Seeking Alpha
  • Today - Thursday, May 28, 2015

  • 7:47 PM
    • The "shot clock" on the FCC's review of AT&T's (NYSE:T) purchase offer for DirecTV (NASDAQ:DTV) -- the 180-day period where the agency vets the deal -- is still in pause, even though deal reviews will be starting to pile up behind it (Charter-TWC, Avago/Broadcom).
    • The FCC paused the clock in mid-March with just 10 days left, and while it's an informal deadline, it can be used to get more documents for review.
    • That pause was due to a court case on third-party programming contracts, and that was decided weeks ago.
    • AT&T, for its part, is submitting more documents in hopes of getting the review moving again.
    | Comment!
  • 7:43 PM
    • Nearly 3 months after unveiling the device, Nvidia (NASDAQ:NVDA) has begun selling its Shield Android TV set-top. A model containing 16GB of flash memory goes for $200; one sporting a 500GB hard drive goes for $300.
    • As previously disclosed, Shield is powered by Nvidia's Tegra X1 processor (contains a Maxwell GPU), supports 4K video, voice search, and Nvidia's Grid cloud game-streaming service, and comes with a game controller. Nvidia states over 200 Android TV games are supported.
    • In terms of both pricing and specs, Shield occupies a middle ground between the PlayStation 4/Xbox One and $100-or-cheaper streaming set-tops from the likes of Apple, Roku, and Amazon. Nvidia exec Matt Wuebbling: "We don’t see it as a game console competitor. We see it as leveraging Android for more entertainment content."
    • Reviewers generally like the potential of Nvidia's hardware, but argue pricing and Android TV's limitations are issues. CNET (6.9/10 stars): "While the Nvidia Shield's 4K video and solid gaming chops make it the most potent Android TV device yet, app shortfalls and a relatively high price limit its appeal." IGN (7.6/10): "Despite its souped-up specs, the Shield feels more like a glimpse into the future of set-top boxes rather than its arrival ... Folks looking for a solid, future-proofed set-top box should wait." Gizmodo's answer to the question "Should You Buy It?" drips of sarcasm.
    | Comment!
  • 7:17 PM
    • Alcoa (NYSE:AA) shares posted a modest loss of less than 1% in today's trade but it was enough to result in a 52-week low, as J.P. Morgan's Michael Gambardella cuts estimates and price targets for Alcoa and Century Aluminum (NASDAQ:CENX) based on his expectation of lower aluminum regional premiums.
    • Gambardella says the timing lag in the business means the two companies will not feel the full brunt of the lower premiums until H2, but AA's diversity in its midstream and downstream segments will shield the impact of the lower premiums; the analyst maintains his Neutral rating on the stock and cuts his stock price target by just $1 to $14.
    • However, CENX is a primary aluminum metal producer and highly leveraged to changes in the LME aluminum price and regional premiums, and will suffer more from lower prices, Gambardella says.
    | Comment!
  • 7:10 PM
    • Shannon Okinaka, Hawaiian Holdings' (NASDAQ:HA) interim CFO since January, is now the airline's permanent's CFO. (8-K filing)
    • Okinaka's base salary has been increased to $375K, and her target annual bonus % upped to 75%. She has also been granted 12,346 restricted stock units.
    | Comment!
  • 6:58 PM
    • Oil companies and industry trade groups lash out against the Obama administration plan to require rigs and time to drill relief wells in case of emergencies at their operations in U.S. Arctic waters, claiming the proposed rules would shorten an already brief window for exploratory drilling while dramatically boosting the costs of the operations.
    • The group also says the proposal would lock in the “same-season relief well” requirement even though rapidly evolving technologies might be a better solution when companies lose control of an Arctic well.
    • Similar arguments were delivered today by Royal Dutch Shell (RDS.A, RDS.B) and Statoil (NYSE:STO), which both hold active leases in the Chukchi and Beaufort seas north of Alaska; ConocoPhilllips (NYSE:COP), another leaseholder in the area, filed comments that are not yet available.
    • A key sticking point is the same-season relief well requirement - not just the proposed rules for it, but whether it should be allowed in the first place; Shell is asking the Interior Department to replace the requirement with a mandate that oil companies demonstrate they have "assets that can address a source-control event."
    | 6 Comments
  • 6:55 PM
    • Walt Disney (NYSE:DIS) may be bringing higher prices to its parks and resorts this summer -- for high demand days, at least, and lower prices for off-peak days in a multi-tiered demand pricing system.
    • That according to surveys sent to annual pass holders who were asked about the pricing scenario. For example, Disneyland currently has a fixed $99 one-day ticket price year-round, but a $115 "Gold" ticket could be used every day, a $105 "Silver" ticket would work except for peak days and popular holidays, and a $99 "Bronze" ticket would only be for off-peak weekends.
    • That represents a bit of a price hike on average, though it would come with volume discounts, and it's a means of addressing crowded parks. Last week, Disneyland temporarily closed gates twice when the park hit its 80K-guest capacity.
    • The company's Parks and Resorts unit was a standout in its fiscal Q2, with revenues that grew 6% to $3.76B and operating income that rose 24% as guests (and their spending) increased.
    • Walt Disney stock is up 17.4% YTD, and up 32.7% over the past 12 months.
    | 4 Comments
  • 6:52 PM
    • The WSJ reports Amazon (NASDAQ:AMZN) plans to "broadly expand its fledgling lineup of private-label brands to include an array of grocery items such as milk, cereal, and baby food as well as household cleaners." It adds Amazon has approached TreeHouse Foods (NYSE:THS) and other private-label foodmakers about partnerships, and has sought trademark protection for various products under its Elements brand.
    • If the report pans out, Amazon would be joining Wal-Mart, Target, and many other retailers in offering a broad lineup of private-label goods; the company already offers private-label batteries, backpacks, and diapers (among other items). In addition to being cheaper - IRI estimates a 28% discount on average relative to name-brand equivalents - private-label goods often carry higher margins.
    • Private-label Amazon groceries could be provided through the company's expanding AmazonFresh grocery delivery service, as well as through its Prime Pantry service, which allows Prime subs to order up to 45 pounds of groceries for a flat $5.99 shipping fee.
    • Earlier: Amazon gives Prime users free same-day in 14 metro areas
    | 5 Comments
  • 6:42 PM
    • Benchmark propane prices are trading below $0.40/gal for the first time in more than a decade, vs. a 2014 average price of $1.04, as current propane inventories are 89% higher than their 20-year average for this time of the year, Goldman Sachs' Ronald Koort says, noting "real concerns" that the U.S. will run out of storage capacity before October 2015.
    • The analyst thinks that's good news for Dow Chemical (NYSE:DOW), as the drop in propane prices will stimulate increased use as a petrochemical feedstock for ethylene production, and propane is used for ~40% of Dow's U.S. feedslate.
    • Noting that Dow consumes 2B-plus gal/year of propane in the U.S. - meaning that a $0.10/gal shift in propane costs could reduce its costs by $200M/year - Koort raises his 2015, 2016 and 2017 EPS for Dow to a respective $3.03, $4.09 and $4.70 from his earlier projections of $2.96, $3.95 and $4.55.
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  • 6:31 PM
    • Mergermarket reports a group of P-E investors have offered to buy Rosetta Stone (NYSE:RST) for $9-$10/share. The language software vendor has jumped to $7.07 in AH trading.
    • The rumored buyout price range is still well below the levels Rosetta traded at two years ago. Mergermarket's report comes two months after CEO Stephen Swad resigned, and was replaced on an interim basis by director/ex-Goldman partner A. John Hass.
    | Comment!
  • 6:30 PM
    • American data-center company Equinix (NASDAQ:EQIX) is in the final stages of a deal to acquire UK firm Telecity Group (OTCPK:TLEIY), and it could be announced as early as tomorrow, Reuters is reporting.
    • There's no news on deal price, though Equinix had reportedly floated the sum of £2.3B ($3.5B) -- 54% in cash, 46% in stock -- in early negotiations.
    • Equinix had to sort out any offer for Telecity by this time next week.
    • Speculation about this deal this month has thrown into question Telecity's own existing agreement to acquire InterXion Holding (NYSE:INXN) for $2.2B.
    • Of 27M square feet of data-center space in Europe, it's estimated that Equinix has 5.3%, Telecity 3.7% and InterXion 3.5% -- so whichever combination emerges will become a key player in a sector that is bound for more M&A activity.
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  • 6:19 PM
    • Morgan Stanley’s MLP analysts initiate coverage of eight major dropdown MLPs, citing attractive attributes such as high-quality asset bases, magnitude and sustainability of growth, and strong and supportive sponsorship.
    • Lead analyst Brian Lasky's top pick in the group is Dominion Midstream Partners (NYSE:DM), which he says warrants a premium valuation to midstream industry and sponsor-backed dropdown peers based on its top-tier distribution growth rate, strong sponsor commitment, depth of inventory, and - most important - strategic asset positioning, with an ability to replenish its inventory.
    • Lasky says these MLPs and their sponsors also have surprised to the upside, positioning the companies for attractive growth and visibility: AM, CNNX, CPPL, EQM, SUN, TLLP, VLP.
    | Comment!
  • 6:18 PM
    • Continuing a string of chip asset purchases by Chinese firms, Beijing's JAC Capital is buying NXP's (NASDAQ:NXPI) RF Power unit (makes base station power amplifiers) for $1.8B in cash. The deal is expected to close in 2H15.
    • NXP will use the proceeds to help pay for the $2B cash portion of its pending acquisition of Freescale (NYSE:FSL). With Freescale already a major player in the base station amplifier market, NXP had previously announced it would sell its RF unit to keep regulators happy.
    • Pac Crest (Overweight) notes JAC is paying ~4x sales (in-line with peer valuations), and that the deal price is towards the high end of the $1B-$2B range estimated by the firm. It sees a $0.40 dilutive impact to 2016 EPS. Bernstein (Outperform) was only expecting a sale to reap $500M-$1B.
    • NXP and Freescale both closed up fractionally today following the announcement. They rallied yesterday with the help of Broadcom/Avago merger reports (confirmed this morning).
    | Comment!
  • 6:14 PM
    • Vodafone (VOD +1.4%) confirms that, as ordered by regulators, it has sold its 4.2% stake in Bharti Airtel (OTC:BHRQY) for $200M -- to Bharti Enterprises (Holding) Private Limited.
    • A new license regime prohibits cross-holdings between rival companies in the same service area.
    • Vodafone had bought a 10% stake in Bharti Airtel 10 years ago, and the stake was diluted in 2007 as it directly entered India's market.
    | Comment!
  • 6:00 PM
     
    • Dow -0.2%.
    • 10-yr +0.09%.
    • Euro +0.1% vs. dollar.
    • Crude +0.07% to $57.99.
    • Gold -0.03% to $1,188.60.
    | Comment!
  • 5:57 PM
    • Temporary shutdowns announced today by Teck Resources (NYSE:TCK) are an important step but will do little to stem the chronic oversupply of coking coal used to make steel, Heard On The Street's Liam Denning writes.
    • TCK’s shutdown will cut 1.5M metric tons in Q3, though further cuts could come later this year, but CEO Don Lindsay had implied that capacity cutbacks along the lines of 4M-9M tons were needed and had not indicated his company would be the one making a move.
    • Cowen analyst Daniel Scott thinks reports that BHP Billiton (NYSE:BHP) was offering June contracts for coking coal at $89/ton - $20 less than the prevailing benchmark contract - may have been a factor, taking pricing down toward a break-even level for TCK.
    • But TCK's move is not enough, Denning writes: TCK's plan to maintain sales levels in Q3 suggests it will sell inventory to make up the shortfall, and the level of surplus supply is staggering - perhaps an excess of 38M metric tons as far out as 2020.
    | 1 Comment
  • 5:55 PM
    • MeetMe (NASDAQ:MEET) discloses CTO Richard Friedman is resigning, effective June 3. He "may serve as a consultant" through year's end, for which MeetMe will pay him bi-weekly installments of $3,802.15.
    • MEET -2% AH to $1.49.
    | 2 Comments
  • 5:49 PM
    • Initially up in AH trading following its FQ4 beat, Deckers (NYSE:DECK) is now down 1.9% to $69.88. Likely weighing: The footwear maker is guiding for FQ1 revenue to be flat Y/Y, and for EPS of -$1.52. Consensus is for a 7.7% revenue increase and EPS of -$1.17.
    • FY16 (ends March '16) guidance is stronger: Revenue of $1.96B and EPS of $5.09, slightly above a consensus of $1.95B and $5.05.
    • Business performance: FQ4 UGG sales +9.7% Y/Y to $216.8M; Teva +13.4% to $53.1M; Sanuk +27.9% to $39.2M. Wholesale/distributor sales +16.6% to $205.1M; retail stores +7.7% to $86.3M; e-commerce +27.4% to $49.2M. 30 new retail store openings offset a 6.5% same-store sales decline. U.S. sales +9.8% to $217.7M; international +27.5% to $122.9M.
    • Financials: Gross margin fell 420 bps Y/Y to 44.7%. Inventories rose 12.9% to $238.9M. $93.9M was spent to buy back 1.3M shares. Deckers ended FQ4 with $225.1M in cash, and $5.4M in credit facility borrowings.
    • FQ4 results, PR
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  • 5:45 PM
    • El Paso Electric (NYSE:EE) declares $0.295/share quarterly dividend, 5.4% increase from prior dividend of $0.28.
    • Forward yield 3.24%
    • Payable June 30; for shareholders of record June 16; ex-div June 12.
    | Comment!
  • 5:44 PM
    • Among the Android news coming out of Google's I/O conference today, HBO Now (NYSE:TWX) will be coming to Android devices this summer.
    • That's after the exclusivity period, at the stand-alone video streaming service's launch, given to Apple's iOS devices.
    • The service was also available to Cablevision customers through their partnership with HBO.
    • Launched in coordination with the season premiere of the network's hit Game of Thrones, HBO Now costs $15/month.
    | Comment!
  • 5:40 PM
    | 1 Comment
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