Friday, April 24, 2015
- After barely moving in response to its Q1 numbers yesterday, Proto Labs (NYSE:PRLB) sold off today in the wake of downgrades to neutral ratings from Piper and Craig-Hallum. Needham downgraded ahead of the report.
- Though the custom parts maker narrowly beat Q1 revenue estimates and posted in-line EPS, it guided for on its CC (transcript) for Q2 revenue of $61M-$64M and EPS of $0.46-$0.50, below a consensus of $63.4M and $0.49 at the midpoints. Forex is expected to have a $2M impact on sales, up from Q1's $1.75M.
- Proto's North American revenue rose 36% Y/Y in Q1 (23% excluding the FineLine acquisition). Japanese revenue rose 23% (43.5% in constant currency), and European revenue fell 5% (up 10% in constant currency). Unique product developers/engineers served rose 44% to 11K.
- Gross margin fell 280 bps Y/Y to 60.2% - lower additive manufacturing margins had a 110 bps impact, and forex a 220 bps impact. GAAP operating expenses rose 33% to $19.4M (compares with 27% revenue growth).
- Q1 results, PR
- Though NetSuite (NYSE:N) beat Q1 estimates, it guided on its Q1 CC (transcript) for Q2 revenue of $170M-$172M and EPS of $0.03-$0.04, below a consensus of $172.1M and $0.06. A strong dollar is blamed (26% of Q1 revenue was international).
- Not counting the impact of the Bronto Software acquisition (announced yesterday morning, expected to close in early June), full-year revenue and EPS guidance of $715M-$725M and $0.32 is maintained. Counting Bronto, guidance is now at $730M-$743M and $0.23. Bronto is expected to contribute $40M-$45M to 2016 revenue.
- Calculated billings rose 28% Y/Y in Q1 to $174M, topping revenue of $164.8M. However, growth slowed from Q4's 34%, and was below revenue growth of 34%. NetSuite thinks forex had a 5% impact on billings growth, up from Q4's 2%.
- The deferred revenue balance rose 3% Q/Q and 36% Y/Y to $323.4M. GAAP operating expenses rose 29% Y/Y to $131.4M. A record number of $250K+ deals were struck.
- NetSuite also guided light in January.
- Q1 results, PR
- Marketo (NASDAQ:MKTO) sold off today in spite of beating Q1 estimates and issuing above-consensus sales guidance: The cloud marketing automation software provider expects Q2 revenue of $49.5M-$50.5M (consensus was at $49.2M) and 2015 revenue of $208M-$210M (consensus was at $205.5M).
- The Street might have been looking for better EPS guidance in light of the top-line strength: Q2 EPS guidance is at -$0.22 to -$0.24 (-$0.22 consensus), and full-year guidance at -$0.81 to -$0.85 (-$0.82 consensus).
- Calculated billings rose 37% Y/Y in Q1 to $49.9M, topping revenue of $46M (+42%), and the deferred revenue balance grew 6% Q/Q and 47% Y/Y to $66.9M. GAAP operating expenses rose 44% Y/Y to $48.5M. The customer count rose by 198 Q/Q to 3,972.
- Q1 results, PR
- Marvell (NASDAQ:MRVL) now expects FQ1 revenue of $710M-$740M, well below prior guidance of $810M-$830M and an $816.3M consensus. All other guidance has been withdrawn.
- The chipmaker blames "weaker than previously expected PC and storage markets and lower than expected emerging market demand." The former is presumably a reference to hard drive/SSD controller sales; the latter might be a reference to Chinese baseband chip sales.
- PC sales were down sharply in Q1, thanks in large part to weak corporate and Japanese demand. Meanwhile, analysts have voiced concerns about soft chip orders from Chinese smartphone OEMs.
- Shares have fallen to $13.50 AH. They fell 1.6% in regular trading after several peers offered soft guidance. Full FQ1 results arrive on May 21.
- Thanks to a better-than-feared Q1 report that included lower-than-expected spending figures, Google (NASDAQ:GOOG) rallied to its highest levels of the month today. Class C shares are now up 16% from a January low of $487.56, and 6% below a 52-week high of $599.65.
- At least 6 firms have hiked their targets. Deutsche's Ross Sandler (Buy) notes net profit margin was flat in Q1 "after imploding for three years," something he attributes to both cost discipline and management changes.
- Looking at the top-line, Morgan Stanley (Equal-Weight) is worried U.S. revenue growth slowed to 11% Y/Y (the slowest pace since Q4 2009). With YouTube having likely grown over 40% Y/Y, MS thinks U.S. search revenue (higher-margin) was only up 9%-10%.
- On the CC (transcript), CFO Patrick Pichette stated a mix shift towards YouTube ads - any un-skipped video ad is counted as a click - was pressuring Google's ad prices (CPCs), and not mobile. "Excluding the impact of YouTube TrueView ads, growth in site clicks would be lower, but still positive, and our CPCs would be healthy and growing year-over-year." Sales chief Omid Kordestani noted YouTube's TruView advertiser count rose 45% in 2014.
- BofA/Merrill (Buy) is pleased with the CPC disclosure, as well as sales growth and margin stability. "We continue to see opportunity for sentiment improvement on new products (I/O in May), anticipation of new CFO, spending trajectory change, and YouTube strength.
- Meanwhile, eyewear maker Luxottica has announced it's working with Google on a commercial version of Google Glass that will launch soon (no ETA is given). Sales of the $1,500 Explorer Edition ended in January.
- Glass chief Ivy Ross previously stated the next version will be cheaper, have a longer battery life, and a better display and sound quality. Himax (NASDAQ:HIMX) is expected to remain Glass' microdisplay supplier, and Intel is expected to be its CPU supplier. Eric Schmidt affirmed Google's commitment to Glass last month.
- Prior Google earnings coverage
- Southern Copper (SCCO +2.7%) reports Q1 earnings of $0.35/share, beating the analyst consensus estimate of $0.29, on revenues that fell 6% Y/Y to $1.27B, below the $1.32B consensus, as copper prices fell.
- Q1 EBITDA declined 16.9% Y/Y to $556.1M, and margin fell from 49.4% to 43.6%.
- SCCO's Q1 copper production rose 8.9% Y/Y to 177.6K tons, and says it expects its copper output to nearly double to 1.15M tons in 2017 from last year.
- Separately, Peru's energy and mines minister says the government could ask SCCO to make additional changes to its $1.4B Tia Maria project after protests turned deadly this week.
3:38 PM| Comment!
- Cabot Oil and Gas (COG +0.1%) inches higher following Q1 earnings and revenues that topped expectations, but earnings nevertheless fell 54% Y/Y and revenue slipped 9% to $465M even as production volume rose 43% to 171.4B cfe.
- The falling price of gas meant COG fetched a price of $2.46/MMcf for its gas in Q1, nearly a third less than last year; COG expects its Q2 natural gas price realizations before the impact of hedges to average $0.82-$0.92 below Nymex settlement prices.
- COG provides Q2 net production guidance of 1,375MM-1,425MM cf/day of natural gas and 17.5K-18.25K bbl/day for liquids, and forecasts full-year production growth of 10%-18% vs. an earlier estimate of 20%-30% growth.
- COG says it will drop one rig in the Eagle Ford Shale, reducing its portfolio to a single rig in the play; it operates three rigs in the Marcellus Shale, which it plans to continue to run but plans to slow its production there to drop output by 50M cf/day.
- Unisys (NYSE:UIS) is down sharply after missing Q1 revenue estimates (while beating on EPS) thanks to a 16% Y/Y drop in non-U.S./Canada revenue. A strong dollar exacted a heavy toll: Non-U.S./Canada sales were down only 5% in constant currency.
- Along with its results, the mainframe/IT services provider (4 months removed from getting a new CEO) has announced it's launching a restructuring expected to cut headcount by 8%, and yield $200M/year in savings by the end of 2016. $300M in restructuring charges are expected over the next several quarters.
- The services backlog was $4.5B at the end Q1, -$300M Q/Q (seasonality) but flat Y/Y. Services revenue fell 6% Y/Y to $639M, while Technology (mainframe/server) revenue rose 3% to $82M. U.S. federal revenue +13%,, other public sector -10%, financial industry -10%, commercial industry -7%.
- Gross margin fell 130 bps Y/Y to 16.2%, and operating expenses fell 4% to $147M. $128.8M was spent on SG&A, and $18.2M on R&D.
- Q1 results, PR
- "By calendar 2016, we believe organic [constant currency] growth returns to low single digits with growing cloud business and earnings growth can potentially be restored to 10% or so with the leverage of share repurchase, and continued strong cash flow generation," writes Nomura's Rick Sherlund, upgrading Microsoft (NASDAQ:MSFT) to Buy following its FQ3 beat. His target remains at $50.
- Sherlund, who downgraded in January on account of Microsoft's FQ2 numbers, still thinks the company will be in a transition period for a few quarters, and notes certain core businesses (e.g. Windows, traditional Office licenses) were soft. However, he thinks total Office revenue (traditional + 365) could start rising again in 2016 "given high interest and migrations among business users to Office 365 and new cross platform productivity tools for Windows, iOS and Android."
- "In our view, Microsoft is well ahead of its large cap value peer group in the transition to the cloud," says UBS' Brent Thill (Buy, $50 target). Pac Crest's Brendan Barnicle (Outperform, $50 target) observes Office 365 still covers less than 10% of the Office installed base, leaving plenty of room for growth. He estimates Azure is on a $1.5B/year revenue rate (compares with $5.16B in trailing revenue for AWS and a $6.3B/year run rate for Microsoft's broader commercial cloud ops).
- On the CC (transcript), CFO Amy Hood stated Microsoft's FY15 (ends in June) opex guidance ($32.4B-$32.5B) is now $2B lower than where it initially was. Adjusting for forex and the Nokia deal, opex rose just 1% Y/Y in FQ3 thanks to job cuts. Meanwhile, Satya Nadella mentioned Office iOS/Android app downloads have topped 100M.
- Prior Microsoft earnings coverage
- Though the Nasdaq is up 0.7% thanks to market-pleasing earnings from Google, Microsoft, and Amazon, chip stocks (SOXX -2.1%) are adding to their Thursday losses after Freescale, Altera, Microsemi, and Maxim joined the ranks of chipmakers offering soft Q2 guidance; Texas Instruments, Xilinx, and Qualcomm did so on Wednesday afternoon.
- NXP (NXPI -4.3%), set to merge with Freescale in a cash/stock deal, is selling off ahead of its April 29 Q1 report. RF chipmakers Skyworks (SWKS -3.8%), Qorvo (QRVO -4.4%), and Avago (AVGO -5.2%) are also seeing steep declines.
- Other decliners include a slew of telecom/networking, microcontroller, and analog/mixed-signal chipmakers. The group includes Marvell (MRVL -3%), ON Semi (ON -6.9%), Atmel (ATML -3.3%), Cypress (CY -4%), Lattice (LSCC -3.9%), Semtech (SMTC -6.9%), Cavium (CAVM -6%), PMC-Sierra (PMCS -2.9%), InPhi (IPHI -3.8%), and Silicon Labs (SLAB -2.9%). Chip packaging/testing firm Amkor (AMKR -5.7%) is also off; its Q1 report arrives on Monday.
- As was the case with TI and Xilinx, soft telecom equipment chip demand was often blamed by those guiding light yesterday afternoon. Freescale (FSL -3.5%) stated it expects network processor division sales to be down Q/Q and RF (base station power amplifier) division sales to be flat. Microcontroller, automotive, and analog and sensor division sales are expected to rise.
- Altera (ALTR -3.3%) stated its "telecom and wireless business, and particularly our wireless business globally looks to be quite weak in [Q2], while the rest for our business will in aggregate be flat to slightly up." Regarding its Q1 miss, the company notes "Industrial, test, compute and storage, and to a lesser extent military, fell short of our forecast" (share loss to Xilinx?).
- Maxim reports seeing "broad-based softness in communications infrastructure demand" and soft industrial bookings to go with healthier mobile/auto demand. The Galaxy S6 appears to be giving a lift to Maxim's mobile sales.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
- In addition to missing FQ3 revenue estimates (while beating on EPS), Maxim (NASDAQ:MXIM) has guided for FQ4 revenue of $570M-$610M and EPS of $0.35-$0.41, below a consensus of $618.5M and $0.44.
- On its CC (transcript), the analog/mixed-signal chipmaker stated telecom/data center chip sales are expected to fall in FQ4, thanks to "broad-based softness in communications infrastructure demand" - TI, Xilinx, and Altera have also reported seeing soft telecom equipment chip sales.
- Maxim also said it's "taking a cautious view" on industrial chip sales (they're expected to be flat Q/Q) due to "weaker than seasonal bookings trends." Mobile chip sales (lifted by Samsung's strong Galaxy S6 sales) are expected to be healthier, as are automotive sales.
- FQ3 results, PR
- In addition to slightly missing FQ2 revenue estimates (while beating on EPS), Microsemi (NASDAQ:MSCC) has guided for FQ3 revenue of $302M (+/- 2%); the midpoint is below a $303.7M consensus. EPS guidance of $0.67-$0.71 is in-line with a $0.69 consensus.
- The high-end analog/mixed-signal chipmaker was up 26% YTD going into earnings, aided by enthusiasm about the Vitesse acquisition. Several peers have also provided soft sales guidance.
- Driving the FQ2 EPS beat: Gross margin (non-GAAP) rose to 57.1% from 56.2% in FQ1 and 55.2% a year ago. Op. margin rose to 25.6% from 24.4% and 20.7%.
- FQ2 results, PR
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