Seeking Alpha
  • Today - Friday, January 30, 2015

  • 8:06 PM
    • News that Spotify is tapping Goldman Sachs to seek $500M in financing -- a move likely to relieve pressure for its IPO -- has put beleaguered Pandora (P -1.6%) in the spotlight.
    • Pandora has lost more than 50% off its share price in the past 12 months amid worries that it might not be able to keep up with intense competition from a cash-rich Spotify, not to mention major players like Apple and Google.
    • Investors like Guy Adami figure Spotify's fundraising is probably good for Pandora, but SA contributor Orange Peel Investments notes a rising tide doesn't lift all streaming boats.
    • Meanwhile, a which-should-you-buy piece examines the two firms' mirror-image business models (subscription-heavy at Spotify; ad-heavy at Pandora) and comes out pro-Spotify.
    • Credit Suisse maintains a Neutral rating on Pandora and has lowered its price target to $24/share. Wedbush previewed Pandora's earnings by maintaining its Outperform rating and a $35 target.
    • Previously: Pandora -5.3%; Sony partners with Spotify (Jan. 28 2015)
  • 7:22 PM
    • Viacom (VIA, VIAB) closed Friday down 4.4% after missing slightly on fiscal Q1 revenues the previous day, but with a few more stormy concerns popping up -- including ad inventory worries and a planned reduction in stock buybacks.
    • "Layoffs on the way" is the message observers took from CEO Philippe Dauman's warning of "substantial net cost savings throughout our organization" and that the company would "pull all the levers" to achieve them. Even Chairman Sumner Redstone has taken a pay cut, with total comp reduced to $13.2M in 2014 compared to a prior $36.2M.
    • The absence of Redstone on the company's earnings call loomed large, raising concerns about his health in the context of the firm's not-quite-transparent succession plans.
    | 1 Comment
  • 6:58 PM
    • Airline stocks took a beating in late trading today as crude oil futures surged 8% to pass $48/bbl, caused by a big drop in U.S. working rigs in the past week and a spike in ISIS attacks on oil-rich northern Iraq.
    • SKYW -7.8%, VA -7.6%, SAVE -7.1%, AAL -6%, DAL -5.8%, RJET -5.7%, UAL -5.6%, ALK -4.5%, LUV -3.8%, LFL -3.6%, JBLU -2.1%.
  • 6:41 PM
    • Dex Media (NASDAQ:DXM) fell 7% in trading today, hitting levels last seen in April. Shares fell 24% over the whole of January.
    • Earlier today, Dex filed a Q4 report for one-time merger partner SuperMedia, done to comply with the reporting requirements of the Delaware court that handled Dex/SuperMedia's 2013 Chap. 11 filing. The report states SuperMedia had cash/equivalents of $64.7M at the end of December, $270.4M in cash available, and $2.49B in notes receivable.
  • 5:46 PM
    • In non-auction FCC news, the agency will add rules that let it review terms for the Internet service interconnects that govern deals between providers and heavy bandwidth eaters -- particularly including Netflix (NASDAQ:NFLX).
    • The move is a first blush of net-neutrality regulations to come.
    • Producers like Netflix, and YouTube would prefer a ban on interconnect fees, while service providers (CMCSA, T, VZ) are arguing for no limit on negotiated fees.
    • The rules are set for a Feb. 26 vote.
    | 1 Comment
  • 5:42 PM
    • Priceline's (NASDAQ:PCLN) Q4 report will arrive at 7AM ET on Thursday, Feb. 19. CC at 7:30AM.
    • Consensus is for revenue of $1.8B (+16.6% Y/Y) and EPS of $10.07 (+14%). With forex concerns looming large, shares have fallen 16% since the online travel giant provided light Q4 guidance to go with a Q3 EPS beat on Nov. 4.
    | Comment!
  • 3:26 PM
    • Products from PepsiCo (PEP -2.1%) will be on full display this Super Bowl Sunday - before, during, and after the mammoth TV event.
    • The company plans to run 11 Mountain Dew Kickstart spots during the extended SB pre-game show.
    • Doritos and Gatorade will have their usual high-visibility presence, while Tostitos gets its introduction to the spectacle.
    • A lead-in commercial just before the Pepsi-sponsored halftime show has a chance to be one of the most watch commercials of the game.
    • In an appeal to millennials, the company is running a student cooking competition using PepsiCo products and unloading massive marketing efforts around the crowdsourced Crash the Super Bowl competition.
    • One group that doesn't mind the significant efforts of PepsiCo to generate Super Bowl buzz is C-stores (KR, CASY, PTRY, OTCPK:ANCUF, CST, MUSA).
    • Traffic to C-stores this weekend is forecast to be up over 8% Y/Y.
    • Mountain Dew Kickstart Ad
    • PepsiCo Super Bowl teaser ad
    | Comment!
  • 2:57 PM
    • Though execution issues and foreign exchange woes are the story of the day at Deckers Outdoor (DECK -19%), the glass is either half full or half empty depending upon the investment firm pounding the table.
    • "Though Ugg sales came in below expectations, we are encouraged by strong full-price selling of casual, weather and specialty boots," writes Jefferies analyst Randal Konik.
    • Jefferies has a Buy rating and $110 PT on Deckers.
    • Sterne Agee thinks the company will correct its inventory misfire this year with the Uggs brand.
    • Telsey Advisory Group cut its rating to Market Perform and set an $80 price target.
    • Canaccord Genuity slashed its PT to $84 from $108.
    • Previously: Deckers -13.5% on FQ3 miss, weak guidance (Jan. 29 2015)
    | Comment!
  • 2:24 PM
    • Amazon's (AMZN +14.8%) Q4 North American op. margin of 5.4% was its highest in three years, notes SunTrust's Robert Peck, reiterating a Buy and upping his target to $370. Peck is also pleased gross margin rose Q/Q in spite of seasonality, even if one backs out Other (i.e. AWS) revenue. Third-party seller and fulfillment service growth drove the gains, as did improved efficiency.
    • Topeka's Victor Anthony likes the fact Prime memberships rose 53% in 2014 (no precise subscriber number has been given, as usual) in spite of Amazon's $20 price hike. Benchmark's Daniel Kurnos observes the bulk of Amazon's Q4 revenue miss was due to its international ops, where the company took an $895M forex hit.
    • B. Riley's Scott Tilghman (Neutral) is more cautious. "We aren’t convinced the company has the same leverage opportunity in non-holiday quarters, and this seems to be captured in its 1Q guidance, which assumes bigger FX headwinds and lower Y/Y profit." On SA, Paulo Santos is as bearish as ever, citing (among other things) the top-line miss and a 4% drop in Media revenue.
    • During the CC (transcript), CFO Tom Szkutak stated Amazon would begin breaking out AWS revenue for the first time in Q1. He also mentioned (giving encouragement to bulls) Amazon is "putting even more energy and attention on driving what we would call fixed expense and variable expense productivity as well as other efficiency projects."
    • Also disclosed: Third-party seller units made up 43% of Q4 unit sales, up from Q3's 42%. Annual paid unit growth slipped to 20% from Q3's 21%.
    • Prior Amazon earnings coverage
  • 1:41 PM
    • Lowe's (LOW -1.1%) adds James Morgan to its board of directors.
    • Morgan is the former CEO of Krispy Kreme and has also been the top exec at Wachovia Securities.
    • Lowe's now has a dozen members on its board.
    • The home improvement retailer is expected to release FQ4 earnings on February 25 in what should be a telling update on the impact of $2 gas on sales.
    | 1 Comment
  • 1:34 PM
    • Heshey's (HSY -0.7%) deal to buy Krave this week brings some new categories to the company.
    • Krave specializes in healthy snacks - including nuts, trail mixes, and jerky with no nitrates or artificial flavors.
    • A meat bar is planned from Krave later this year.
    • The deal price for the Krave acquisition wasn't disclosed by Hersey.
    | Comment!
  • 1:23 PM
  • 1:06 PM
    • The FCC releases its list of winners in the record-setting AWS-3 auction.
    • In short: As speculated, AT&T (NYSE:T) opened up the checkbook, bidding $18.2B; Verizon (NYSE:VZ) bid $10.4B; Dish Network (NASDAQ:DISH) had a big presence, bidding $10B ($13.3B gross); T-Mobile (NYSE:TMUS) bid $1.8B.
  • 12:52 PM
    • VimpelCom (NASDAQ:VIP) subsidiary Global Telecom Holding closed out its sale of a majority interest in Omnium Telecom Algeria, drawing $2.6B from the Algerian National Investment Fund.
    • GTH will continue to hold operational control over the Algerian telecom, creating a public-private partnership.
    • The deal makes room for VimpelCom pay down some gross debt and settles disputes the company filed against Algeria, following the payment of a $1.1B fine.
    • VIP Shares are up 3.2%, swimming against the tide of ruble-relevant telecoms suffering today in the aftermath of a Russian interest-rate cut.
    | Comment!
  • 12:43 PM
    • Today's Russian interest rate cut has taken its toll on the long-suffering ruble -- and therefore on ruble-related telecom firms.
    • The ruble's made up a bit of ground from earlier, now at 70.12 vs. the dollar.
    • Mobile TeleSystems (NYSE:MBT) is down 2.8%; MiMES Rostelekom (OTCQX:ROSYY) down 4.2%; Turkcell (NYSE:TKC) down 1.8%.
    • The interest-rate cut to 15% today followed a hike to 17% last month and points to more volatility ahead for the currency and for firms in ruble-related markets.
    • Previously: Russia central bank cuts key rate (Jan. 30 2015)
    | Comment!
  • 11:54 AM
    • Shares of Mattel (MAT +0.3%) have made an unexpected comeback following a weak Q4 earnings report.
    • Shares of the toy maker were down 5% before the bell after the report first hit.
    • It appears that interim Mattel CEO Chris Sinclair used the right set of adjectives when describing the plan for the company during the earnings call this morning.
    • Sinclair said Mattel was approaching strategy with a "heightened" sense of urgency and will be "laser-focused" on results.
    • Earnings call webcast
    | 1 Comment
  • 11:36 AM
  • 11:19 AM
    • A report from the Nevada Gaming Control Board indicates revenue in the state fell 8.08% Y/Y in December.
    • Revenue from Las Vegas Strip casinos was off 16% during the month.
    • Analysts noted the month posed a tough compare, but were still caught off-guard.
    • The negative report appears to be impacting sentiment across the gaming sector, although some other factors are also in play.
    • Casino stocks:(CZR -4.4%), (CACQ -4.3%), (ISLE -2.7%), (NYNY -3.9%), (UWN -1.6%), (CNTY -1.8%), (MCRI -2.2%), (CHDN -1.5%), (PNK -0.3%), (MGM -3%), (WYNN -2.5%).
  • 10:55 AM
    • Earlier this week, Ross Stores (ROST -2.1%) announced the departure of Doug Baker who served as the Chief Merchandise Officer at dd's Discounts.
    • The dd's brand could become a larger part of the story at Ross Stores with the company saying it's on track to expand to 500 locations from the 152 it runs today.
    | Comment!
  • 10:44 AM
    • Shake Shack (Pending:SHAK) trades as high as $52 with the popular burger chain seeing an uncanny amount of demand.
    • The company is being valued at over $1.8B off of a net income tally of $3.5M for the 39 weeks ending last September 24.
    • The bright side in looking at the chain is the high average customer ticket ($10.50-$11.00 est) and restaurant-level margin (22.9% vs. 14% industry average), although those metrics are not at any meaningful scale (63 stores).
    • Early investors are making out like bandits on Shake Shack, raising the question of what the conversations are like in the C-suites at Five Guys and Smashburger today.
    • Previously: Buzz builds over Shake Shack IPO (Jan. 29 2015)
    • Previously: Shake Shack indicated for $34-$36 open
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