Seeking Alpha
  • Today - Thursday, April 17, 2014

  • 5:26 PM
    • After underperforming yesterday in response to a mixture of in-line and soft outlooks from Intel, ASML, and Linear, chip stocks bounced back strongly following more encouraging numbers from foundry giant TSMC, NAND flash giant SanDisk, and well-diversified Cypress.
    • TSMC, seen as a bellwether for chip demand due to a client list that includes most of the world's top fabless chipmakers (Qualcomm, Broadcom, MediaTek, Xilinx, etc.), beat Q1 estimates, issued strong Q2 guidance, and reported seeing healthy sales from mobile clients, and for its advanced 28nm process node.
    • SanDisk offered strong margin guidance to go with a Q1 beat. Cypress posted a slight Q1 revenue beat, and issued Q2 revenue guidance that beat consensus at the midpoint.
    • Notable gainers: ARMH +3.9%. MRVL +2.2%. CODE +5.1%. RMBS +4.4%. IDTI +3%. ENTR +3.7%. PXLW +6.1%. QUIK +2.4%.
    | Comment!
  • 4:39 PM
    • AMD expects Q2 revenue to be flat to up 6% Q/Q; that's better than a consensus for a 3% decline.
    • Due to desktop weakness, Computing Solutions (PC/server CPU) sales fell 8% Q/Q and 12% Y/Y in Q1; they were down 13% Y/Y in Q4, and 15% in Q3.
    • Graphics & Visual Solutions (GPUs, console/embedded designs) sales fell 15% Q/Q and rose 118% Y/Y. Console-related sales fell Q/Q, but GPU sales rose.
    • CPU ASPs were flat Q/Q and down slightly Y/Y. GPU ASPs rose Q/Q and Y/Y due to Radeon R7/R9 demand (some of it from Litecoin miners).
    • Gross margin (a point of concern lately) was 35%, flat Q/Q, down 600 bps Y/Y, and in-line with guidance. GM is expected to remain at 35% in Q2.
    • R&D spend fell 11% Y/Y to $279M, MG&A spend fell 13% to $156M. AMD ended Q1 with $982M in cash, down from $1.19B at the end of Q4 thanks to a GlobalFoundries payment. Debt fell by $43M to $2.06B.
    • Q1 results, PR, CFO commentary (.pdf)
  • 4:20 PM
    • Though pre-IPO demand was muted (leading to conservative pricing) and initial trading wasn't impressive, Weibo (WB +19.1%) and Leju (LEJU +18.6%) closed up strongly. The former is now worth $4.05B (21x sales), and the latter $1.57B (4.7x sales).
    • Sina (SINA +6.7%) managed to follow Weibo higher, but E-House (EJ -5%) couldn't get a similar lift from Leju.
    • Chinese Internet companies with upcoming IPOs - the list includes, (JMEI), and Cheetah Mobile - are likely breathing sighs of relief.
    | Comment!
  • 4:03 PM
    • TSMC (TSM +2.8%) has guided for Q2 revenue of NT$180B-NT-$183B ($5.97B-$6.07B), well above a $5.61B consensus. Gross margin is expected to be in a range of 47.5%-49.5%, after coming in at 47.5% in Q1 (+170 bps Y/Y).
    • TSMC states strong mobile chip demand contributed to its Q1 beat, which follows a March guidance hike, and that it's also benefiting from inventory restocking and "better performance and higher yield and reliability" for advanced process nodes.
    • 28nm wafers made up 34% of Q1 revenue, and 40/45nm wafers 21%.
    • UBS' William Dong has upgraded shares to Buy, and thinks strong demand for 4G smartphones (have higher chip content than 3G phones) is giving the foundry a lift. He expects 10%-12% Q/Q Q3 revenue growth as orders for Apple's A8 CPU ramp, and 3%-5% growth in Q4.
    • At the same time, Dong expects TSMC to see a more "balanced pricing environment" in 2015 as smaller foundry rivals such as Samsung try to take share.
    • Q1 results, PR
    | Comment!
  • 2:22 PM
    • Baker Hughes (BHI +4%) Chairman/CEO Martin Craighead said in today's earnings call that growing U.S. well counts, led by the Permian Basin, are increasing demand for the company's products given the increasingly complex nature of oil production.
    • Management said it sees strong commodity prices supporting spending by its customers; for Q2, it expects a seasonal drop in its North America business to be more than offset by gains in other segments, leading to earnings growth similar to Q1.
    • FBR Capital reiterates an Outperform rating on the stock, writing that the quarter demonstrates why the stock has been its top pick in the group.
    | Comment!
  • 1:21 PM
    • After initially trading near breakeven following a Baird upgrade to Outperform, SolarCity (SCTY +1.7%) has moved higher.
    • Baird's Ben Kallo thinks the 35% drop seen since Feb. 27 provides a great buying opportunity for "the stock most levered to the U.S. rooftop market, which will likely undergo a boom over the next several years."
    • He also argues SolarCity's cost cuts and scale give it a competitive edge, and that solar asset-backed notes provide it with cheap capital to "capitalize on the expansive U.S. greenfield opportunity."
    • Deutsche and Roth talked up the value of SolarCity's asset securitization efforts two weeks ago. Shares rallied yesterday on news of the DOE's loan guarantee proposal.
    | Comment!
  • 1:03 PM
    • "There is vivid interest already from both hedge funds and institutional investors," says Petros Christodoulou, deputy CEO of National Bank of Greece (NBG +4.4%). The €750M senior unsecured bond will be the first such issue by the bank in nearly 5 years, and it's expected to have a 5-year maturity and be priced to yield around 4.5% (the government just sold 5-year paper last week at 4.95%).
    • The bond sale comes alongside an expected €2.5B equity offering aimed at filling the large capital hole in the bank.
    • The moves comes as Piraeus Bank - the largest Greek lender - last month raised €500M in debt, followed by a €1.75B equity sale. Third-ranked lender Alpha Bank has also raised €1.2B in capital and #4 Eurobank has an investor group ready to anchor a €2.9B stock sale later in April.
    • Greek ETF: GREK
  • 12:47 PM
    | Comment!
  • 12:46 PM
    • The major averages are managing to hang in there - S&P 500 (SPY +0.1%), Nasdaq 100 (QQQ) - despite sizable earnings-related declines in a number of high-profile names. IBM -3.4%, Google -4.5%, American Express -2%, and Chipotle Mexican Grill -1.9%. United Health -3.7%, and leading health insurer stocks lower amid dour comments on Medicare rate cuts and high Hepatitis C costs.
    • Not all the big earnings names are lower though: Morgan Stanley +3.6%, GE +2.3%, and Goldman Sachs about flat.
    • Also weighing is a big jump in Treasury yields after initial jobless claims remained right around 300K and the Phila Fed Index popped to a 7-month high. The 10-year Treasury is up 8 basis points to 2.71%.
    | Comment!
  • 12:15 PM
    • On the surface, Morgan Stanley's (MS +3.5%) Q1 results appear far better than those of Goldman Sachs (GS +0.6%), with FICC revenues up 9% Y/Y vs. a decline at Goldman. But Oppenheimer's Chris Kotowski notes Morgan had an especially easy comparison since 2013 Q1 was particularly weak. "Nonetheless, it is always nice to see year-over-year growth, and Morgan Stanley's is the best we have seen so far."
    • Kotwoski also takes note of return on tangible common equity - 11.1% at Goldman vs. 10.9% at Morgan. Despite the lower ROE, Morgan trades for 10.3x 2015 estimates vs. 9.4x for Goldman. Investors may want to have to take a harder look at which one to buy.
    | 1 Comment
  • 12:08 PM
    • SandRidge Energy (SD +3.7%) pushes solidly higher following positive comments last night from Jim Cramer.
    • "Because SandRidge is so hated by Wall Street, the analysts can't see the incredible turnaround happening in front of their faces," Cramer said, noting that SD has delivered three consecutive quarters where the company beat earnings estimates and raised guidance since James Bennett took over as CEO.
    • Cramer also likes SD's real estate assets, particularly the Mississippian play, where the company owns 1.8M acres; SD has 10 years worth of drilling inventory, and new technology could extend that to 20 years or more, he says.
  • 12:07 PM
    • Weibo (WB) opened at $16.27, below its $17 IPO price (at the low end of a $17-$19 range) . But shares have very quickly jumped to $18.18, giving them a 6.9% gain.
    • The Chinese microblogging leader is worth $3.64B. Parent Sina (SINA +2.4%), which stands to own 58% of Weibo post-IPO after accounting for its downsized offering, has shot higher as well.
    • Prospectus, IPO preview
    • Update (12:20PM): Weibo is now up 10.1%.
    | 1 Comment
  • 12:01 PM
    • IBM soundly missed revenue estimates for yet another quarter, thanks in large part to a 23% Y/Y drop in hardware/chip sales, and also reported a $3B Y/Y drop for its services backlog. SAP missed Q1 estimates due to a mixture of forex pressure and light software license revenue.
    • Microsoft (MSFT -1.4%), whose enterprise software ops compete against both IBM (middleware, databases, developer tools) and SAP (ERP/CRM apps, databases), is trading lower. As is IBM archrival H-P (HPQ -2.6%).
    • A few enterprise cloud software vendors, some of whom compete against SAP, are also off: JIVE -3.5%. N -2%. VEEV -1.9%. MKTO -2.2%.
    | Comment!
  • 11:53 AM
    • Almaden Minerals (AAU +6.2%) reports positive results from the first preliminary economic assessment on its Ixtaca gold and silver deposit in Mexico.
    • The PEA concludes that the Ixtaca deposit may be economically viable and the company should proceed to a pre-feasibility study.
    | Comment!
  • 11:53 AM
    • Weibo (WB) is indicated to open below its $17 IPO price.
    • Parent SINA (SINA -0.7%) is moving lower in response.
    | Comment!
  • 11:42 AM
    • Though SAP's (SAP -2.1%) non-IFRS cloud subscription/support revenue rose 32% Y/Y in Q1 (even with Q4's rate) to €221M, its traditional software license revenue fell 5% to €623M after growing 1% in Q4.
    • Much like archrival Oracle's 2013 license revenue misses, the latter figure is bound to trigger fears about the impact of cloud software competition.
    • Support revenue (driven by software licenses, relatively steady) rose 5% Y/Y to €2.21B, and all other revenue fell 8% to €643M. Opex rose just 2% Y/Y.
    • A strong euro took a toll: Whereas revenue and op. profit each rose 2% Y/Y at current exchange rates, they've would've risen 6% and 7% at constant currency. SAP expects a similar forex impact for the whole of 2014.
    • SAP now has 3.2K+ Hana customers, up from 3K+ at the end of 2013, and nearly 1K customers now run its core Business Suite on Hana (up from 800). But no Hana revenue figure is given; Hana revenue rose 61% in 2013 to €633M.
    • Cloud billings rose 23% Y/Y to €228M (36% exc. forex), and the cloud deferred revenue balance 20% to €454M (29% exc. forex).
    • In spite of the Q1 miss, SAP is reiterating its full-year revenue and op. profit forecasts.
    • Q1 results, PR
    | Comment!
  • 11:15 AM
    • The outlook for Chesapeake Energy (CHK +1.7%) is on the upswing because CEO Doug Lawler has made substantial progress since taking the helm last June, top shareholder Southeastern Asset Management says in a letter today.
    • Lawler’s “capital discipline and operational effectiveness will reward shareholders,” according to the owner of ~10% of CHK shares.
    • Lawler has voiced plans to cut spending 20% this year, bringing it down to less than half of 2012 levels as CHK sells assets and spins off its oilfield services division.
  • 11:12 AM
    • LiveDeal (LIVE +32.7%) is taking the battle to shorts with a new press release in which it draws out some analyst comments on the unusually high short interest in the company.
    • Whether the PR did the trick or momentum kicked in is hard to say, but either way shares are in full-fledged rally mode on the day.
    | Comment!
  • 10:53 AM
    • With natural gas in storage at more than a decade low, there needs to be plenty of inventory-building this spring and summer, but the season is off to a slow start with the EIA reporting a build last week of just 24 bcf vs. 36 bcf expected. Stocks today stand at 850 bcf, 50% off the level from one year ago and vs. a 5-year average for this time of year of 1 trillion cubic feet.
    • Futures jump in response, with the May 2014 contract up 4% to $4.707. UNG +3.5%
  • 10:39 AM
    • Cloud Peak Energy (CLD -1.5%) is "a good stock in a dirty business," Barron's says in making the case for a potential 30% upside in what it sees as undervalued shares, but CLD isn't enjoying the usual Barron's bounce.
    • CLD trades at a discount to its larger peers despite its clean balance sheet and improving free cash flow profile, and a rise in thermal coal prices could have a dramatic impact on profits and the stock; every $1/ton increase in the Powder River spot price adds ~$46M to CLD's EBITDA.
    • Most other coal names also are lower: BTU -1.5%, CNX -0.3%, ACI +0.2%, ANR -1.3%, WLT -2.1%, WLB -0.1%.
    | 1 Comment
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