Seeking Alpha
  • Today - Monday, March 30, 2015

  • 12:07 PM
    • Four months after the company started promoting local services to its customers, Amazon (AMZN +0.8%) has launched a Home Services site with the help of partners such as TaskRabbit, Pep Boys, and TakeLesons. Market leader Angie's List (ANGI -4.6%) isn't reacting well to the news.
    • Amazon exec Peter Faricy: "We have 85 million Amazon customers who have shopped for products this past year that often require a service afterwards." 700 services are initially supported; much like Angie's List, Amazon argues it helps connect consumers with trustworthy businesses. Only 3 out of every 100 professionals in each metro are said to be accepted, with Amazon making sure each business is licensed, insured, and passes a background check.
    • The e-commerce giant also claims it only takes 60 seconds for a customer to buy a service. Faricy: "We have standardized and prepackaged all of our service offerings. So you know exactly what is going to be done and how much it’s going to cost you, up front, no surprises."
    • 41 states are currently supported; Amazon wants to provide strong coverage across the 30 biggest U.S. metro areas. The Verge notes a beta version of Amazon's site suggests the company is taking a 20% cut on standard services, 15% on custom services, and 10% on recurring services.
    | 1 Comment
  • 12:03 PM
    • E.W. Scripps (NYSE:SSP) is up 2.4% after setting $60M up for the special dividend associated with its merger/spinoff with Journal Communications (JRN +2.5%).
    • As expected, the closing date for the transaction is this Wednesday, April 1.
    • When-issued trading is under way for Journal Media Group (JMG -0.4%), the resulting spinoff ticker that will hold the newspaper assets from JRN and SSP.
    | Comment!
  • 11:58 AM
    • The Canpotex North American potash consortium says it has finalized 2015 supply contracts with all of its major customers in China.
    • Canpotex says shipments to China will reach at least 1.8M metric tons, up from 1.6M in 2014, and may be as much as 2.5M metric tons, depending on supply, demand and logistics; the group does not release price terms but says the contracts are at "current competitive levels."
    • Belarusian Potash said earlier this month it signed a contract with China to sell potash for $315/ton including shipping costs, which was $10 more than last year’s price.
    • Canpotex represents Potash Corp. (POT +1.5%), Mosaic (MOS +2.6%) and Agrium (AGU +1.5%).
    | Comment!
  • 11:42 AM
    • Breitburn Energy Partners (BBEP -4.9%) is sharply lower following its agreement with EIG Global Energy Partners to receive $1B of strategic investment via the sale of preferred units and senior secured notes; BBEP also cut its annual distribution by 50% to $0.50/unit.
    • Wunderlich downgrades shares to Sell from Hold with a $4 price target, which says that even with the significant distribution cut and capital infusion, BBEP would have a high leverage of 4.8x, which along with its liquids-heavy portfolio would keep the stock under pressure until oil stages a convincing recovery.
    • Including the pro forma distribution cut, BBEP's current stock price would imply a yield of 8.5% vs. a peer average 14%.
    | Comment!
  • 11:37 AM
    • After rising 28.4% on Friday on reports Intel (INTC -0.3%) is in talks to buy the company, Altera (ALTR -3.8%) is paring its gains in response to downgrades from CLSA, Morgan Stanley, and Macquarie. Morgan Stanley has also downgraded Xilinx (XLNX +0.3%), which rose 5.8% on the reports.
    • Reactions to the reports, which vindicate at least a few predictions, have been largely positive. Among the perceived benefits to Intel from a deal: 1) Cost synergies from handling the manufacturing of Altera's FPGAs in-house. 2) Lowering Intel's PC dependence amid soft industry demand. 3) The potential to better cater to the likes of Facebook and Google (and keep ARM rivals at bay) by creating Xeon server CPUs with built-in FPGA circuitry to accelerate algorithm performance. 4) The potential to create system-level solutions for servers, telecom infrastructure gear, and other products that combine processors, FPGAs, and other chips.
    • CLSA: "[W]e view a potential Altera deal favorably given the manufacturing and end-market synergies ... Altera’s strong base station presence is valuable to Intel ... we see $0.05-0.10 accretion to our 2016 EPS, and additional accretion down the road as manufacturing moves in house."
    • Cowen: "[W]e surmise the deal would be heavily debt financed ... ALTR is one of the only semiconductor companies with better gross margin than INTC ... PLDs are one of the only verticals requiring leading-edge silicon in which INTC does not compete."
    • Though upgrading Altera to Market Perform, Wiliam Blair is more cautious. "[W]e believe Altera’s fundamentals have deteriorated as the company has faced multiple headwinds. These include market share loss to Xilinx, declining margins, delays in new product ramp-ups, and competitive issues ... On top of this, we believe Altera (as well as Xilinx) has been negatively affected by the increased adoption of SoC solutions, resulting in decreased demand for FPGAs for Glue Logic functions." Bernstein (still bearish on Intel) notes Altera's revenue is only equal to 3% of Intel's.
    • If a deal happens, many think Xilinx will be acquired soon afterwards. The short list of chipmakers big enough to swallow Xilinx ($11.1B market cap) and arguably having complementary products includes Texas Instruments, Qualcomm, Analog Devices, NXP/Freescale (about to merge), Skyworks, and Avago. There's also some speculation Intel, which has sat out the chip industry's recent M&A wave, will follow up on an Altera deal by making other purchases to lower its PC exposure.
    | Comment!
  • 11:20 AM
    • ChinaNet Online (NASDAQ:CNET) is up 10.6% on very heavy volume after announcing a service partnership deal with search giant Baidu.
    • The companies will cross-sell business-to-business services -- Baidu's Direct Reach service, and ChinaNet's Business Direct 3.0 -- and ChinaNet joins the "ecosystem" of providers at Baidu.
    • The platform is centered on mobile search, accounts, maps and personalized recommendations among others.
    • "Our influence on the SME industry with franchises and chain stores will create opportunities for Baidu to leverage the ChinaNet brand," says ChinaNet COO George Chu.
    | Comment!
  • 10:51 AM
    • Cellcom (NYSE:CEL) is 2.9% lower today as Israel is pressing for changes to the company's network-sharing agreement with Golan Telecom.
    • There's no news on what Israel's Ministry of Communications wants to see in the deal, which has the companies working together on a 4G network and sharing previous-generation sites.
    • Also lower: peer Partner Communications (PTNR -3.8%.)
    | Comment!
  • 10:50 AM
    • BAML adds SVB Financial (SIVB +4.8%) to its U.S. 1 List.
    • The stock's now ahead by about 10% YTD.
    | Comment!
  • 10:49 AM
    • After falling 5.6% on Friday, volatile 500.com (NYSE:WBAI) is seeing even bigger losses in early trading today. Rumors that the company is caught up in a corruption probe related to Chinese online sports lottery sales continue  to swirl in the wake of suspensions from provincial authorities.
    • SA Instablog writer/ex-banker MNS Global has written a series of posts about sports lottery suspensions and rumored anti-corruption efforts.
    | Comment!
  • 10:31 AM
    • Oi SA (NYSE:OIBR) is trading 3.9% lower as RBC Capital downgrades to Underperform, from Sector Perform, following a Q4 earnings report where the telecom swung to a net loss of 4.42B reais (about -$1.39B).
    • Revenues of 7.32B reais missed an expected 9.12B by nearly 20%.
    • EBITDA of 3.195B reais fell 12.5%, but beat an expected 2.84B reais.
    • Shares in Oi are down 46% YTD.
    | 1 Comment
  • 10:23 AM
    • "We believe ADI has secured multiple sockets across AAPL's iPhone/iPad lineup to enable the 3D/Force Touch feature," reports Barclays, upgrading Analog Devices (NASDAQ:ADI) to Overweight and hiking its target by $15 to $70. "[W]e believe AAPL needs and would be be willing to pay for ADI's high accuracy [analog/digital] converters."
    • The WSJ reported 3 weeks ago Apple's next-gen iPhones will support haptic sensors that allow different software commands to be sent based on how hard a user presses on a screen. Apple has already integrated its haptics solution (christened Force Touch) within Apple Watch and a new 12" retina MacBook.
    • Barclays forecasts the Apple wins will boost ADI's 2016 EPS by $0.80 or more. It thinks 1 converter chip will be needed for the iPhone and 3 for a 12" iPad, and estimates an ASP of $1.50-$2.00. "ADI is known to have the best converters in the industry and this level of performance is needed to compensate for high levels of screen noise."
    • Long-term, the firm believes multi-chip iPad solutions could be replaced by a single chip, and that ADI could even "integrate the 2D touch function into a single super chip." It also believes the company is seeing strong industrial chip demand, forecasts a pickup in auto chip sales, and sees room for further revenue and cost synergies from the Hittite acquisition.
    • Shares have blasted off to new highs on Barclays' report.
    | Comment!
  • 10:02 AM
    • Lululemon (LULU +2.1%) trades higher in early action as the stock recovers from a mini-slump last week.
    • The company's new line of men's pants are a "smash hit" with consumers, according to CNN Money.
    • Other publications are also giving Lululemon some free pants publicity.
    • The $128 slacks are made with a high-tech fabric and are being promoted as comfortable in all the right places.
    | Comment!
  • 9:57 AM
    • Dynegy (DYN +5.4%) opens higher after announcing late Friday that it won approval from the FERC to buy power plants in Illinois, Ohio and Pennsylvania from Duke Energy (DUK +0.5%) and Energy Capital Partners for $6.25B.
    • The approval clears the way for DYN to complete its acquisition, which was announced last August.
    • In buying the units, which sell power in competitive wholesale markets, DYN will nearly double its electricity generation capacity, owning and operating nearly 26K MW of fuel-diverse power generating facilities, primarily in the Midwest and Northeast.
    | Comment!
  • 9:55 AM
    • Online real estate plays SouFun (SFUN +9%), E-House (EJ +4.1%), and Leju (LEJU +8.1%) are shooting higher in early trading after PBOC governor Zhou Xiaochuan stated China has "room to act" to counter deflation. The Shanghai Composite rose 2.6% overnight, and the Nasdaq is currently up 0.9%.
    • The PBOC has already carried out a series of monetary easing moves over the last several months, including multiple rate cuts and reserve requirement cuts. SouFun, E-House, and Leju all trade far below their 2014 highs thanks to worries about a weak Chinese property market and the impact of a listing fee price war.
    • Andy Rothman, a strategist at fund manager Matthews Asia, argues in the FT today fears of a Chinese real estate crash are overblown, and that prices are likely to rise Y/Y in 2H15 (aided by favorable comps). "There are no sub-prime mortgages and there are very few mortgage-backed securities [in China]. There is no secondary securitization, so no collateralized debt or loan obligations (CDOs and CLOs). China’s residential market is clearly very soft, but I believe a housing crisis is very unlikely."
    | Comment!
  • 9:52 AM
    • DreamWorks Animation (NASDAQ:DWA) is up 8.2% after Home -- its only film release for 2015 -- led the weekend box office and beat its own expectations with $54M, the company's third-largest non-sequel opening.
    • Following a series of flops for DWA, the film was expected to draw about $30M-$35M.
    • Home is another standout child-focused success in a year filled with adult fare so far. R-rated prison comedy Get Hard (NYSE:TWX) took the No. 2 spot, drawing $34.6M.
    • Insurgent (NYSE:LGF) and Cinderella (NYSE:DIS) followed those two, adding to their considerable takes with $22M and $17.5M respectively. New foreign markets joined Cinderella, pushing it to more than $300M globally, and Insurgent has made $180M worldwide.
    • Kingsman: The Secret Service is a hit with legs for Twenty-First Century Fox (NASDAQ:FOXA), plugging away at sixth place this week (its seventh) with $3M, and passing $300M globally.
    • Previously: DreamWorks up 7.7%, on two-day surge as planning takes shape (Mar. 04 2015)
    | Comment!
  • 9:45 AM
    • ITG sees revenue for Zulilly (ZU +3.9%) tracking above the Wall Street consensus for Q1
    • LMM's Bill Miller was also talking up the beat-up name last week on CNBC.
    • Q! results from Zulilly are expected to be released in the early part of May.
    • Shares of Zulilly are down 43% YTD due in part to some supply chain issues.
    | Comment!
  • 9:43 AM
    • Nano cap Can-Fite Biopharma (CANF -51.1%) plunges on average volume in response to its announcement that its lead product candidate, CF101, failed to achieve its primary efficacy endpoint in a Phase 2/3 study in patients with moderate-to-sever plaque psoriasis. The measure of efficacy was a statistically significant improvement in Psoriasis Area Sensitivity Index (PASI) score compared to placebo.
    • The proportion of patients treated with CF101 who achieved PASI 75 (75% improvement in psoriasis from baseline) was 8.5% compared to 6.9% for placebo.
    • The company's analysis of the data is ongoing.
    | Comment!
  • 9:42 AM
    • Raymond James moves to the sidelines on S&P Bancorp (STBA -4.6%), downgrading to Market Perform from Outperform.
    • The stock's higher by 22% year-over-year, but has lost some ground since January 1.
    | Comment!
  • 9:26 AM
    | 6 Comments
  • 9:18 AM
    • Cal-Maine Foods (NASDAQ:CALM) reports egg sales rose 5.24% Y/Y to 283.03M in FQ3.
    • Specialty egg volumes increased 22.6% Y/Y.
    • Average price +6.14% to $1.50 per dozen.
    • Specialty-egg sales accounted for 26.9% of total revenue, up 320 bps from a year ago.
    • Gross margin rate +248 bps to 25.71%.
    • Operating margin rate grew 468 bps to 16.46%.
    • CALM -0.20% premarket.
    | Comment!
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