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Today - Tuesday, August 4, 2015
- Telecom Italia (TI -1.3%) is looking to avoid up to €4B (about $4.4B) in antitrust charges via a reorganization of the unit that leases its wireline network to competitors -- including Vodafone (NASDAQ:VOD), which is seeking more than €1B in damages, Bloomberg reports.
- The plan would be modeled after what BT Group has done in the UK with Openreach: folding its OpenAccess unit into its wholesale business.
- The board is reportedly set to review the plan at a meeting on Thursday. TI has reportedly made provisions, including one-time items of €309M in Q2, to address antitrust concerns.
- Telecom competitor Fastweb SpA --owned by Swisscom (OTCPK:SCMWY) -- is also pursuing remedies against TI, to the tune of €1.7B.
- The proposal would have TI buying wholesale capacity from OpenAccess just as its rivals do, and the wholesale group would have total oversight over OpenAccess.
- Boeing (NYSE:BA) is scrambling to find alternate financing for a satellite contract worth "several hundred million dollars" that was scuttled by commercial satellite provider ABS due to uncertainty about the future of the U.S. Export-Import Bank, according to a Reuters report.
- ABS is said to have terminated its order for the satellite in mid-July, citing the expiration of the trade bank's charter on June 30 and that it would have to consider non-U.S.-based producers, given the absence of U.S. export credit financing.
- Boeing first announced the ABS contract in June.
- Nabors Industries (NYSE:NBR) says it expects a decrease in Q3 results as current depressed market conditions likely will prevail for an extended period.
- Q2 results, "while down significantly [Y/Y], were better than we had anticipated," Chairman/CEO Anthony Petrello says, adding that NBR expects another decline in Q3 but that the quarter may "represent the bottom in most areas outside of the U.S. Lower 48," as international rig startups and Q4 seasonal upticks in Alaska and Canada should "mitigate some of the impact of further pricing erosion in the U.S."
- NBR says it expects the North American market to remain depressed for a long time; total Q2 revenue fell 47% Y/Y to $863M, with revenue from the company's drilling operations in the U.S. falling ~40%.
- Major U.S. telecoms are reporting widespread phone outages in the Midwest and Southeast, for both wireless and wireline service.
- The outages seem centered in Kentucky, Indiana, Alabama and Tennessee, but they affect customers of AT&T (NYSE:T), Verizon (NYSE:VZ), Sprint (NYSE:S) and T-Mobile (NYSE:TMUS). All four of those carriers acknowledged the outages on Twitter accounts.
- AT&T suggested that the problem has been pinpointed to a hardware issue and that engineers are working with vendors to restore service.
- In addition to slightly missing Q2 revenue estimates (while beating on EPS), Enphase (NASDAQ:ENPH) is guiding for Q3 revenue of $100M-$105M, up modestly from a year-ago level of $99.1M, below a $115.6M consensus, and potentially triggering more concerns about competition from SolarEdge (NASDAQ:SEDG). However, with shares down 61% YTD going into earnings, a lot was priced in.
- Lifting Enphase's Q2 EPS: Gross margin was 32.7%, +10 bps Q/Q and -30 bps Y/Y, and above a 30%-32% guidance range. Q3 GM guidance is also at 30%-32%. Also: Operating expenses rose a moderate 12% Y/Y to $30.3M; they're expected to be flat to up 3% Q/Q in Q3. Enphase ended Q2 with $31.9M in cash, and no debt.
- Enphase has risen to $5.90 AH. SolarEdge has risen to $30.44 ahead of its Aug. 12 FQ4 report.
- Enphase's Q2 results, PR
- The first oil from a long-duration output test in Brazil's giant Libra offshore area now is projected to flow in Q1 2017 instead of H2 2016, says Odebrecht Oil & Gas, which will operate the test platform with Teekay Offshore Partners (NYSE:TOO).
- The later startup date could be one the first signs that Petrobras (NYSE:PBR), which manages exploration in Libra, may be having trouble meeting targets in its $130B 2015-19 strategic plan.
- PBR owns a 40% stake in E&P rights to Libra, one of the largest oil discoveries of the past three decades; Total (NYSE:TOT) owns 20%, Royal Dutch Shell (RDS.A RDS.B) 20%, and 10% each for Chinese state oil companies Cnooc (NYSE:CEO) and China National Petroleum (NYSE:PTR).
- Though it beat FQ1 estimates, InvenSense (NYSE:INVN) guided on its earnings call (webcast) for FQ2 revenue of $106M-$114M and EPS of $0.13-$0.15, below a consensus of $115.5M and $0.17. However, a soft outlook was expected by many, given the light calendar Q3 guidance provided by a slew of other chipmakers.
- Gross margin (affected by Apple/Samsung pricing) remained under pressure in FQ1, dropping to 44.6% from FQ4's 46% and the year-ago period's 49.6%, and slightly missing guidance of 45%-46%. FQ2 GM guidance is at 44%-45%. Operating expenses rose 32% Y/Y to $32M (compares with 59% revenue growth).
- Apple and Samsung respectively accounted for 38% and 23% of FQ1 revenue, and a third company (presumably a Chinese OEM) 10%. The U.S. was responsible for 41% of sales, Korea 27%, and China 23%. Smartphones/tablet motion sensor sales made up 72% of revenue, OIS gyroscopes 15%, and other end-markets 12%.
- INVN +0.5% AH to $12.82. Shares fell 6.6% in regular trading ahead of earnings, following other Apple suppliers lower.
- FQ1 results, PR
- Exxon Mobil (NYSE:XOM) says it has reversed a 71-mile segment of its North Line oil pipeline from Longview, Tex., to northern Louisiana, in the first step of a bigger plan to link Permian Basin output to Louisiana refineries.
- The segment is helping feed ~15K bbl/day of Texas crude to Delek US Holdings' (NYSE:DK) Arkansas refinery, displacing barrels that had been trucked or railed to the plant at higher transportation costs, DK executive VP Mark Smith told analysts during today's earnings conference call.
- Smith said DK's 80K bbl/day El Dorado refinery is North Line's sole shipper until XOM finishes reversing another idle stretch to Baton Rouge, where XOM operates a 502.5K bbl/day refinery.
- CEO Bob Iger took a large chunk of time at the beginning of the Walt Disney (NYSE:DIS) earnings call to vigorously defend ESPN -- a nod to recent rampant discussion about the sports empire's fortunes in the new multichannel environment.
- "We're realists about the business and about the impact technology has had," Iger said. "We're also quite mindful about trends in younger audiences in particular."
- "ESPN has experienced some modest sub losses -- though those are less than reported by a prominent research firm," Iger said. "And the vast majority of them, 80%, are due to decreases in multi-channel households ... only a small percentage due to skinny bundles." Nielsen has said that ESPN has lost 3.2M subscribers in just over a year.
- In the company's fiscal Q3 results, it noted that operating results at ESPN were driven by affiliate revenue growth even as ad revenue declined. Subscriber numbers were goosed by the August 2014 launch of the SEC Network. Lower ad revenues "reflected lower ratings and rates."
- Last week Iger suggested that ESPN could go direct to consumers (over-the-top) eventually, but today talked up the standard program bundle and said unbundling is still "a positive trend for us ... ESPN is a must-have brand," not only No. 1 in sports media but the leader in live programming. "Ninety-six percent of all sports programming is watched live," he said, particularly valuable in today's ad marketplace.
- Another concern tackled in the call was currency-exchange headwinds. New CFO Christine McCarthy said Disney was updating its old long-term guidance through 2016, seeing $500M in forex effects for revenue. And "due to lower sub levels, we now expect domestic cable affiliate revenue [growth] to fall short of previous expectation, but still in high single digits."
- DIS is now down 6.3% after hours.
- Previously: Disney -2.3% as Q3 revenues fall short; profits up 11% (Aug. 04 2015)
- Chesapeake Energy (NYSE:CHK) ended today's trade at another 52-week low ahead of tomorrow morning's Q2 earnings report, but the market’s extreme reaction to CHK’s recent dividend cut may have provided a buying opportunity.
- WSJ's Spencer Jakab, for one, is backing CHK's move to preserve cash with a potentially positive impact on future output as well as the company’s financial viability, and finds it "frustrating" that the cut was interpreted as a sign that things are worse than believed.
- While the price of natural gas remains weak and could cause further woes for CHK, but Q2 results should show that things the company actually can affect, such as efficiency, continue to improve, Jakab writes.
- CHK "remains far from distress and could sell more assets, but its exaggerated weakness may have brought a larger asset into play: the whole company," Jakab concludes.
- Analyst consensus for Q2 results calls for an $0.11/share loss vs. a $0.38 profit last year on revenue of $2.79B (-45% Y/Y).
- While ZAGG's tablet keyboard, portable power (charger/cable), and audio (speaker/headphone) sales all declined Y/Y in Q2, strong screen protector demand fueled a 33% Y/Y revenue increase (improved from Q1's 17%).
- iPhone 6/Galaxy S6-related sales boosted screen protector demand, as did broader distribution. The keyboard/power declines are blamed on unfavorable comps caused by year-ago "customer launch initiatives," and the audio decline on "less product placement at a key customer" and "fulfillment challenges."
- Gross margin (benefits from a mix shift towards screen protectors) was 37% vs. 40% in Q1 and 33% a year ago. GAAP operating expenses rose 23% Y/Y to $18.7M.
- Zagg has risen to $8.10 AH.
- Q2 results, PR
- Caliber Midstream Partners, a pipeline operator owned by Triangle Petroleum (NYSEMKT:TPLM) and First Reserve, have ended a sale process after failing to fetch a high enough price, Bloomberg reports.
- Part of the reason the sale fell through is because potential buyers were nervous about the production outlook for TPLM, Caliber’s main customer, according to the report.
- Caliber reportedly was working with Credit Suisse to find a buyer, valuing itself at as much as $1B.
- TPLM owns ~28% of Caliber, which operates a network of oil and gas pipelines as well as businesses that help transport and dispose of water used in the drilling process.
- Bankrate (NYSE:RATE) is zooming after hours, +29.3%, after a Q2 report where revenues beat expectations and the company bumped its full-year sales guidance up.
- EBITDA of $35.8M beat an expected $33.9M.
- Revenue by segment: Banking, $27M (down 7.4%); Credit cards, $56.1M (up 1.8%); Insurance, $43.9M (down 3.2%); Other, $5.9M.
- For the full year, Bankrate raised its revenue guidance to $525M-$531M (vs. an expected $526M) from its previous range of $520M-$530M, and maintaining EBITDA guidance of $145M-$150M, in line.
- For Q3, it's guiding to revenue of $125M-$130M (just short of an expected $131.5M) and EBITDA of $33M-$35M (vs. expectations of $35.5M).
- Press Release
- Identive (NASDAQ:INVE) expects to report Q2 revenue of $15.6M, -30% Y/Y and well below a $22M 3-analyst consensus. Adjusted EBITDA is expected to be at -$4.2M, thanks largely to "a significant increase in legal and accounting professional fees associated with non-core business activities and increased spending on partner marketing programs."
- The company now expects 2015 revenue of $65M-$70M, below prior guidance of $90M-$95M and a $92.1M consensus. "Cost reduction activities" have been implemented.
- The Q2 revenue shortfall is blamed on "a continued decline in the Company's international sales and delayed deployment timeframes for new U.S. customers."
- Shares have tumbled to $3.00 AH. Official Q2 results arrive on the afternoon of Aug. 13.
- Devon Energy (NYSE:DVN) +2.5% AH after reporting better than expected Q2 earnings, helped by growth in its U.S. operations and cost reduction initiatives, even as revenues fell 25% Y/Y.
- DVN says Q2 total oil production averaged 270K bbl/day, up 32% Y/Y and beating the midpoint of guidance by 5K bbl/day, while U.S. oil production averaged a record high of 172K bbl/day, attributed to production from the Eagle Ford and Permian basin plays; including production from Canadian oil sands and heavy crude assets, Q2 total production averaged 674K boe/day, up 9% Y/Y.
- DVN guides its Q3 production outlook to 638K-676K boe/day and its full-year forecast to 649K-684K boe/day.
- Expects FY 2015 capital spending of of $4.4B-$4.8B, ~10% above the $4.1B-$4.4B range projected in February.
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