Seeking Alpha
  • Today - Saturday, April 25, 2015

  • 2:47 PM
    • "We already own enough of it, thank you very much," says SoftBank (OTCPK:SFTBF) Internet/media chief Nikesh Arora about Yahoo Japan (OTCPK:YAHOY). Yahoo's (NASDAQ:YHOO) recently-disclosed efforts to explore options for its 35.5% YJ stake had fueled speculation SoftBank (owns 43% of YJ) would try to buy the stake.
    • At the same time, Arora, formerly Google's sales chief, states SoftBank (has a portfolio of 1,300+ investments) is up for making new investments in growth companies ... at the right price. With valuations for private U.S. tech companies having soared, India, which has relatively low Web, smartphone, and e-commerce penetration rates and a new government widely seen as more business-friendly than its predecessor, has been an area of interest.
    • SoftBank led a $627M funding round in Indian e-commerce marketplace Snapdeal last year, and has been rumored to be weighing a major investment in low-end Indian Android OEM Micromax. It has also led a $600M round for Chinese ride-sharing platform Kuaidi Dache (recently merged with top rival Didi Dache), and invested $250M in top Southeast Asian ride-sharing platform GrabTaxi.
    • The Japanese conglomerate's 797.7M-share Alibaba stake (current pre-tax value of $67.5B) leaves it with plenty of fresh powder for further dealmaking.
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  • 1:54 PM
    • 95% of all Oracle (NYSE:ORCL) products will be available as cloud-based services by the time the company holds this year's Oracle OpenWorld conference in October, says co-CEO Mark Hurd. He asserts 65% of Oracle products are offered via the cloud today.
    • Hurd: "We are still investing, very much in our traditional products. But that said, we are moving those products to now be available in the cloud at a really incredible pace ... We are not protecting, so to speak, anything."
    • Oracle has rapidly fleshed out its cloud app (SaaS), app platform (PaaS), and infrastructure (IaaS) lineup over the last 3 years through a mixture of acquisitions and internal product launches, with the goal of keeping clients from abandoning Oracle for either the offerings of cloud-focused rivals (e.g. Salesforce, Workday) or those of fellow IT giants making their own large cloud investments (e.g. SAP, Microsoft, IBM).
    • Though Oracle faces a tough sell with Internet firms and startups that have eschewed its offerings (often for some mixture of Amazon Web Services, open-source software, and apps from cloud-only upstarts), it's gaining traction with its core enterprise base: The company's SaaS/PaaS revenue rose 30% Y/Y in the February quarter to $372M, and its IaaS revenue rose 28% to $155M. At the same time, traditional software license revenue fell 7% to $1.98B (forex was a headwind).
    • In a recent note, D.A. Davidson (Buy, $51 target) reported its research indicates Oracle's SaaS/PaaS offerings "continue to gain customer traction and mindshare, particularly in Europe," where the company faces less competition from upstarts. "Most ... pure play SaaS vendors are in earlier stages of building the distribution and channel partnerships needed to succeed longer term in this geography."
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  • 12:09 PM
    | 1 Comment
  • 12:05 PM
    • Starbucks (NASDAQ:SBUX) reports all stores are operating as usual after a national sales register outage disrupted functions last night and led to thousands of stores closing early.
    • The point-of-sale crash struck after a daily system refresh.
    • The Starbucks outage created a stir on Twitter on widespread reports of stores giving away free food and drinks.
    • Earlier this week, tech initiatives were a focal point of Starbucks earnings report and conference call presentation and Q&A.
    • Shares of Starbucks were up 8.86% last week to close at $51.84.
    • Previously: Powerful comp lifts Starbucks (April 23)
    • Previously: Tech initiatives at Starbucks gain momentum (April 23)
    | 3 Comments
  • 7:46 AM
    • Taubman Centers (NYSE:TCO) trades at a whopping 25% discount to estimated NAV, according to Green Street Advisors, versus General Growth Properties (NYSE:GGP) at just a 3% discount, and Macerich (NYSE:MAC) and SImon Property Group (NYSE:SPG) at small premiums.
    • At least partly behind the discount is worry over Taubman's capital allocation - particularly the development of two Chinese malls whose expected returns are sizably less than what the company could earn on domestic redevelopment projects (or maybe on buybacks). And what if Taubman - which still sees itself as a family company (the Taubman's own 29% of it and haven't sold a share since the 1992 IPO) - isn't satisfied with just two Chinese malls?
    • “Anybody who can put on blinders and blot out the chatter should do well,” says Green Street's Mike Kirby, arguing the Chinese fears are overblown. Taubman's a money-maker: Since the 1992 IPO, the company has generated a 15%-plus annual total return - six hundred basis points better than the S&P 500 - and dividends have grown at a 4% annual rate. The stock's sizable underperformance against its peers over the last year - add disappointing 2015 guidance to the China fears - offers investors a chance to get in relatively cheaply.
    • Source: Barron's Andrew Bary
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  • 7:46 AM
    • Texas regulators have ordered Exxon Mobil's (NYSE:XOM) XTO Energy subsidiary and another company to prove their wells near Fort Worth are not causing earthquakes.
    • On Friday the Texas Railroad Commission, which regulates the state’s oil and gas industry, told both companies they need to appear at hearings scheduled for June to justify why their wells should not be shut down.
    • The action follows a Southern Methodist University study released this week that linked a rash of small earthquakes in the area to nearby natural gas wells and the injection of wastewater deep underground.
    • Also this week, the U.S. Geological Survey reported that an increase in seismic activity in Texas, Oklahoma and six other states "very likely" was caused by  wastewater injection from oil and gas operations.
    • ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, XES, IYE, IEO, IEZ, FENY, PXE, PXJ, RYE, FXN, DDG
    | 53 Comments
  • Friday, April 24, 2015

  • 7:30 PM
    | 6 Comments
  • 7:11 PM
    • After barely moving in response to its Q1 numbers yesterday, Proto Labs (NYSE:PRLB) sold off today in the wake of downgrades to neutral ratings from Piper and Craig-Hallum. Needham downgraded ahead of the report.
    • Though the custom parts maker narrowly beat Q1 revenue estimates and posted in-line EPS, it guided for on its CC (transcript) for Q2 revenue of $61M-$64M and EPS of $0.46-$0.50, below a consensus of $63.4M and $0.49 at the midpoints. Forex is expected to have a $2M impact on sales, up from Q1's $1.75M.
    • Proto's North American revenue rose 36% Y/Y in Q1 (23% excluding the FineLine acquisition). Japanese revenue rose 23% (43.5% in constant currency), and European revenue fell 5% (up 10% in constant currency). Unique product developers/engineers served rose 44% to 11K.
    • Gross margin fell 280 bps Y/Y to 60.2% - lower additive manufacturing margins had a 110 bps impact, and forex a 220 bps impact. GAAP operating expenses rose 33% to $19.4M (compares with 27% revenue growth).
    • Q1 results, PR
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  • 6:50 PM
    • In another day of broad losses among in precious metals miners, Newmont Mining (NYSE:NEM) enjoyed a 6.5% surge following strong Q1 results that included impressive cost reductions in gold and copper production.
    • J.P. Morgan analysts especially liked the strong first quarter at Batu Hijau and Yanacocha and the deferral of some capex that allowed NEM to generate $344M in free cash flows and pay down $200M in debt; the firm says full-year guidance could be raised if cost reductions can be maintained in Q2.
    • Otherwise, it was not a good day for mining equities, following another drop in gold futures which tumbled to their lowest level in more than a month.
    • NEM CEO Gary Goldberg expects gold prices to gain ~25% to $1,500/oz. by 2020 on rising demand from China and a weaker dollar; for now, Goldberg says the strong U.S. dollar is “definitely having an adverse effect” on gold prices, and he expects the dollar will “eventually come back off of its highs in the next couple of years."
    • In today's trade: ABX -0.9%, AU -4.2%, GG -2.6%, SBGL -7.7%, GOLD -2%, AUY -2.5%, NGD -1.9%, GFI -4.4%, SLW -1%, PAAS -1.6%, EGO -4.1%, RGLD -2.7%, FNV -2.1%, KGC -0.4%, IAG -1.4%, BTG -1.9%, HL -1.9%, AGI -1.6%, AUQ -3.1%.
    | 11 Comments
  • 6:47 PM
    • Though NetSuite (NYSE:N) beat Q1 estimates, it guided on its Q1 CC (transcript) for Q2 revenue of $170M-$172M and EPS of $0.03-$0.04, below a consensus of $172.1M and $0.06. A strong dollar is blamed (26% of Q1 revenue was international).
    • Not counting the impact of the Bronto Software acquisition (announced yesterday morning, expected to close in early June), full-year revenue and EPS guidance of $715M-$725M and $0.32 is maintained. Counting Bronto, guidance is now at $730M-$743M and $0.23. Bronto is expected to contribute $40M-$45M to 2016 revenue.
    • Calculated billings rose 28% Y/Y in Q1 to $174M, topping revenue of $164.8M. However, growth slowed from Q4's 34%, and was below revenue growth of 34%. NetSuite thinks forex had a 5% impact on billings growth, up from Q4's 2%.
    • The deferred revenue balance rose 3% Q/Q and 36% Y/Y to $323.4M. GAAP operating expenses rose 29% Y/Y to $131.4M. A record number of $250K+ deals were struck.
    • NetSuite also guided light in January.
    • Q1 results, PR
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  • 6:23 PM
    • Marketo (NASDAQ:MKTO) sold off today in spite of beating Q1 estimates and issuing above-consensus sales guidance: The cloud marketing automation software provider expects Q2 revenue of $49.5M-$50.5M (consensus was at $49.2M) and 2015 revenue of $208M-$210M (consensus was at $205.5M).
    • The Street might have been looking for better EPS guidance in light of the top-line strength: Q2 EPS guidance is at -$0.22 to -$0.24 (-$0.22 consensus), and full-year guidance at -$0.81 to -$0.85 (-$0.82 consensus).
    • Calculated billings rose 37% Y/Y in Q1 to $49.9M, topping revenue of $46M (+42%), and the deferred revenue balance grew 6% Q/Q and 47% Y/Y to $66.9M. GAAP operating expenses rose 44% Y/Y to $48.5M. The customer count rose by 198 Q/Q to 3,972.
    • Q1 results, PR
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  • 6:12 PM
     
    • Reuters reports Nutanix, a fast-growing maker of integrated server/storage systems for companies adopting hyperscale data center architectures (beloved by many Internet firms), is in talks to hire underwriters for an IPO that could value it at over $2.5B.
    • Nutanix was valued at over $2B in a $140M 2014 funding round. To a large extent, its systems are aimed at companies that want the cost, integration, scalability, and deployment time benefits of hyperscale data centers, but (unlike Google, Facebook, or Amazon) don't want to take a do-it-yourself approach to hardware and management software.
    • As of last August, Nutanix had over 800 customers; its client list includes Starbucks, the U.S. Army, Best Buy, Honda, Yahoo Japan, and eBay. Last year, VMware launched a rival platform (known as EVO:RAIL) that leverages its vSphere server virtualization platform and has been adopted by OEMs such as EMC, Dell, and Fujitsu.
    | Comment!
  • 6:00 PM
     
    • S&P +0.26%.
    • 10-yr +0.19%.
    • Euro +0.48% vs. dollar.
    • Crude -0.79% to $57.29.
    • Gold -1.32% to $1,178.50.
    | Comment!
  • 5:55 PM
    • EQT Corp. (NYSE:EQT) is reiterated with a Buy rating with a new $103 price target, up from $87, at Canaccord following Q1 earnings and revenues that easily beat analyst estimates.
    • The firm believes EQT's execution - as evidenced by Q1 results that it expects to see continued throughout the year - coupled with a clean balance sheet, a liquidity event in the EQGP IPO, and potential for a NAV accretive acquisition, make a strong investment case for the company.
    • EQT increased its 2015 guidance for production sales volume to 585B-600B cfe, including liquids volume of 9,000-10,000 Mbbls, and sees Q2 volumes at 145B-150B cfe with liquids of 2,300-2,400 Mbbls.
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  • 5:51 PM
    • A BlackBerry (NASDAQ:BBRY) spokeswoman: "At this time, we are considering the closure of our offices in Sweden [and] since this may impact approximately 100 employees, we are now initiating consultations with the employees’ trade unions." The comments follow Swedish media reports stating BlackBerry is closing down its local software design ops.
    • The company's Swedish design team stems from its 2010 acquisition of UI design firm The Astonishing Tribe (TAT). While the unit has contributed to a variety of products, much of the original TAT team has long departed.
    • BlackBerry, of course, has already cut plenty of jobs over the last two years. Its R&D spend fell 46% Y/Y in the February quarter, and its sales/marketing/admin spend 52%. The company's global headcount is around 7K.
    | 79 Comments
  • 5:50 PM
    • Windstream Holdings (WIN -5.6%) has completed the spinoff of telecom assets into its REIT Communications Sales and Leasing (Pending:CSAL).
    • The tax-free transaction means that share distribution and a reverse split will execute this weekend: Windstream shareholders will receive one share of CSAL for every five Windstream shares they held of record at 5 p.m. ET on April 10, with an ex-date of April 27.
    • After that, at 8 p.m. Sunday, Windstream will execute a one-for-six reverse split of its common stock. CSAL shares should be deposited into accounts by April 30.
    • CSAL will begin trading on Nasdaq on Monday.
    • As expected, Windstream shareholders of record April 10 will get a cash dividend of $0.0659. After the reverse split, the company expects to pay $0.60 annually via quarterly dividends.
    • Also: Windstream repaid $2.4B in debt and received cash proceeds of $1.035B to retire additional debt, and boardmember Francis X. Frantz will leave Windstream's board to serve as chairman of CSAL's board.
    • Related: Windstream Announces Redemption of Debt
    | 3 Comments
  • 5:44 PM
    • Caterpillar (NYSE:CAT) is maintained with a Buy rating at Stifel following Q1 results, believing that buybacks, a healthy dividend, and North American construction will remain steady while investors await a boost in commodities - a function of the U.S. dollar, and demand in China and emerging markets.
    • The bears are out on CAT, but the firm thinks it is a stretch to expect the current downturn will last much longer than 2016 and believes a recovery in North American heavy construction is in the early stages.
    • Barclays raises its price target to $93 from $90, noting that CAT's Q1 15.8% construction margin was well above its 11.4% estimate; CAT also seems open to more significant cost takeouts, particularly within resource industries, after increasing its planned restructuring costs by $100M in 2015 (Briefing.com).
    • Wolfe Research thinks CAT’s results are bad news for Joy Global (NYSE:JOY), and the firm expects multiple revenue and EPS revisions for JOY through 2015.
    | 5 Comments
  • 5:37 PM
    • Top gainers, as of 5:15 p.m.: UEC +4.3%. SIMO +3.3%. EJ +3.2%. CDE +2.5%. WTW +2.4%.
    • Top losers, as of 5:15 p.m.: AKRX -13.1%. MRVL -5.6%. MXWL -1.7%. VRSN -1.5%. VALE -1.4%.
    | Comment!
  • 5:32 PM
    • Marvell (NASDAQ:MRVL) now expects FQ1 revenue of $710M-$740M, well below prior guidance of $810M-$830M and an $816.3M consensus. All other guidance has been withdrawn.
    • The chipmaker blames "weaker than previously expected PC and storage markets and lower than expected emerging market demand." The former is presumably a reference to hard drive/SSD controller sales; the latter might be a reference to Chinese baseband chip sales.
    • PC sales were down sharply in Q1, thanks in large part to weak corporate and Japanese demand. Meanwhile, analysts have  voiced concerns about soft chip orders from Chinese smartphone OEMs.
    • Shares have fallen to $13.50 AH. They fell 1.6% in regular trading after several peers offered soft guidance. Full FQ1 results arrive on May 21.
    | 2 Comments
  • 5:23 PM
    • Peabody Energy (NYSE:BTU) held steady a day after a larger than expected Q1 loss triggered a 7.6% pounding in the stock price.
    • Sterne Agee's Michael Dudas is optimistic, noting BTU ended Q1 with liquidity of $2.2B following its recent refinancing; at cycle lows for pricing, strong current and anticipated cost reduction efforts, and liquidity to meet estimated fixed outlays, the firm thinks BTU shares should benefit once pricing resets to more normalized levels.
    • BTU said during yesterday's earnings call that it has studied creating a coal MLP, and Clarkson analyst Jeremy Sussman says BTU's Illinois Basin and Southwest assets could prove a good fit for an MLP structure because of the long-term nature of contracts and general stability of pricing in those regions.
    • However, Nomura reiterates its Reduce rating on the shares, citing concerns about cash flow generation.
    | 2 Comments
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