Seeking Alpha
  • Today - Thursday, August 21, 2014

  • 7:19 PM
    • Amid the latest flareup of Middle East violence, one-time enemies Israel and Egypt are negotiating deals that may mean the sale of $60B in Israeli natural gas to liquefaction plants in Egypt.
    • Executives at Noble Energy (NYSE:NBL) and units of Israel’s Delek Group said this week they expect to finalize by year-end agreements to deliver as much as 6.2T cf of gas over 15 years from the Tamar and Leviathan offshore fields to LNG facilities in Egypt.
    • For Israel, the two fields have more than enough gas to supply it for decades, so it is seeking a way to export the excess, and shipping it to Egypt would be faster than building LNG plants; the Russia-Ukraine crisis has made energy security a top priority for Europe, which will be scrutinizing all potential energy sources.
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  • 7:02 PM
    • Deep Nishar, LinkedIn's (NYSE:LNKD) SVP of products/user experience and a 6-year company vet, is leaving.
    • In a statement, LinkedIn states CEO Jeff Weiner will be "indefinitely" taking over Nishar's responsibilities. The company also observes its user base has grown by over 10x to 313M since Nishar came on board.
    • Nonetheless, LinkedIn has struggled in recent years to boost its historically low engagement rates (relative to other social networking platforms), in spite of a series of product changes meant to address the issue. The company's Q2 numbers suggest it's starting to make some headway.
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  • 6:56 PM
    • Sears' (NASDAQ:SHLD) operations burned through another $747M as it lost another $573M in a dismal Q2, prompting it to say in its earnings call that it is weighing additional steps to shore up its balance sheet.
    • SHLD may look to refinance some debt, including its revolving credit facility, which comes due in April 2016, and it has $1B in senior secured notes that come due in Oct. 2018; it also could issue debt against its real estate, similar to what J.C. Penney did last year when it secured a $2.25B loan with mortgages on its property.
    • SHLD has raised $665M YTD, in part by spinning off Lands' End to shareholders; it plans to raise $1B this year and may sell its 51% stake in Sears Canada and its Sears Auto Center business.
    • Fitch analyst Monica Aggarwal expects Sears to need $2B in cash in 2014 to fund operations and cover pension, interest and other obligations, but she is not optimistic: "We don't see them having the levers to turn this business around."
    • Meanwhile, sales have now fallen for 30 straight quarters, and Credit Suisse is calling Sears "one of the worst service stores in America."
    | 9 Comments
  • 6:48 PM
    • Thanks partly to an accounting policy change that will result in PC product revenue being recognized over time rather than entirely up-front, Intuit (NASDAQ:INTU) expects FY15 (ends July '15) revenue of $4.275B-$4.375B and EPS of $2.45-$2.50, well below a consensus of $4.85B and $3.97.
    • Adjusted revenue, which takes the policy change into account, is expected to be in a range of $4.75B-$4.85B.
    • Small business revenue +12% Y/Y in FQ4, with QuickBooks Online subs growing 40% Y/Y to 683K (60K added in the quarter). Consumer tax revenue +22%; ProTax +16%.
    • Costs/expenses +13% Y/Y to $787M. $152.5M was spent on buybacks.
    • FY17 targets: Revenue of $5.8B, EPS of $5, and 2M QuickBooks Online subs.
    • FQ4 results, PR
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  • 6:22 PM
    • Ixia (NASDAQ:XXIA) has named Bethany Mayer, previously in charge of H-P's network functions virtualization (NFV) product line, its new CEO.
    • Mayer's resume also includes a stint as the GM of H-P's networking unit, and marketing roles at Cisco and Apple. Ixia has been without a permanent CEO since Vic Alston resigned last October for misstating his credentials. Chairman Errol Ginsberg has been serving as interim CEO since.
    | 1 Comment
  • 6:20 PM
    • Baker Hughes (NYSE:BHI) is poised to win the biggest contract in Petrobras' (NYSE:PBR) $1.5B-$2B offshore drilling program, according to a Bloomberg report.
    • BHI is said to have placed the lowest-cost bid for a contract representing half the drilling work being offered by the Brazilian company over the next four years, charging less per well compared with other drilling packages that have smaller volumes of work.
    • Schlumberger reportedly offered the cheapest bid for a second package representing 30% of offshore wells and Halliburton (NYSE:HAL) placed the lowest-cost offer for the remaining 20% of work.
    • Meanwhile, PBR has spudded the first appraisal well in the pre-salt Libra field, where production is scheduled to begin in 2017, plateauing at 1.3M bbl/day in 2030.
    | 1 Comment
  • 6:12 PM
    • Tony Navarra, head of Globalstar's (NYSEMKT:GSAT) space operations and a 20-year company vet, is retiring. He'll remain a consultant for one year following his retirement.
    • Navarra's duties will be divided between Globalstar's satellite operations and satellite engineering chiefs, each of whom will report to CEO Jay Monroe.
    | 1 Comment
  • 6:00 PM
     
    • S&P +0.02%.
    • 10-yr flat.
    • Euro +0.02% vs. dollar.
    • Crude -0.07% to $93.90.
    • Gold -0.05% to $1,277.30.
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  • 5:56 PM
    • Strong Xbox One/PS4 sales fueled a 124.8% Y/Y FQ2 increase in GameStop's (NYSE:GME) new hardware sales to $332.3M (19% of revenue), which in turn drove the company's big revenue beat. Comparable store sales rose 21.9%.
    • New software sales +15.6% Y/Y to $497M; pre-owned value game sales +5.5% to $558M; game accessories +17% to $107.5M; digital +6% to $52.3M; mobile/consumer electronics +85.1% to $112.1M.
    • A mix shift towards hardware led gross margin to fall 260 bps Y/Y to 31.8%. SG&A spend fell to 27.5% of revenue from 30.5%. $75.5M was spent on buybacks.
    • GameStop expects FQ3 EPS of $0.58-$0.64 (above a $0.57 consensus), with comp. sales growth of 1%-5%. FY14 EPS guidance of $3.40-$3.70 is being maintained for now (consensus is already up to $3.67); 6%-12% full-year comp. sales growth is expected.
    • FQ2 results, PR
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  • 5:49 PM
    • Gap (NYSE:GPS) +1.2% AH after edging analyst estimates for Q2 earnings and revenues, boosted by firm sales at its Old Navy business.
    • Q2 comp sales were flat vs. a 5% increase in the year-ago quarter; Gap sales suffered a 5% decline, Banana Republic was flat, and Old Navy gained 4% Y/Y.
    • Q2 operating margin was 14.2% vs. 13.5% a year ago, but GPS continues to expect roughly flat margin for the full year.
    • Raises FY 2014 EPS guidance to $2.95-$3.00 vs. prior forecast of $2.90-$2.95 and $2.95 analyst consensus estimate.
    • Announces plans to enter India through franchise-operated Gap brand stores in 201, starting in Mumbai and Delhi; Gap expects eventually to have ~40 stores in the country.
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  • 5:35 PM
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  • 5:30 PM
  • 5:24 PM
    • Insperity (NYSE:NSP) declares $0.19/share quarterly dividend, in line with previous.
    • Forward yield 2.51%
    • Payable Sept. 12; for shareholders of record Sept. 2; ex-div Aug. 28.
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  • 5:22 PM
    • Brocade (NASDAQ:BRCD) guides in its earnings slides (.pdf) for FQ4 revenue of $550M-$570M and EPS of $0.21-$0.23, in-line with a consensus of $561.3M and $0.22.
    • In spite of the Fibre Channel struggles seen by adapter card/embedded switch vendors Emulex and QLogic, Brocade's SAN product revenue (60% of total) rose 1% Q/Q and 4% Y/Y in FQ3 to $325M. SAN switch and director sales respectively rose 9% and 5% Y/Y, offsetting an adjusted 11% drop in server product (adapter/embedded switch) sales.
    • IP networking revenue rose 9% Q/Q and fell 1% Y/Y to $133M; the Y/Y drop is better than FQ2's 9%. Router weakness, product strategy changes, and the sale of Brocade's adapter card business to QLogic offset switch growth.
    • SAN products are expected to be down 1%-2% Q/Q in FQ4, and IP networking up 6%-15%. Geopolitical issues and transitions at OEM partners (i.e. IBM) are expected to weigh on SAN revenue, while high-density router launches and federal seasonality are expected to boost IP networking.
    • Gross margin rose 50 bps Q/Q and 160 bps Y/Y to 67.2%, beating guidance of 65.5%-66.5%. FQ4 GM guidance is at 66%-67%. $112M was spent on buybacks. EMC/IBM/Hitachi made up 48% of revenue vs. 47% a year ago.
    • FQ3 results, PR (.pdf)
    | 1 Comment
  • 5:15 PM
    • Aeropostale (NYSE:ARO) -9.2% AH despite posting a narrower than expected Q2 loss, as the struggling teen apparel retailer issues downside guidance for Q3, sees a loss of $0.44-$0.48/share vs. analyst consensus for a $0.35 loss.
    • Q2 gross margin narrowed to 15.8% from 17.9%, but input costs fell 11% to $333M.
    • ARO had pre-announced some of its Q2 results earlier in the week while announcing the return of former CEO Julian Geiger to replace Thomas Johnson.
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  • 5:11 PM
    • Brinker International (NYSE:EAT) declares $0.28/share quarterly dividend, 17.0% increase from prior dividend of $0.24.
    • Forward yield 2.30%
    • Payable Sept. 25; for shareholders of record Sept. 5; ex-div Sept. 3.
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  • 5:05 PM
    • Carter's (NYSE:CRI) declares $0.19/share quarterly dividend, in line with previous.
    • Forward yield 0.92%
    • Payable Sept. 12; for shareholders of record Sept. 2; ex-div Aug. 28.
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  • 5:03 PM
    • Strattec Security Corporation (NASDAQ:STRT) declares $0.12/share quarterly dividend, 9.1% increase from prior dividend of $0.11.
    • Forward yield 0.67%
    • Payable Sept. 26; for shareholders of record Sept. 12; ex-div Sept. 10.
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  • 5:00 PM
     
    • S&P +0.02%.
    • 10-yr flat.
    • Euro +0.17% vs. dollar.
    • Crude -0.09% to $93.89.
    • Gold -0.04% to $1,277.40.
    | Comment!
  • 4:58 PM
    • In addition to beating Q2 revenue estimates (while missing on EPS), Qunar (NASDAQ:QUNR) is guiding for 90%-95% Y/Y Q3 revenue growth; the consensus is for revenue to grow 83% to $72M.
    • Mobile revenue rose 511.8% Y/Y in Q2 to $22.9M (35.5% of revenue), fueling the revenue beat. Flight revenue +143.3% to $45M; hotel revenue +79.5% to $11.5M. Flight ticket volume +66.1%, and revenue/ticket +46.4%. Hotel room night volume +105.2%, but revenue per room night -12.5%.
    • Gross margin fell to 73.6% from 78.1% in Q1 and 78.2% a year ago (hurt EPS). Qunar notes higher payment-processing fees pressured its gross profit.
    • Spending was heavy: R&D spend +181.6% Y/Y to $29.3M, sales/marketing +212.4% to $34.7M, product sourcing spend +416.1% to $10.9M, G&A spend +432.9% to $18M. Online marketing spend +120.5% Q/Q to $23.8M.
    • If history is any guide, Ctrip (NASDAQ:CTRP) and/or eLong (NASDAQ:LONG) could follow Qunar higher.
    • Q2 results, PR
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