Today - Saturday, May 23, 2015
- Royal Dutch Shell (RDS.A, RDS.B) CEO Ben van Beurden endorses the view that the world’s fossil fuel reserves cannot be burned unless a way is found to capture their carbon emissions, but maintains that hydrocarbons will be needed for years to come.
- Justifying Shell's decision to drill exploration wells in the Alaskan Arctic, the CEO says: "The decline in existing production is always going to be faster than the decline that the most successful [low carbon] policies can create. There is always going to be a need for investment."
- But van Beurden criticizes calls for pension funds and foundations to divest from energy companies, in particular The Guardian's "Keep it in the Ground" campaign, and considers it a simplistic solution.
- Shell confirms it will attend an upcoming meeting with major European energy companies including BP, Total (NYSE:TOT), Statoil (NYSE:STO) and Eni (NYSE:E) to form a unified strategy on dealing with climate change issues ahead of U.N. talks that could force billions of dollars of oil, coal and gas to remain in the ground.
- In Canada, Suncor (NYSE:SU) CEO Steve Williams says his company is willing to pay a carbon tax but thinks it should apply to both companies and consumers; "If you look at carbon production in a modern economy, about 80% of it is at the point of consumption or the point of use," he says.
Friday, May 22, 2015
- Justice Department investigators have identified criminal wrongdoing in General Motors' GM failure to disclose a defective ignition switch and are negotiating what is expected to be a record penalty, NY Times reports.
- A final settlement number is still being negotiated but is expected to exceed the $1.2B paid last year by Toyota for concealing unintended acceleration problems in its vehicles, according to the report, which also says a settlement could be reached this summer.
- Amazon (NASDAQ:AMZN) is prepping Handmade, a marketplace for handcrafted goods that takes direct aim at market leader ETSY. The WSJ reports Etsy sellers have received invites offering a sneak peek at Handmade, and directing them to a questionnaire regarding which products they offer.
- Amazon's huge customer base and fulfillment infrastructure could quickly make it a thorn in Etsy's side. At the same time, Etsy's cult following and large network effect of craft/vintage goods buyers and sellers arguably make it tough to dislodge. Also (as noted by the WSJ), Etsy's 3.5% cut and $0.20 listing fee might make it cheaper than Handmade - Amazon currently takes up to a 15% cut on marketplace sales.
- Amazon is two months removed from launching a home services site that competes against Angie's List. The company has also recently launched a restaurant takeout/delivery service that competes against GrubHub.
- ETSY -1.2% AH to $16.96. Shares plunged on Wednesday thanks to the company's Q1 numbers, briefly dipping below April's $16 IPO price.
- Philip Morris International (NYSE:PM) and British American Tobacco (NYSEMKT:BTI) are suing the British government over new rules starting next May that would require cigarettes to be sold in plain packages.
- The tobacco industry is alarmed over a growing international move toward laws mandating that colorfully branded cigarette boxes be replaced with drab, uniform packages displaying prominent health warnings.
- Separately, a U.S. appeals court today issued a split ruling on what kinds of statements tobacco companies must make in product warnings after a judge found them in violation of federal law nearly a decade ago.
- Defendants included Altria (NYSE:MO), Reynolds American (NYSE:RAI) and Lorillard (NYSE:LO), which have battled with the Justice Department and public health advocates over the exact wording of the warning statements; today's ruling could further delay the date when any such warnings appear in public.
- Slides leaked by a Chinese site Intel (NASDAQ:INTC) plans to launch the first CPUs for its 14nm Skylake platform (successor to the current-gen/14nm Broadwell line) in August/September, and gradually flesh out its Skylake lineup over the following 4-5 months. Intel has said Skylake will launch in 2H15.
- Desktop Skylake chips codenamed Skylake-S will reportedly arrive in August and September - with Intel skewing its Broadwell launches towards notebooks and tablets, some PC OEMs are opting to pass on launching desktop Broadwell parts and wait for Skylake.
- Reportedly due in September: High-end notebook CPUs (Skylake-H), mainstream notebook CPUs (Skylake-U), and ultrabook/tablet CPUs (Skylake-Y). Additional Skylake-H parts are said to be due in October/November, and additional Skylake-U/Y parts in January.
- Whereas Broadwell prioritized lowering power draw and enabling new form factors (see Apple's 12" retina MacBook), Skylake appears to emphasize CPU/GPU performance gains as much as power savings. The PC industry is counting on Skylake and Windows 10 to spark a 2H15 rebound following a rough start to the year.
- Separately, Digitimes reports Intel and Chinese mobile SoC partner Rockchip have stepped up their efforts to sell Rockchip's 3G Atom SoC (part of the SoFIA line, launched in March) to white-box Chinese tablet makers. As part of the effort, Intel is said to be offering a $3 subsidy for each device using the chip.
- 7" tablets using the Rockchip SoC reportedly wholesale for just $45. With the help of generous marketing subsidies, Intel shipped 46M tablet CPUs last year, beating a goal of 40M.
- CBS zipped through its annual meeting in about a half hour and, as expected, Chairman Sumner Redstone skipped it, as he did Viacom's meeting in March and recent earnings calls.
- Despite the (upbeat) content of CEO Les Moonves' state-of-the-company presentation, shareholder question No. 1 was about M&A.
- Moonves yet again dismissed rumors that CBS might take over Viacom (VIA, VIAB): “We have no intention at this point in time or any time in the future to take over anybody ... We are very satisfied with our assets and our performance. We don’t see anything like that."
- But considering the nature of Redstone's heavy control of both companies, and the confusion around succession, a sale/merger of one or both after his death gets increasingly likely.
- Redstone's current setup means control of his trust would pass to seven people, only two of which (including daughter Shari Redstone) are family members. The relationship with Shari is reportedly strained, and as Sumner Redstone's live-in girlfriend and ex-girlfriend plan his 92nd birthday party next week, Tony Bennett is invited -- but not Shari.
- At the meeting, Moonves praised the network's increased ownership of its shows (important as content licensing becomes a more significant revenue driver) and its moves into digital distribution.
- Previously: Redstone to skip CBS annual meeting next week (May. 14 2015)
- Arch Coal (NYSE:ACI) has hired restructuring advisers to explore ways to decrease its $5B-plus debt load, WSJ reports, as the deep coal market slump continues to weigh on the company.
- ACI is not planning a broad restructuring of its debt load through bankruptcy, but instead is looking to trim its debt through deals with bondholder groups, according to the report.
- ACI is said to be in talks with holders of its bonds due in 2020, with one potential option to swap the bonds for new, higher-ranking debt.
- Separately, ACI says it has received a continued listing standard notice from the NYSE for failing to average at least $1/share for the preceding 30-day trading period.
- Monsanto's (NYSE:MON) efforts to try to take over Syngenta (NYSE:SYT) could spark a selloff or de-emphasis of its glyphosate product line that last year brought in ~$5B, or a third of total MON's revenues, industry sources tell Reuters.
- The key ingredient in MON's popular Roundup herbicide is glyphosate, the world's most widely used weed-killing agent, but its heavy use has led to high levels of weed resistance, and rivals have been developing alternative herbicide options.
- A move away from glyphosate would make sense for MON, a Piper Jaffray analyst says, since "as resistance continues to grow with glyphosate, the value of that product is likely going to decline."
- Executive VP for global strategy Kerry Preete told investors earlier this week that in addition to selling off SYT's seeds and traits business to make the acquisition work, MON is open to selling "certain overlapping crop protection chemical assets that exist."
- More trouble for Discovery Communications (DISCA -0.5%) at TLC, its second-biggest network, after it pulls all episodes of 19 Kids and Counting from its schedule following its star's admission of child molestation.
- The show is one of the biggest brands at the "troubled" network -- just as was Here Comes Honey Boo Boo, before it was canceled after allegations also related to child molestation.
- After refusing comment yesterday, TLC issued a statement late today: "Effective immediately, TLC has pulled all episodes of 19 Kids and Counting currently from the air. We are deeply saddened and troubled by this heartbreaking situation, and our thoughts and prayers are with the family and victims at this difficult time."
- The show is in its 15th season and has been on the air since 2008. Amid a storm of criticism, TLC aired a marathon of the show last night.
- TLC is received in 94M U.S. households.
- An agreement by Mississippi electric power cooperatives to cost-share 15% of Southern Co.'s (NYSE:SO) $6.2B clean coal plant in Kemper County has been abandoned after the cooperatives' power purchasing entity decided the power to be delivered from the Kemper plant would be too costly.
- SO in turn notified state regulators it may have to raise electricity rates for Mississippi power customers by 41%, or $37/month for the typical household, to pay for the project.
- It is unclear what the decision will mean for SO, whose stock value and reputation both in Mississippi and nationally are riding partly on the plant that was expected to provide a bright future for the embattled coal industry but instead has exposed the risks of pursuing novel clean-coal technology.
- Inovio Pharma (NASDAQ:INO) has filed to sell up to $250M worth of securities through future offerings. Net proceeds from any sale are expected to be used for "general corporate purposes, research and development and clinical trial costs, including the costs associated with preparing for and conducting current and potential Phase 1, Phase 2 and Phase 3 clinical trials."
- Inovio had $81M in cash/short-term investments at the end of Q1, and no debt.
- Shares are down 1.4% in AH trading, after rising 6.9% in regular trading.
- Midstates Petroleum's (NYSE:MPO) corporate credit rating is downgraded to "selective default" from B- by Standard & Poor’s after the company swapped portions of its unsecured debt for third-lien notes.
- S&P says it views the transaction as a distressed exchange because "unsecured debt investors received a value of less than what was originally promised on the senior unsecured notes."
- MPO announced yesterday it issued $504M in third-lien secured notes maturing no later than 2020 in exchange for a combined $630M of its 10.75% notes due October 2020 and 9.25% bonds maturing June 2021.
- "When you want to go from unsecured to secured that’s a sign you’re not confident of the company’s ability to repay all of its debt," a Bloomberg Intelligence analyst says.
- Alarm.com, a provider of home/business security, video monitoring, energy management, and automation services, has filed for an IPO under the symbol ALRM. The underwriters: Goldman, Credit Suisse, BofA/Merrill, Stifel, Raymond James, William Blair, and Imperial Capital. (prospectus)
- Alarm.com claims 2.3M subscribers and 25M connected sensors/devices for its services, which are backed by online/mobile monitoring and alerting. Sales and hardware installations are handled by a network of 5K+ service providers. Rivals include Google's Nest/Dropcam smart thermostat and home camera unit, as well as connected home security services from the likes of AT&T and Comcast.
- The company had 2014 revenue of $167.3M (+28% Y/Y), and net income of $13.5M. $111.5M of the revenue came from software/subscriptions, and $55.8M from hardware. Q1 revenue totaled $46M (+25% Y/Y), and net income $3M.
- VC firms TCV and ABS Capital respectively own 42.9% and 41.6% stakes. The FT reported last year ABS was thinking of taking Alarm.com public, and that the company was believed to be worth $1.5B-$2B.
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