Seeking Alpha
  • Today - Monday, March 30, 2015

  • 4:58 AM
    • After pulling away from a 12-year trough the last two weeks, the euro fell to as low as $1.0830 (-0.6%) this morning, hurt by the uncertainty of whether Greece would be able to strike a deal with its creditors before it runs out of cash.
    • After sending a list of reforms to bailout monitors late last week, both sides held lengthy talks over the weekend, with Greece pledging to finalize the list by Monday.
    • The proposals include measures to increase tax revenue and investment, and would raise some €3B, according to Greek officials.
    • Athens' ATG stock index -1.1%.
    | 1 Comment
  • 4:25 AM
    • Eurocement, the second-largest shareholder in Holcim (OTCPK:HCMLY), plans to vote against the Swiss company's union with Lafarge (OTCPK:LFRGY) unless the financial terms of the deal are altered.
    • Last week, the two cement companies salvaged their $44B merger with a revision to their agreement, saying Holcim would offer 0.90 of one of its shares for each one of Lafarge, instead of a one-for-one swap.
    • Eurocement alone can’t derail the deal, which requires the approval of two thirds of Holcim's shareholders at an extraordinary meeting (scheduled for May 8).
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  • 4:09 AM
    • Top European and U.S. banks axed 59,000 jobs last year as they restructured, cut costs and moved further into digital banking, Reuters reports.
    • The figure brings the total number of jobs lost across 24 banks in the last two years to 160,000.
    • Notables: Barclays (NYSE:BCS) shed 7,300 jobs last year due to a three-year plan to cut 19,000 staff; RBS (NYSE:RBS) slashed 10,000 employees as it sold overseas businesses and trimmed its investment bank further; JPMorgan (NYSE:JPM) and BofA (NYSE:BAC) also made substantial job cuts as they worked through troubled mortgages and refinanced loans at lower rates.
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  • 3:44 AM
    • Oil prices are heading south again as traders focus on whether Iran and six world powers will reach a deal that could add more crude to an already oversupplied market if sanctions against Tehran are lifted.
    • Diplomats remain divided over the pace of easing sanctions on the Islamic Republic and the limits to be imposed on its nuclear program, but a deadline to find a preliminary agreement has been set for Tuesday, with a detailed accord coming by the end of June.
    • Crude futures -1.9% to $47.92/bbl.
  • 3:27 AM
    • Chinese stocks took off today after policy makers signaled the country had capacity to ease monetary policy and boost sluggish growth at the Boao Forum for Asia on Sunday.
    • PBOC governor Zhou Xiaochuan outlined that China's policy makers had to be "vigilant" against the risk of disinflation and suggested that the nation had "room to act."
    • China's central bank has already taken a series of easing steps since November, cutting interest rates twice and slashing banks' reserve requirements.
    • The Shanghai Composite +2.8% to 3,795; Hang Seng Index +1.8% to 24,923.
    | 1 Comment
  • 2:45 AM
    • In Asia's biggest block deal this year, Chevron (NYSE:CVX) has sold its entire stake in Caltex Australia (OTC:CTXAY), the country's biggest refiner, for A$4.7B ($3.7B).
    • Offshore institutional investor demand for the 50% holding was strong, with bidding driving the final price to A$35 a share.
    • Previously: Chevron looks to sell Caltex Australia stake (Mar. 27 2015)
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  • 2:31 AM
    • Following months of regulatory examination, Reynolds American (NYSE:RAI) and Lorillard (NYSE:LO) are expected to meet this week with members of the Federal Trade Commission ahead of a final decision by the agency on whether to allow the companies to merge.
    • When the two U.S. cigarette makers announced their $25B deal last July, they sought to address potential regulatory concerns about competition by selling $7.1B in brands and other assets to Imperial Tobacco (OTCQX:ITYBY).
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  • 2:10 AM
    • Switzerland's Dufry (OTCPK:DUFRY) has agreed to buy airport tax and duty free seller World Duty Free (OTC:WDFPF) in a deal that values the latter at about €3.6B ($3.9B), including debt.
    • Dufry will pay €1.3B, or €10.25 per share, for the Italian Benetton family's 50.1% stake in the airport retailer.
    • The deal is the second high-profile foreign takeover of an Italian company in less than a week after ChemChina bought a majority stake in tire maker Pirelli last Sunday.
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  • 1:51 AM
    • Although it has not revealed what compromise it is seeking, Fidelity Investments, DuPont's (NYSE:DD) sixth largest shareholder, has put pressure on activist Trian Fund Management and the chemical conglomerate to reach a settlement over their "detrimental" proxy fight.
    • Trian, which owns a 2.7% stake in DuPont, is pushing for the appointment of four of its own directors, including Nelson Peltz, at the company's annual shareholder meeting on May 13.
    • Previously: DuPont board battle heats up (Mar. 23 2015)
    | Comment!
  • 12:00 AM
  • Sunday, March 29, 2015

  • 7:39 PM
    • Optical component industry consolidation "was a common topic of discussion among investors and companies" at the industry's recent OFC conference, reports Piper's Troy Jensen. "The reasons for consolidation are well known and center on operational expense savings, a more rational pricing environment, and more complete product lines."
    • One deal that's viewed as especially likely: A Finisar (NASDAQ:FNSR) purchase of JDS Uniphase's (NASDAQ:JDSU) optical component/laser unit (CCOP), currently set to be spun off as Lumentum Holdings in Q3. Activist Sandell Asset Management has been urging JDS to sell CCOP, which had FY14 (ended June '14) revenue of $794M (+7% Y/Y). Jefferies' James Kisner thinks a deal could happen, but not before the spinoff occurs.
    • Jensen on industry consolidation in general: "The question isn't really an if, but more of the urgency of potential sellers and buyers and also at what price a deal would take place. In general, our feeling is that investors were slightly more anxious for a deal, while companies we spoke with sensed the need for consolidation, but were less anxious."
    • The industry has already seen a decent amount of M&A. In addition to CCOP, smaller component vendors Oclaro (OCLR - $213M market cap), Alliance Fiber (AFOP - $308M market cap), Applied Optoelectronics (AAOI - $196M market cap), and NeoPhotonics (NPTN - $217M market cap) could be targeted. NeoPhotonics has soared since delivering a big Q4 beat (fueled by strong 100G component demand) on March 3.
    | 1 Comment
  • 5:30 PM
  • 5:29 PM
    • Angie's List (NASDAQ:ANGI) has halted a major expansion of its Indianapolis HQ, citing the recent passage of Indiana's Religious Freedom Restoration Act (viewed by critics as providing legal cover for discriminating against gays and lesbians).
    • CEO Bill Oesterle: "We are putting the 'Ford Building Project' on hold until we fully understand the implications of the freedom restoration act on our employees, both current and future ... Angie's List is open to all and discriminates against none and we are hugely disappointed in what this bill represents." Angie's "will begin reviewing alternatives for the expansion of its headquarters immediately."
    • Last October, Angie's said it planned to spend $40M by 2019 (and more than $10M in 2015) on an HQ expansion that includes the purchase of a former Ford manufacturing plant. The local services marketplace added it expects to have 2,800 workers by 2019; it had 1,852 as of the end of 2014, up 13% Y/Y.
  • 4:29 PM
    • "We were a little bit surprised [by the criticism] because we had raised a significant amount of venture capital. Clearly that was being spent on growing the business pretty rapidly," says BOX CEO Aaron Levie in a talk with TechCrunch, defending his company's huge pre-IPO spending against its many critics. "We were coming off a year of over 100 percent growth, so the investments were working."
    • For many quarters prior to Box's IPO, the company's sales/marketing spend was single-handedly bigger than its revenue. In the January quarter, it was still 88% of revenue on a GAAP basis; Box has guided for its FY16 (ends Jan. '16) non-GAAP op. loss to be equal to 50%-52% of revenue.
    • Regarding future spending plans, Levie names content management, collaboration, and security as areas Box plans to focus R&D investments on. The company recently launched an enterprise key management (EKM) service that lets clients control the encryption of data stored on Box's cloud storage/file-sharing platform.
    • Levie asserts the service (in addition to providing a new revenue stream) allows Box to meet the security needs of companies in healthcare, financial services, and other heavily-regulated industries that were previously nervous about putting their data on Box's servers. That might also hold for international companies worried about U.S. government requests.
    • Box closed on Friday 31% above its $14 IPO price, but 9% below an opening price of $20.20. Shares trade for 9x trailing billings, and perhaps (given recent growth rates) 6-7x forward billings.
    • Previously: Levie makes long-term case for Box following IPO
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  • 3:38 PM
    • With shares of "mature" networking hardware vendors such as Cisco having performed better in 2014, Guggenheim Securities' Ryan Hutchinson thinks investors "should revisit growth companies, around which sentiment has been negative."
    • Hutchinson, who just launched coverage on the industry, argues tech trends favor smaller, faster-growing, firms with differentiated products, and thinks the recent acquisitions of Riverbed and Aruba Networks kickstarted a new wave of M&A. "New technologies, architectures, and delivery models are disrupting traditional business models ... These include cloud computing, software-defined architectures, network function virtualization, white-box hardware, and open-source software ... We are neutral on the data networking and communications space ... but there are hidden gems to be found; we recommend secular share gainers."
    • His top picks are application delivery controller leader/security upstart F5 (FFIV - $130 target), carrier/enterprise Wi-Fi vendor Ruckus (RKUS - $15 target), and DNS/IP address management hardware vendor Infoblox (BLOX - $30 target).
    • Hutchinson argues F5's "stable core ADC growth and strong cash flow generation, combined with expansion into adjacent service provider and security verticals should drive the stock price higher." He adds there's more room for F5 to gain ADC share due to Cisco's exit, and considers shares inexpensive at 11x forward free cash flow.
    • He notes Ruckus is the #2 U.S service provider Wi-Fi vendor behind Cisco, and will be #3 in enterprise Wi-Fi once the HP/Aruba deal closes. [W]e believe RKUS is well positioned for organic growth and total addressable market (TAM) expansion with new product additions; becoming an increasingly attractive takeover target."
    • Infoblox is expected to benefit from new management, a rebuilt DDI appliance pipeline, and growing security attach rates. "[W]e believe BLOX is successfully executing on its transformation from a 'nice to have' to a line item in IT budgets; we believe the company can generate growth at or above 20%."
    • Previously: F5 bulls eye security, mobile growth after sales miss
    • Previously: Deutsche upgrades Infoblox, sees a cloud play
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  • 7:42 AM
    • Earthstone Energy (NYSEMKT:ESTE): Q4 EPS of -$3.83
    • Revenue of $12.1M (+32.7% Y/Y)
    • Press Release
    | Comment!
  • 5:30 AM
    • Russia, Australia, Denmark and the Netherlands have now become the latest countries to join the China-led Asian Infrastructure Investment Bank despite misgivings in Washington.
    • China has set a March 31 deadline to become a founding member of the bank, which is seen as a significant setback to U.S. efforts to extend its influence in the region and balance China's growing financial clout and assertiveness.
    • At least 35 countries will join the AIIB by the deadline, the bank's interim chief, Jin Liqun, said last Sunday.
    • Previously: AIIB steadily gains more members (Mar. 27 2015)
    • Previously: Australia poised to join AIIB (Mar. 25 2015)
    • Previously: AIIB gains more steam (Mar. 22 2015)
  • 5:10 AM
    • Argentina's securities regulator has suspended Citibank Argentina from conducting local market operations due to Citigroup's (NYSE:C) deal with holdout creditors who are embroiled in a legal battle with the South American nation.
    • Economy Minister Axel Kicillof said on Wednesday the accord, in which Judge Thomas Griesa allowed the bank to process two debt payments in order to facilitate a smooth exit from its Argentine custodian business, violated local laws.
    • Previously: New court order allows Citi to process Argentine bond payments (Mar. 23 2015)
    | 1 Comment
  • 4:45 AM
    • Barrick Gold (NYSE:ABX) Chairman John Thornton received almost $13M in total compensation last year, up from $9.5M in 2013, raising more questions of executive pay at the world's largest gold miner.
    • In yet another challenging year, Barrick's shares dropped around 35% last year, amid continued weakness in bullion prices and major write downs on the value of its assets.
    • Thornton's compensation was also greater than the $7.3M and $4.5M awarded respectively to the company's joint chief executive officers, Jim Gowans and Kelvin Dushnisky.
  • 4:18 AM
    • Best Buy (NYSE:BBY) plans to close some stores and consolidate its operations in Canada, in a move that will hurt its earnings by $0.10-$0.20 this year.
    • Costing about $200M-$280M in restructuring charges, Best Buy said it will close 66 of its Future Shop stores in Canada and convert 65 of them into Best Buy outlets.
    • The retailer also announced plans to spend $160M to improve its Canadian online operations, increase staffing at its remaining stores, and launch a range of home appliances.
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