb. 25 2015)
- Previously: DreamWorks pummeled after brutal quarter; rough year ahead (Feb. 24 2015)
- New CTO Aamir Hussain is wasting little time at CenturyLink (NYSE:CTL) -- shuffling executives and reorganizing development into a cloud-heavy organization.
- "We need to transform from a telephone company to IT-based services company," Hussain tells LightReading.
- Several internal executives are taking new leadership roles, while cloud/tech SVP Andrew Higginbotham is leaving the company and four more leaders are to be hired, some from outside.
- Most of CenturyLink's cloud progress so far has come through acquisition -- but becoming a "full agile" company and focusing on business transformation is the new goal. A new transformation unit "is really responsible for not only technology and platform but people and strategy as well as we transition from a legacy telco to a next-gen IT service provider," Hussain says.
- Like many competitors, the firm has been losing its landline customers while growing revenue from broadband and TV subscribers.
- CTL shares are up 16% over the past year -- but have lost 11.7% in the past six months.
- Previously: CenturyLink misses Q4 earnings; guides low for Q1 EPS (Feb. 11 2015)
- GE's Jeff Immelt estimates he has sold 65% of the company he inherited some 13 years ago in order to streamline it, but at the same time he bet big on energy by spending $14B on oil services companies, and some investors are dissatisfied, WSJ reports.
- Oil and gas accounted directly or indirectly for a quarter of GE's $100B in industrial revenue last year, but as oil prices have tanked, the CEO is now warning that the business could see revenue and earnings both drop as much as 5% in 2015.
- GE says customers probably will delay future exploration and production, but that 60% of its oil and gas business is in booked orders and that the difficulty some of its customers have in stopping oil operations actually will help the company.
- Earlier: Barclays; GE's Immelt may quit within the next year
- Shares of hospital operators and some managed care providers turned in strong gains today after the U.S. Supreme Court entertained arguments on a case that questioned whether Obamacare health insurance subsidies should be provided in the 34 states that have not set up their own exchanges (transcript).
- The catalyst come from questions posed by Justice Kennedy - considered a swing vote on the issue - voicing concerns about potential constitutional consequences of a ruling that strikes down the availability of the subsidies.
- Kennedy said throwing out subsidies would potentially unlawfully pressure states and cause an insurance "death spiral" because premiums would increase, but he also said he had an open mind over the challengers' interpretation of the law.
- CYH +6.3%, THC +6.2%, HCA +5.8%, LPNT +3.6%, EVHC +3.6%, UHS +2.7%, TMH +2%.
- At China's National People's Congress opening, Chinese premier Li Keqiang uses the highly anticipated opening address to set GDP expectations for the country at about 7%, and a consumer inflation target of 3%.
- Last year's target was around 7.5%; with growth slowing, a lower number is in line with expectations.
- Might it mean an end to the government's growth focus? At the least, it suggests signs that restructuring may be closer.
- ETFs: FXI, EWH, KWEB, PGJ, YINN, GXC, FXP, ASHR, CYB, HAO, CNY, TAO, YANG, CHIQ, CQQQ, DSUM, CHIX, MCHI, QQQC, PEK, XPP, YAO, YXI, FXCH, CHXF, ECNS, FCA, CHII, CN, CHIE, CHIM, EWHS, FCHI, ASHS, KFYP, CNXT, CHNA, TCHI, KBA, FHK, CBON, CHNB
- Midwestern grocer Roundy's Supermarkets (NYSE:RNDY) is charging it after hours, +12.4% in late trading, after beating on top and bottom lines in Q4.
- It wraps a "transition year" for the company as it moved out of 27 stores in the Twin Cities market and invested in growth in Illinois. Q4 EBITDA of $37M vs. an expected $37.6M.
- The company guided to Q1 sales of $980M-$990M, in line, and adjusted EBITDA of $27.5M-$32.5M vs. $32M expected. For full 2015, it projects net sales of $4B-$4.08B vs. $4.03B expected, and EBITDA of $115M-$125M vs. $122M expected.
- Roundy's is expecting same-store sales to decline 0.25% to 1.25% in Q1, and anywhere from 0.75% to 2.75% for the full year.
- Debt may still be a concern with total long-term debt at $718M against $78M in cash. Net cash flows from operations for the year were $48M, down from the prior $104M.
- Press release
- Pacific Ethanol (NASDAQ:PEIX) +11.6% AH after Q4 earnings routed analyst expectations and revenues jumped 19% Y/Y and also beat estimates.
- PEIX's ethanol production gallons sold in Q4 totaled 50.4M, up +24% Y/Y from 40.5M gallons, while third-party gallons sold totaled 84.2M, up 26% from 66.5M; however, the average sales price in the quarter fell to $2.15/gal from $2.36/gal in the same quarter last year.
- Q4 gross profit was $18.4M vs. $21.6M in the year-ago quarter, which the company says was due to particularly strong production margins in Q4 2013.
- Expects to complete its acquisition of Aventine this year to become the fifth-largest ethanol producer and marketer in the U.S.
- "When you trade at premium valuation, there is an expectation of flawless execution," says Canaccord's Richard Davis in response to the market's reaction to Veeva's (NYSE:VEEV) FQ4 numbers and FQ1/FY16 guidance. Davis, who remains bullish on the cloud life sciences software vendor, notes that while most of Veeva's FQ4 numbers beat estimates, "unguided cash flow came in light of estimates, driven entirely by the timing of collections on renewals."
- Deutsche's Karl Keirstead, who downgraded to Hold, observes FQ4 op. cash flow (-$1.3M) was negative for the first time since Veeva's IPO, and that FQ1 billings guidance of $80M-$85M (+8%-15% Y/Y) was well below Deutsche's $102M estimate. "Coupled with the guide for just 20% growth in CRM subscriptions revs growth in FY16 ... we now also wonder if Veeva is seeing a material slowdown in new CRM billings growth as this business (80% of the mix) now has a market share of 50%." His FY16 billings growth forecast has been cut to 25% from 35%.
- On the CC (transcript), CFO Tim Cabral stated Veeva is seeing more pronounced billings seasonality, with nearly 40% of its subscription revenue base now billed in FQ4. CEO Peter Gassner declared Veeva's acquisition of key opinion leader (KOL) software/data solution Qforma CrowdLink will help the company "deliver a more complete solution for medical."
- Lumber Liquidators (NYSE:LL) closed down another 12%-plus in today's trade, the third double-digit drop in the past week, after Sen. Bill Nelson of Florida called on the U.S. government to investigate into the laminate flooring sold by the company to find out whether it "poses a health risk to the public," and to look into marketing claims LL has made about the safety of its products.
- The company says it “shares Senator Bill Nelson’s desire for consumer safety” and is engaging with California regulators and the EPA.
- Earlier, LL canceled an appearance at a conference and said it would host a call with investors on March 12, as it continues to respond to Sunday's damaging 60 Minutes report.
- Shares are now down 48% since LL said a week ago during its Q4 earnings conference call that 60 Minutes would feature the company in an unfavorable light.
- Reports flew today that in the wake of the FCC's decision last week to reclassify broadband Internet under Title II -- treating it more as a public utility -- Netflix (NASDAQ:NFLX) was taking a "We didn't want that much Title II" position.
- At Morgan Stanley's conference today, CFO David Wells said: "Were we pleased it pushed to Title II? Probably not ... We were hoping there would be a non-regulated solution."
- Critics leapt at the chance to call Netflix on a reversal of its strong position last year that Title II was the approach to use in re-regulation.
- By the end of the day, Netflix was walking back, saying they stuck by their earlier position: "There has been zero change in our very well-documented position in support of strong net neutrality rules."
- Asked to explain, a Netflix representative said "David was trying to convey how our position evolved over time from preferring an industry solution to recognizing the need for a regulatory one."
- It's no small matter for Netflix, which moves so much traffic that the regulatory difference in its delivery costs may mean as much as $100M/year.
- A quarter after reporting an 18% Y/Y revenue drop and a $633K net loss, InfoSonics (NASDAQ:IFON) reported 51% sales growth and net income of $730K. Investors responded by bidding the microcap Android OEM's shares to their highest levels since September.
- Fueling the turnaround: A 57% Y/Y increase in ASP caused in part by a mix shift towards smartphones. InfoSonics notes it's "responding to customer demand for larger screen devices" and recently launched (in the U.S.) its first 4G phone.
- Gross margin was 16.5% vs. 14.7% in Q3 and 16.9% a year ago. Operating expenses rose 15% Y/Y to $2.1M. InfoSonics ended Q4 with $1.5M in cash, $15.9M in net working capital, and $2.7M in debt.
- Q4 results, PR
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