Today - Friday, January 30, 2015
- Quantum's (NYSE:QTM) FQ4 revenue guidance of $130M-$135M is mostly above a three-analyst $130.2M consensus. However, EPS guidance is only at $0.01-$0.02 vs. a $0.02 consensus. A culprit: Gross margin is expected to drop to 43%-45% from FQ3's 46.2% (+270 bps Y/Y).
- Though FQ3 revenue ($142.1M) officially missed consensus, it was in-line with the guidance provided in the company's Jan. 13 warning, as was EPS.
- On the CC (transcript), CEO John Gacek stated FQ3 sales guidance "reflects momentum we have in scale-out storage and DXi, offset by uncertainty around OEM tape [storage] and foreign currency risks." He added Quantum has "multiple large deals and new partnerships that are difficult to forecast at this point."
- The company has also announced it's buying back $50M worth of convertible senior notes due 2015 using cash. Quantum ended 2014 with $107M worth of cash/equivalents, and $204M in convertible debt.
- FQ3 results, PR
- Optical networking/carrier Ethernet hardware vendor Ciena (CIEN -4%), optical component suppliers Finisar (FNSR -2.4%) and Oclaro (OCLR -2%), and telecom chipmakers AppliedMicro (AMCC -5.9%) and Cavium (CAVM -4.4%) are all off after component vendor JDS Uniphase (JDSU -7.4%) missed FQ2 estimates and provided soft FQ3 guidance.
- On its CC (transcript), JDS observed its FQ2 network enablement (test equipment) and service enablement (telecom software/services) revenue fell a combined 8% Y/Y due to "weaker carrier spending and no budget flush in historically stronger December quarter." Network enablement is expected to remain soft in seasonally weak FQ3 as customers weigh their 2015 spending plans. Service enablement is expected to grow ~24%, after growing 16.6% in FQ2.
- AppliedMicro is down 10% since providing a soft FQ4 EPS guidance (-$0.09 vs. a -$0.07 pre-earnings consensus) on Tuesday afternoon to go with an FQ3 beat. Cavium is giving back the gains it saw yesterday after beating Q4 estimates and providing strong Q1 guidance.
- 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
- Harmonic (NASDAQ:HLIT) has soared to new 52-week highs after beating Q4 estimates and guiding for Q1 revenue of $100M-$110M, mostly above a $101.5M consensus.
- The Backlog and deferred revenue balance rose 10% Q/Q in Q4 to $128.7M. By contrast, the balance had fallen 12% in Q3. Strong video hardware demand from service providers drove the growth.
- Gross margin fell 20 bps Y/Y to 54.1%, and op. margin 270 bps to 6.2%. $6.7M was spent on buybacks.
- Q4 results, PR
1:31 PM| Comment!
- Following 16% Q/Q growth in Q3 (driven by iPhone-related orders), Broadcom's (BRCM +4.3%) broadband/connectivity chip sales only fell 2% Q/Q in Q4 to $1.475B, less than expected and driving the company's Q4 beat. Infrastructure/networking chip sales fell 4% Q/Q to $625M, in-line with expectations.
- On the CC (transcript), CEO Scott McGregor stated broadband/connectivity upside was "across the board, including set-top box, broadband access and particularly wireless connectivity." Wireless benefited not only from new phone launches, but also a growing mix of higher-ASP 802.11ac and 2x2 MIMO Wi-Fi combo chips.
- McGregor added Broadcom is "seeing significant customer interest in our 4x4 multiuser MIMO 5G WiFi chip targeted for retail routers, broadband access gateways and set-top boxes," and has scored its first wireless charging IC design win. Q1 broadband/connectivity segment sales are expected to be down Q/Q, in-line with seasonality.
- In infrastructure/networking, data center sales were stronger than enterprise (campus LAN) and carrier sales. Strong design win activity is claimed for both Broadcom's new 3.2Tbps StrataXGS Tomahawk switching chip. Segment sales are expected to be flat Q/Q in Q1.
- Q4 gross margin was 54.7%, +60 bps Q/Q and +240 bps Y/Y, even with a guidance midpoint of 55% after factoring stock compensation. Thanks to job cuts and the baseband wind-down, R&D spend fell 18% Y/Y to $530M, and SG&A spend rose by just $1M to $173M. $104M was spent on buybacks.
- Q4 results/guidance, PR
- With shares having gone into trading near their 52-week low of $53.76, Coherent's (NASDAQ:COHR) FQ1 beat is easily overshadowing light FQ2 guidance: Revenue of $195M-$205M vs. a $209.2M consensus.
- Also helping: The industrial laser vendor has launched a new $25M buyback (good through Jan. 2016), and stated on its CC (transcript) it expects fiscal 2H revenue to be up ~10% from 1H levels. A $25M buyback launched last July has been used up.
- With OEM order timings and soft European sales weighing on results, FQ1 bookings fell 19% Y/Y to $162.5M, and book-to-bill was 0.81. Strong Asian life sciences demand is boosting sales of Coherent's Chameleon lasers.
- FQ1 results, PR
12:07 PM| Comment!
- Salesforce (CRM -2.2%), ServiceNow (NOW -2.2%), Paylocity (PCTY -5.8%), Castlight (CSLT -4.1%), Cornerstone OnDemand (CSOD -3.6%), InContact (SAAS -2.2%), and Zendesk (ZEN -2.1%) are selling off after cloud ERP/HR/e-commerce software vendor NetSuite (N -11.7%) offered light Q1 and 2015 sales guidance to go with a Q4 beat. The Nasdaq is down 0.4%.
- As one would expect, NetSuite states forex has much to do with its guidance. On the CC (transcript), CFO Ronald Gill noted "the weighted average value of the foreign currencies in which we recognize international revenue has fallen more than 8% against the dollar." However, it's worth noting only 27% of NetSuite's Q4 revenue was international.
- NetSuite's Q4 numbers were solid: Subscription/support revenue grew 34%, and billings rose 34% to $201M (well above revenue of $157.9M). 54 customers were added for NetSuite's SuiteCommerce e-commerce software platform - CEO Zach Nelson humbly observes that was more than 3x the 17 customer adds rival Demandware (DWRE -1.6%) reported for Q3 (a seasonally weaker quarter).
- ServiceNow, the top player in the cloud IT service desk software market, provided above-consensus guidance on Wednesday.
- When asked on Unisys' (NYSE:UIS) Q4 CC (transcript) if the company is aiming for "somewhere around flat" 2015 growth for its Technology (hardware) segment, CFO Janet Haugen responded with cautious remarks. "We've got a 6 percentage point negative impact on currency in the quarter ... we've got two headwinds in that technology revenues, one is the currency impact on year-over-year basis and second a lower renewal opportunity than we would have had previously."
- Unisys' 2015 total revenue growth consensus is at 3%. In Q4, the company's Technology revenue rose 1% Y/Y to $184.9M, and its services revenue (driven in part by past hardware sales) fell 11% to $720.9M.
- Services margins also received attention: Unisys' services gross margin fell to 17.5% in Q4 from 21.9% a year ago, and services op. margin to 3.9% from 9.8%. When asked if Unisys can expand services margins in the event of declining revenue, new CEO Peter Altabef said he doesn't "want to have to face that choice."
- Services backlog was flat Y/Y in Q4 at $4.8B. Unisys expects $635M and $2B of its services backlog to respectively convert into Q1 and 2015 revenue. Total revenue consensus estimates for Q1 and 2015 are respectively at $767.1M and $3.46B.
- Q4 results, PR
- Gigamon (NYSE:GIMO) guided on its Q4 CC (transcript) for Q1 revenue of $40M-$43M and EPS of $0.01-$0.05, well above a consensus of $35.5M and -$0.03.
- The network visibility hardware vendor saw a 16% Y/Y Q4 increase in product revenue to $36.8M, and a 27% increase in services revenue to $14.5M. Enterprises accounted for 73% of revenue, service providers 14%, and federal 13%.
- Notably, enterprise bookings rose 68% Y/Y, and federal bookings 261%. Service providers bookings were up 17%. Customer count rose by 94 to 1,649, and the deferred service revenue balance rose by $11M Q/Q to $51.7M.
- The mid-range GigaVUE-HC2 appliance was a strong seller, with HC2 product family bookings doubling Q/Q. H-Series GigaSMART software licenses also saw strong growth.
- Q4 results, PR
- SurModics (SRDX +0.1%) FQ1 results: Revenues: $14.2M (+2.2%); R&D Expense: $3.6M (-2.7%); SG&A: $3.7M (-5.1%); Operating Income: $5M (+16.3%); Net Income: $3.6M (-0.4%); EPS: $0.27 (+3.8%); Quick Assets: $30.7M (-34.1%); CF Ops: $5.5M (+27.9%).
- FY2015 Guidance: Revenue: $57.0M - 60.0M (unch); GAAP EPS: $0.85 - 0.95; GAAP Cash Flow: $16.5M - 18.0M (unch); CAPEX: $2.2M - 2.5M (unch).
- QLogic (QLGC +4.8%) has jumped to new 52-week highs after beating FQ3 estimates and issuing strong FQ4 guidance on its CC: Revenue of $132M-$138M and EPS of $0.24-$0.28 vs. a consensus of $133.1M and $0.25 (transcript).
- Archrival Emulex (ELX -8.1%), however, is off sharply after providing in-line FQ3 guidance - revenue of $97M-$103M and EPS of $0.11-$0.15 vs. a consensus of $100.1M and $0.13 - to go with an FQ2 beat.
- QLogic CEO Prasad Rmapalli asserts his company has been gaining share in the Fibre Channel adapter card market (59% estimated revenue share over the first three quarters of calendar 2014), and has seen "significant share gains" in the high-end 16G Gen 5 segment.
- He added strong Q/Q growth was seen for QLogic's 10G Ethernet adapters and ASICs - the company bought Broadcom's Ethernet controller business a year ago - aided by major design wins for servers running Intel's recently-launched Grantley Xeon CPUs. 25G Ethernet adoption is forecast to be "a disruptive force in the Ethernet ecosystem."
- Likely hurting Emulex: CFO Kyle Wescoat stated on the CC (transcript) "sequential [FQ3] growth in our Ethernet products is offset by Fibre Channel seasonality that could be more pronounced than usual, given the stronger-than-expected December quarter performance."
- A BMO analyst pressed Emulex about its 10G Ethernet share during the Grantley server cycle, and an RBC analyst asked if IBM's recent woes are hurting the company. CEO Jeff Benck declared Emulex is confident it can gain share during the Grantley cycle, and noted a weak UNIX server market (where IBM is a major player) can have an impact.
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