Today - Tuesday, January 27, 2015
- Western Digital (NASDAQ:WDC) guided on its FQ2 CC for FQ3 revenue of $3.6B-$3.7B and EPS of $1.90-$2.00, mostly below a consensus of $3.73 and $1.99. With shares having already plunged over the last two days due to Seagate's outlook and Microsoft's numbers, investors are giving the hard drive giant a pass.
- FQ2 gross margin was 30.5%, up from 30.1% in FQ1 and the year-ago period, and above guidance for GM to be flat Q/Q. Western is also guiding for GM to be roughly flat Q/Q in FQ3.
- Notably, Western puts the total addressable market for hard drives in calendar Q4 at 140.8M units, less than the 144M-145M estimated by Seagate. That implies an FQ2 share of 43.4%, down from 44% in FQ1 and 44.4% a year ago. Average shipped drive capacity rose to 1.09TB from 1.00TB in FQ1 and 874GB a year ago. ASP was at $60.
- $309M was spent on buybacks, boosting EPS. R&D spend rose 2% to $426M, and SG&A spend 27% to $164M.
- FQ2 results, PR, prepared remarks, factsheet (.pdf)
- Micron (NASDAQ:MU), SanDisk (NASDAQ:SNDK), and InvenSense (NYSE:INVN) have joined Cirrus Logic, NXP, and several RF chipmakers in rising AH in response to Apple's FQ1 beat and stronger-than-expected iPhone sales print (74.5M units, +46% Y/Y).
- Micron became an iDevice mobile DRAM supplier through the Elpida acquisition. SanDisk has been both an iPhone NAND flash and MacBook SSD supplier, but there have been reports the company's recent woes are partly due to losing Apple as an SSD client. InvenSense's motion sensors were designed into the iPhone 6/6 Plus.
- MU +1.3% AH to $30.02. SNDK +1.3% to $79.99. INVN +1.7% to $15.19. InvenSense reports on Thursday. Micron was hit hard earlier today by Microsoft's FQ2 Windows figures and related commentary.
- Yahoo (NASDAQ:YHOO) has guided in its Q4 earnings slides (.pdf) for Q1 revenue (ex-TAC) of $1.02B-$1.06B, below a $1.1B consensus. Adjusted EBITDA is expected to fall to $200M-$240M from $306M a year earlier, and op. income to $50M-$90M from $149M.
- The company used its Alibaba IPO windfall to buy back $980M worth of shares in Q4 at an average price of $45.26 (contributed to the EPS beat). $9.7B have been bought back since Q2 2012.
- Q4 search revenue (ex-TAC) was nearly flat Y/Y at $462M, after rising 6% in Q3. However, search click revenue (excludes Microsoft payments) rose 18%, driven by a 10% increase in paid clicks and a 7% increase in price per click.
- Display revenue (ex-TAC), still hurt by share loss and the transition to native ads, fell 5% to $464M. Ads sold rose 17%, but price per ad fell 20%. All other revenue rose 2% to $253M.
- Americas revenue was flat Y/Y at $913M. EMEA fell 7% to $87M, and Asia-Pac 7% to $180M. Operating expenses rose 6% to $923M.
- On the CC, CFO Ken Goldman says Yahoo didn't include its Yahoo Japan (OTCPK:YAHOF) stake in the Alibaba spinoff in order to keep the transaction simple, but hints some other move could be on tap. "We are not saying we will not do something."
- Marissa Mayer says Yahoo is talking with Microsoft about the terms of the companies' search alliance; Mayer has made it clear more than once she's not happy with its performance. Not surprisingly, she also suggests Yahoo would love to displace Google (previous) as Apple's Safari search provider.
- YHOO +7.4% AH. Q4 results, Alibaba announcement.
- Few energy plays have held up as well of late as U.S. refiners such as Valero (NYSE:VLO), Tesoro (NYSE:TSO) and Marathon Petroleum (NYSE:MPC), and Barclays analysts see more strength ahead for the group.
- For a refiner the price of oil is an input, so cheaper oil cuts its costs, and U.S. refiners generally do better when the price difference between U.S. crude and international benchmarks is widening - and that’s exactly what Barclays believes will happen.
- Brent-LLS and Brent-WTI Cushing spreads have tightened significantly in recent weeks, but the firm thinks the differentials are unsustainable; storage capacity at Cushing and the Gulf coast will inhibit the ability to store excess barrels indefinitely, and the upcoming turnaround season should expedite the speed at which Cushing and Gulf coast inventory meets maximum storage capacity, eventually forcing differentials to re-widen and begin to reflect transportation costs.
- In conclusion, Barclays believes U.S. independent refiners will benefit from the re-widening of North American differentials in the coming months.
- Electronic Arts (NASDAQ:EA) is guiding for FQ4 revenue of $830M and EPS of $0.22, below a consensus of $911.6M and $0.26. However, the huge beat posted for EA's seasonally biggest quarter is taking priority.
- EA's packaged goods/other revenue (traditional game sales) fell 31% Y/Y in FQ3 to $755M. But full game download revenue rose 22% to $140M, extra content revenue 47% to $314M, and subscriptions/ad/other revenue 52% to $100M. Mobile revenue grew 13% to $139M.
- Also boosting EPS: Sales/marketing revenue fell 21% to $169M. R&D spend rose 3% to $283M. $97M was spent on buybacks.
- Xbox One/PS4 revenue rose 51% to $593M. Xbox 360/PS3 revenue fell 42% to $412M. International markets accounted for 58% of sales.
- FQ3 results, PR
- The U.S. Senate is on track to pass legislation to approve the Keystone XL pipeline (NYSE:TRP) by the end of the week, Majority Leader Mitch McConnell says.
- Keystone legislation stalled yesterday as Democrats raised objections about the number of amendments they’ve been allowed to offer; Republicans say the Senate has voted on two dozen amendments, more than were voted on in all of 2014 under Democrat control.
- Republicans control the Senate 54-46, and because six Democrats have signed on as sponsors of the Keystone bill, party leaders expect to get the 60 votes needed to pass legislation despite failing yesterday in two procedural votes.
- Synergy Resources (NYSEMKT:SYRG) -3.6% AH after launching a public offering of $150M of its common stock, with an underwriters option to purchase up to an additional $22.5M of stock.
- SYRG says it will use the proceeds to help fund additional asset acquisitions in the Wattenberg Field which may become available, to pay down debt under its revolving credit facility and for corporate purposes, including working capital.
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- Apple suppliers Cirrus Logic (NASDAQ:CRUS), NXP (NASDAQ:NXPI), Skyworks (NASDAQ:SWKS), Qorvo (NASDAQ:QRVO), and Avago (NASDAQ:AVGO) are up AH after the tech giant blew away FQ1 estimates on the back of 74.5M iPhone sales (+46% Y/Y and above forecasts of ~66-67M). iPad sales of 21.4M (-18%) were roughly in-line
- CRUS +2.9% to $26.79. NXPI +1.5% to $79.20. SWKS +1.3% to $82.60. QRVO +1% to $74.48. AVGO +2.7% to $107.60.
- Cirrus and Qorvo report tomorrow, and NXP on Feb. 4. Skyworks posted an FQ1 beat and offered strong guidance last week.
- The oil price decline is the most significant reason Caterpillar (NYSE:CAT) expects a 20% cut in its earnings this year, particularly for its energy and transportation unit which makes compressors, pumps and turbines for oil and natural-gas companies, and is a negative for CAT’s construction business in oil-producing regions, CEO Doug Oberhelman said in today's earnings call.
- A stronger dollar also is hurting sales and will hurt U.S. manufacturers, although CAT's global production footprint would help offset the impact, the CEO said.
- “We are hopeful the guidance is conservative enough to provide a base level expectation for 2015, but it was a surprise even against lower expectations,” says William Blair analyst Larry De Maria.
- If 2015 sales fall the company expects, it would be the first time since the Great Depression that CAT has experienced three consecutive years of falling revenues.
- Earlier: Caterpillar plunges on profit drop, lowered outlook
- The FDA approves Abiomed's (NASDAQ:ABMD) Impella RP (Right Percutaneous) System under a Humanitarian Device Exemption (HDE). It is the first percutaneous single access heart pump designed for right heart support to receive regulatory clearance.
- It is indicated for providing circulatory assistance for up to 14 days in pediatric or adult patients who develop acute right heart failure or decompensation following left ventricular assist device implantation, myocardial infarction, heart transplant or open heart surgery. The device does not require a surgical procedure for insertion and it provides up to four liters/minute of hemodynamic support.
- A Humanitarian Use Device (HUD) is intended for the treatment of diseases or conditions that affect less than 4,000 people in the U.S. per year.
- Tim Cook has provided a more concrete timetable for Apple's (NASDAQ:AAPL) smartwatch launch on the FQ1 CC. 9to5 Mac previously reported hearing the Watch would launch by the end of March; Apple had before only said it would ship in "early 2015." (live blogs: WSJ, BI)
- CFO Luca Maestri notes forex headwinds had a 4% impact on revenue growth (plenty of other tech giants can relate), with the yen and ruble the biggest culprits. He suggests the impact going forward will be around 5%; more favorable costs will partly offset.
- Maestri adds iPhone channel inventory fell by 200K Q/Q, and that supply only met up with demand in January. iPad inventory rose by 1M.
- Other details: 1) iPhone sales more than doubled Y/Y in mainland China and Brazil. 2) App Store revenue rose 41% Y/Y. iTunes/media revenue rose by $200M to $2.6B. 3) Apple now has 447 retail stores (182 outside the U.S.)
- AAPL +4.9% AH. FQ1 results, details.
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- Commodities trader Vitol and Italian energy company Eni (NYSE:E) receive final approval from Ghana's government to develop a $7B offshore oil and gas project, in the largest project backed by foreign investment in the country since gaining independence in the 1950s.
- The Offshore Cap Three Point project would produce 15 years worth of gas for Ghana’s domestic power stations as well as crude oil for sale on international markets.
- Vitol and Eni expect oil to start flowing from the project’s five fields in 2017, with gas production expected to start a year later.
- The decision to go ahead with the project comes as many oil and gas companies are looking to cut costs and reduce spending on big developments because of sharply lower oil prices.
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