Seeking Alpha
  • Today - Friday, October 31, 2014

  • 6:59 PM
    • Herbalife (NYSE:HLF) has settled an 18-month-old class-action suit accusing the company of operating a pyramid scheme. Financial terms are undisclosed; Herbalife says the settlement doesn't feature "an admission of liability or wrongdoing."
    • Former distributor Dana Bostick originally filed the suit, alleging his efforts were "doomed from the start by an Herbalife marketing plan that systematically rewards recruiting over retail sales."
    • Last year, Herbalife amended its distributor agreements to preclude distributors from filing jury and class-action suits.
  • 6:50 PM
    • The recent wild behavior in the energy MLP sector - tumbling nearly 3x more than the S&P 500 during the first 10 trading days of October before rallying this week, with an assist from Shell Midstream Partners (NYSE:SHLX), which went public in a $1.1B offering and gained 46% - should not weaken the investment case for those who are choosy and hold for the long term, analysts say.
    • Investors worry that some E&P companies won’t be able to make money in a low oil price environment, and MLPs in the same business face tough times, but those upstream MLPs make up only ~5% of the total value of the sector, perhaps suggesting that the across-the-board decline was too extreme.
    • MLPs may remain expensive relative to their own history, but their average distribution of 5.5% in annual income - which should grow at ~7%/year in the next few years to 12%-plus - is plenty attractive relative to everything else.
    • To steer clear of the risk that lower energy prices will crimp profits, analysts advise concentrating on midstream operators; among the most stable are ETP, ETE, EQM, MMP, PAA, PAGP and SXL.
  • 6:49 PM
    • Tencent's (OTCPK:TCEHY) MyApp Android app store is now seeing 100M daily downloads, up from just 76M in July. The figure covers both apps downloaded directly from the MyApp store, and from Tencent's WeChat and Mobile QQ messaging platforms.
    • Qihoo and Baidu's 91 Wireless unit remain the leaders in China's fragmented Android app store market - 91 Wireless averaged 130M downloads/day in Q2. But the near-ubiquitous reach of WeChat/QQ within China, together with Tencent's mobile gaming clout, is helping Tencent gain ground.
    • Separately, Tencent, which is best known for its consumer offerings, has signed an MOU with IBM to jointly sell cloud apps and related services to Chinese SMBs. Tencent's cloud services unit will host the apps, and IBM will provide consulting and IT services.
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  • 6:26 PM
    • The average gallon of gasoline in the U.S. will cost less than $3 this weekend for the first time in nearly four years, with more than 60% of all U.S. stations selling gas for less than $3/gallon, according to AAA.
    • "We're going to continue going down, and by Thanksgiving I'm seeing $2.80 a gallon" before stabilizing into early 2015, oil analyst Andy Lipow tells CNBC, noting that gasoline futures are tumbling, which will be passed on to consumers over the next few weeks.
    • Lipow remains wary of a potential market surprise if Saudi Arabia decides to cut production, "since the market thinks that OPEC is going to do nothing."
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  • 6:17 PM
    • Morgan Stanley's Simon Flannery: "Crown Castle (CCI -6.2%) now offers a ~4% dividend yield, based on [Thursday's] closing price, compared to the REITs, which yield between 3.3% and 3.9%. We continue to see upside, as the stock attracts income oriented investors."
    • Though it just more than doubled its payout following pressure from activist Corvex Management, Crown Castle still expects to grow its dividend at a rate on par with its AFFO growth; the tower owner is aiming for 6%-7% growth on an organic basis.
    • Shares sold off due to disappointment with CCI's 2015 outlook: The company expects AFFO/share of $4.31-$4.37, below a $4.75 consensus. Site rental revenue is expected to rise to $3.047B-$3.067B from a 2014 level of $3.001B-$3.006B.
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  • 6:00 PM
    • S&P +1.05%.
    • 10-yr -0.18%.
    • Euro -0.69% vs. dollar.
    • Crude -0.6% to $80.63.
    • Gold -2.2% to $1,172.20.
    | Comment!
  • 5:57 PM
    • BBM has been updated to include several new features: Among them: Support for messages/pictures that automatically erase following a specified amount of time (echoes of Snapchat); the ability to retract messages from a chat; HD photo transfers; and a new music discovery feature.
    • BlackBerry (NASDAQ:BBRY) says timed messages and message retractions - two features that could appeal to privacy-sensitive business users - will be available for free for the next 3 months, but will afterwards be "offered as part of a BBM subscription."
    • BlackBerry has previously announced plans to monetize BBM via mobile ads/sponsored content, virtual goods, and payments. BBM monthly active users (MAUs) totaled 91M at the end of August, up from ~60M at the time Android/iOS apps were released a year ago. Rivals include WhatsApp (600M+ MAUs), Line, Viber, WeChat, and Facebook Messenger.
  • 5:56 PM
    • United Steelworkers leaders, representing employees at two-thirds of U.S. refineries, are "looking for a fight" as they prepare to negotiate the next three-year contract with refiners, says the USW international VP who manages the union’s oil sector.
    • The USW is seeking a substantial increase in wages, stronger rules to prevent fatigue and measures to preserve the share of union workers rather than contract employees.
    • During the last round in 2012, USW and Shell (RDS.A, RDS.B), which represented refiners, spent about a month in negotiations before agreeing to a national contract which was used as the foundation for forging refinery-by-refinery contracts with union locals.
    • An S&P index of refiners - including Exxon (NYSE:XOM), Chevron (NYSE:CVX), Marathon Petroleum (NYSE:MPC) and Tesoro (NYSE:TSO) - has more than doubled since the beginning of 2012, and the unions want a piece of the pie.
  • 5:39 PM
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  • 5:37 PM
    • The cheapest crude oil in more than two years has the world’s two top oil producers, Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), glad they held onto their refineries when rivals were shunning the business.
    • Both companies reported better than expected Q3 earnings today (I, II), with executives touting the importance of owning massive refineries alongside oil and gas wells, "demonstrat(ing) the strength of our integrated business model," as XOM CEO Rex Tillerson says.
    • XOM’s Q3 profit from refining jumped, helping drive a 2.5% Y/Y increase in its total profit, while CVX’s refinery earnings more than tripled, propelling a 13% jump in overall profit; XOM said it sold U.S. oil for $89.60/bbl on average, down 12% Y/Y, while international barrels fetched $96.76, or 9.3% less, and CVX said its U.S. price fell $10/bbl to $87 as international prices fell $93 from $104.
    • But sustaining profits could be more of a challenge if demand for fuels continues to weaken around the world, which could limit output and profit gains at refining operations; also, refining profit margins already are shrinking as gasoline and diesel prices are dragged lower by the crude from which they’re derived.
    | Comment!
  • 5:28 PM
    • Sony (SNE +5.8%) sold 3.3M PlayStation 4 units in calendar Q3, up from 2.7M in Q2 and easily outpacing the 2.4M Xboxes sold by Microsoft in Q3. In addition, Sony reported its gaming unit posted a $195M profit, up from $43M in Q2 thanks to rising PS4 game royalties.
    • VG Chartz estimates Sony has cumulatively sold 12.3M PS4 units since last fall, and Microsoft 6.1M Xbox One units. To boost sales, Microsoft recently slashed Xbox One prices by $50 - starting Nov. 2, the One sells for $349 without a Kinect, and $449 with one.
    • Electronic Arts (EA +2.8%), Activision (ATVI +1.9%), and Take-Two (TTWO +4.7%) outperformed again today. All three game developers rallied yesterday after Take-Two posted a big FQ2 beat on the back of strong sales for Grand Theft Auto V, NBA 2K14, and Borderlands 2. EA jumped thanks to an FQ2 beat and strong EPS guidance the day before.
    • GameStop (GME +1.5%) and PS4 CPU/GPU supplier AMD (AMD +1.8%) are likely also happy with Sony's PS4 sales figure.
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  • 5:25 PM
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  • 5:16 PM
    • Alliqua BioMedical (ALQA +3.6%) Q3 results: Revenues: $1.5M (+275.0%); COGS: $0.9M (+50.0%); R&D Expense: $0.6M (+700.0%); SG&A: $5.7M (+171.4%); Operating Loss: ($5.2M) (-126.1%); Net Loss: ($5.1M) (-131.8%); Loss Per Share: ($0.33) (6.5%); Quick Assets: $19.9M (+64.5%).
    • FY14 Guidance: Revenue $4.7M-5M (+160%-180%)
    • FY15 Guidance:Revenue $11M-13M
    • Previously: Alliqua misses by $0.02, beats on revenue
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  • 5:09 PM
    • Furmanite (NYSE:FRM): Q3 EPS of $0.05 misses by $0.07.
    • Revenue of $124.12M (+24.7% Y/Y)
    • Press Release
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  • 5:02 PM
    • S&P +1.05%.
    • 10-yr -0.18%.
    • Euro -0.69% vs. dollar.
    • Crude -0.6% to $80.63.
    • Gold -2.2% to $1,172.20.
    | Comment!
  • 5:01 PM
    • Endologix (ELGX +1.4%) Q3 results: Global Revenue: $37.2M (+12%); U.S. Revenue $27.1M (+2%); COGS: $13.6M (+84.4%); Gross Profit: $23.6M (63% GM); Operating expenses $32.5M (+15.7%); Net Loss: $(13.9M) (-55%); Loss Per Share: $(0.21) (-50%); Quick Assets: $100.5M (-20.6%).
    • No guidance given.
    • Previously: Endologix EPS in-line, beats on revenue
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  • 4:58 PM
    • Southwestern Energy (NYSE:SWN) is initiated with an Outperform rating and a $50 share price target, implying a potential ~57% gain, at Imperial Capital, which believes SWN is positioned as one of the lowest-cost producers in the U.S. and potentially taking market share in the midst of a major step-up in U.S. demand for natural gas the firm sees as likely in the 2016-17 period.
    • As a low-cost producer, SWN is one of the few U.S. E&P companies with the potential to flourish in a low $4.00/Mcf U.S. natural gas price environment the firm expects over the next few years.
    • A recent $5.4B property acquisition in the southwest Marcellus and Utica play region from Chesapeake Energy fits what SWN does best and can become a third low-cost core growth area, Imperial adds.
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  • 4:53 PM
    • Molina Healthcare (MOH +4.6%) Q3 results: Revenues: $2,484.4M (+47.3%); Medical care cost $2,097.8M (+52%); G&A expenses $178.7M (+1.5%); Operating expenses $2,444.6M (+47%); Operating Income: $39.8M (+60%); Net Income: $16.1M (+113%); EPS: $0.33 (+106%); Quick Assets: $1,598.6M (+70.8%); CF Ops: $605.7M (+171%).
    • No Guidance given
    • Previously: Molina Healthcare EPS of $0.33
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  • 4:48 PM
    • Though Castlight (CSLT -3.6%) beat Q3 EPS (and revenue) estimates, its Q4 EPS guidance (-$0.20 to -$0.22) was below a -$0.23 consensus. Revenue guidance of $12.8M-$13.2M was above a $12.6M consensus.
    • The cloud healthcare software provider added 29 clients in Q3 (7 in the Fortune 500), raising its total base to 159.
    • GAAP opex rose 64% Y/Y to $25.5M, with sales/marketing spend rising 70% to $14.8M.
    • Q3 results, PR
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  • 4:48 PM
    • Westport Innovations (NASDAQ:WPRT) reversed earlier losses in late trading, finishing 2% higher after the K&M Douglas Trust disclosed a 15.6% active stake via a 13D filing.
    • WPRT reps have solicited Douglas’ views on management and strategic direction, according to the filing.
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