Friday, April 17, 2015
- "We believe ServiceNow (NYSE:NOW) saw increased seasonality in Q1, which is in part the result of the company's shift to Services Automation beyond IT, where the company will be focusing on larger cross-enterprise deals," writes Brean (Buy) after ServiceNow (NOW) provided light Q2 guidance and a smaller top-line beat than has been seen in recent quarters amid heavy forex pressures.
- On the CC (transcript), CEO Frank Slootman stated ServiceNow "had quite a bit of deal slip" in Q1, and was also dealing with a drained deal pipeline (as of January) and a salesforce reorg. Brean isn't worried. "This is a common occurrence for enterprise software companies, but appears to have unfortunately caught many by surprise (ourselves included). However, we believe the after-market reaction reflects strong outperformance into the print, as well as overall anxiety in the market, as opposed to deteriorating fundamentals."
- "When you trade at 9x 2016 revenues you don't get a pass...on anything," admits Canaccord (Buy). It's not thrilled with the Q1 numbers, but also thinks there was nothing to change its belief ServiceNow will grow to $3.5B-$4B/year business with 20%+ free cash flow margins by 2020. The firm still sees shares reaching $200 in 4 years.
- TechStockRadar's Rob DeFrancesco: "[T]he longer-term outlook remains bright because the company continues to benefit from the broad enterprise transition to the cloud (it faces little legacy vendor competition) and gain traction in IT operations management (ITOM), a $10-billion market that is significantly larger than its core [IT service management] market. In the latest quarter, ServiceNow generated about 10% of its business from ITOM, indicating plenty of room for expansion."
- Shares fell 11.5% in regular trading to $73.29. They're still up 38% from where they traded a year ago.
- Yesterday: ServiceNow's Q1 results, guidance/details
- "AMD’s model appears to be breaking, as we now have them burning substantial amounts of cash," writes Bernstein's Stacy Rasgon, reiterating an Underperform following the CPU/GPU vendor's Q1 miss and soft Q2 guidance. "Frankly, this call is getting depressing. But, we see little reason to step off of it."
- Rasgon doesn't see AMD going bankrupt (no major debt payments are due before 2019), and likes its improved inventory management. But he also thinks the company will be in "serious trouble" if PC demand doesn't stabilize later this year thanks to improved inventories and Windows 10.
- He also notes AMD's 20% Q/Q and 38% Y/Y PC CPU/GPU division sales drops compare with 16% Q/Q and 8% Y/Y drops for Intel's PC/mobile CPU unit. "This continues to suggest continued share losses by the company (though this should hardly be shocking at this point)."
- Ascendiant's Cody Acree, who downgraded to Hold: "In addition to a relatively weak macro computing environment, we believe AMD’s gross and operating margin leverage will likely also be constrained. We believe CPU and GPU pricing from both INTC and NVDA will continue to be aggressive and that AMD’s semi-custom business will only support modestly higher margins as pricing declines meet console volume increases."
- Though maintaining an Outperform for now, Wells Fargo's David Wong now forecasts losses for the rest of 2015, and also through 2016. He sees profits eventually returning on account of AMD's engineering expertise. Oppenheimer notes gross margin (down in Q1) is expected to be flat Q/Q in Q2, and thinks new semi-custom wins are unlikely to ramp before 2H16.
- Jefferies' Mark Lipacis (Buy) is hoping improved PC/console demand and the launch of AMD's anticipated Fiji GPUs provide a 2H15 lift. He also expects AMD to use its May 6 analyst day to "articulate its first long-term strategy and business model in years."
- Shares fell 10.3% in regular trading to $2.58. The 52-week low is $2.14.
- Yesterday: AMD's Q1 results, guidance/details
- Celanese (NYSE:CE) hit a new 52-week high today and closed with a 15.5% gain after reporting Q1 earnings that routed analyst estimates and raising its FY 2015 EPS guidance to $5.60-$5.90 from an earlier outlook for $5.00-$5.50 and above the $5.21 consensus estimate.
- CEO Mark Rohr said CE began 2015 with "significant headwinds at the macro level," including an uncertain macroeconomic environment and volatile currency markets as well as the company's methanol transition and tow inventory de-stocking, but CE's strong Q1 commercial performance "gives us confidence that we can overcome these headwinds."
- UBS raised its price target on CE to $69 from $65 following the Q1 results, citing the increased guidance and cost savings initiatives, while UBS reiterated its Buy rating on the shares.
- CE also says it is considering expanding its south Texas chemical plant to produce methanol; the $800M project, to be built under a JV with Japan's Mitsui, would have the capacity to produce 1.3M tons/year of methanol.
- FARO Technologies expects to report Q1 revenue of $70M, -5% Y/Y and well below an $85.4M consensus. The company blames a $7M forex hit, weak Japanese macro conditions, and soft Brazilian industrial demand (also blamed on macro). In addition, $1.3M in forex losses are expected for intercompany account balances, primarily involving the Swiss franc.
- CEO Jay Freeland: "Our expected sales growth of approximately 5%, excluding the $7 million of negative foreign exchange impacts, is below our long term mid-teens sales growth goal primarily due to lower metrology unit sales. On a positive note, we are very pleased that the FARO Focus3D laser scanner is expected to report greater than 20% year-over-year unit sales growth, and that our new hand-held Freestyle 3D laser scanner has received a strong market reception."
- In response to the shortfall, FARO is "implementing efficiencies and cost reduction measures." Full Q1 results arrive on April 28.
- Shares have fallen to $56.30 AH. They fell 1.8% in regular trading thanks to a market selloff.
4:06 PM| Comment!
- Q1 earnings of $552M or $0.66 per share vs. $558M and $0.79 one year ago.
- Net interest income of $2.9B up 5% Y/Y. NIM of 15.79% down 304 basis points as deposits rolled in.
- Provision for loan losses down $77M to $687M thanks to improved asset quality trends.
- Loan-receivables growth of 7%, driven by purchase volume growth of 10% and average active account growth of 4%.
- Deposits of $35B up 28% Y/Y, and now make up 59% of funding, up from 55%.
- CET1 ratio of 16.4%.
- On the earnings call, management says it does not expect any buybacks or dividends until the separation from GE is complete, though capital will continue to grow in the meantime.
- Previously: Synchrony Financial beats by $0.02, beats on revenue (April 17)
- SYF -0.3%
- In addition to missing FQ3 revenue estimates (while beating on EPS), Seagate (NASDAQ:STX) has guided on its CC (webcast) for FQ4 revenue of $3.2B-$3.3B, below a $3.42B consensus. However, a light outlook was expected given the PC industry's recent woes. Demand is expected to pick up in 2H15 thanks to higher PC/console sales and continued enterprise/cloud strength.
- $706M was spent on buybacks in FQ3, helping EPS beat estimates in spite of a revenue miss. Also: Gross margin was 28.9%, +70 bps Q/Q and +40 bps Y/Y, and above guidance of 28.5%. While revenue fell 2% Y/Y, operating expenses rose 18% to $555M, thanks to both higher R&D and marketing/admin spend.
- Boosting margins: Shipments of enterprise drives (higher-margin) rose 18% to 9.1M thanks to a server upgrade cycle and Web/cloud demand. PC drive shipments fell 14% to 31.1M, with plunging desktop volumes offsetting slight notebook growth. Consumer drives -11% to 4.8M; branded drives -14% to 5.1M. Hard drive ASP rose $1 Q/Q and Y/Y to $62.
- Western Digital (NASDAQ:WDC) is following Seagate higher ahead of its April 28 FQ3 report. The gains come in in spite of a 1.5% drop for the Nasdaq. BofA's upgrades are looking good for now.
- Seagate's FQ3 results, PR, earnings slides (.pdf)
9:05 AM| 4 Comments
8:15 AM| Comment!
8:03 AM| Comment!
- Net income of $1.12B, or $1.41 a share, vs. $1B, or $1.28 a share, in the same quarter a year ago.
- Q1 profit by segment: Aerospace +7%; Automation and Control Solutions +10%; Performance Materials +6%.
- Q1 sales by segment: Aerospace -6%; Automation and Control Solutions -3%; Performance Materials -5%.
- Honeywell (NYSE:HON) cut its 2015 sales outlook to a range of $39B-$39.6B from $40.5B-$41.1B and raised the lower end of its EPS outlook to a range of $6.00-$6.15 from $5.95-$6.15.
- HON -3.6% premarket
- Q1 results
7:32 AM| Comment!
- Reynolds American (NYSE:RAI) reports cigarette volume fell 2.4% to 13.9B in Q1 vs. +0.5% industry average.
- Cigarette market share -50 bps to 26.1%.
- Premium mix +30 bps to 58.7%.
- SG&A expenses +23.73% Y/Y to $511M.
- Operating margin rate increased 280 bps to 37.2%.
- FY2015 Guidance: Adjusted EPS: $3.65 to $3.80.
- RAI +1.70% premarket.
7:18 AM| Comment!
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