Seeking Alpha
  • Friday, January 23, 2015

  • 6:19 PM
    • BOX closed up 65.4% from its $14 IPO price, leaving it with a $2.77B market cap (15% above the valuation for its last funding round). 41.4M shares changed hands, or 3.3x the 12.5M sold through its IPO (before factoring the overallotment option).
    • Co-founder/CEO Aaron Levie, best known to some for his Twitter one-liners, made the rounds today, arguing more than once his company's offerings are well-differentiated from the aggressively-priced cloud storage/file-sharing services of tech giants.
    • Levie during a talk with Barron's: "What we’ve built really is software to help manage and collaborate and share throughout the business ... ultimately our customers buy our solution because we have built an amazing product to manage all that content. We get compared to more storage-oriented products, but there’s more to it."
    • He called Microsoft (NASDAQ:MSFT), whose SharePoint collaboration platform is widely deployed and which is now offering unlimited OneDrive storage to Office 365 subs, Box's biggest competitor, but also one Box can stand out relative to. "I think our real differentiation is we do all the enterprise-oriented delivery, the industry compliance for FINRA, the security, and all that — but the really unique part is we deliver that in a consumer-grade experience, with open APIs, and that works across platforms."
    • Levie suggests to Forbes Box will focus going forward on giving clients more tools for using/interpreting data, pointing to its recent acquisition of medical image-sharing platform MedXT as an example. He also notes Box is investing in industry-specific machine learning tools that analyze content to organize, surface, and recommend documents.
    • Prior Box coverage
    • Prospectus, IPO analysis
  • 5:31 PM
    • Hospital giant HCA Holdings will take Safeway's place in the S&P 500 after Monday's close. Safeway is about to be acquired by fellow supermarket chain Albertsons.
    • HCA +2.7% AH to $70.50.
    | Comment!
  • 5:04 PM
    • Maguire Asset Management has disclosed a 2.5M-share (5.5% stake) in Novatel (NASDAQ:MIFI). The firm adds managing partner Timothy Maguire has issued a letter to the board "expressing confidence in [Novatel's] management team and offering continued support to help [Novatel] achieve its full potential."
    • Maguire plans to continue investing in Novatel as long as its shares "trade at a discount to its most notable peers," and is "interested in being considered for any available position on the Board."
    • Novatel has been exceptionally volatile this month: Shares soared from Jan. 2-9, sold off hard from Jan. 13-21, and have now risen 24% over the last two trading days. Forward sales multiples remain well below those of larger rival Sierra Wireless.
    • Update: Novatel and theft-recovery service provider LoJack (NASDAQ:LOJN) have announced a partnership after the close. LoJack will rely on Novatel's 2G/3G telematics modems to enable an inventory-monitoring service for car dealers.
  • 4:46 PM
    • Though 8x8 (NASDAQ:EGHT) met FQ3 estimates, its total business customers only rose by 617 Q/Q to 41,051 - a smaller gain than FQ2's 1,094 and the year-ago period's 2,079.
    • On the CC (transcript), CFO Mary Ellen Genovese attributed the slowdown to "the end-of-life reduction of very small iTEL Connect customers which we acquired in 2008 and an emphasis on the part of our SMB team on selling larger deals." She added 8x8 expects this trend to continue as the SMB team keeps focusing on bigger deals and iTEL customers continue declining.
    • CEO Vik Verma stated 8x8's SMB sales team, which has historically focused on deals involving less than 50 lines, is now selling deals "that we would have traditionally had sold through our mid-market channel." He also notes 8x8 is facing off against larger service providers as it expands in the mid-market, and argues the company's patents allow it to differentiate its cloud-based telecom services.
    • While customer growth slowed, business ARPU rose to $305 from $299 in FQ2 and $274 a year ago. Also, churn was 1%, up slightly from 0.9% in FQ2 but down from 1.5% a year ago. Sales/marketing spend rose 28% Y/Y to $20.6M, and R&D spend 16% to $3.9M.
    • FQ3 results, PR
  • 4:17 PM
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  • 4:05 PM
    • TheDeal reports Procera (NASDAQ:PKT) has hired advisors to help it explore a sale. Activist Merriman Capital has to be pleased.
    • Though having jumped over the last two months in response to new contracts and a Q4 pre-announcement, the deep packet inspection hardware specialist remains far below a 2012 high of $25.99. Procera has nearly $5/share in cash/investments on its books.
    | Comment!
  • 3:58 PM
    • The Firsthand Technology Value Fund (SVVC -6.5%) saw 4.92M shares (57.5% of its outstanding shares) tendered through an offer to buy $20M of them at a price equal to 95% of a Dec. 31 NAV of $24.495/share; that translates to an offer price of $23.27/share, and the purchase of 859K shares.
    • With the number of tendered shares well above the number Firsthand has committed to buying, the fund will acquire tendered shares on a pro rata basis.
    • Firsthand currently trades 29% below its Dec. 31 NAV. GSV Capital can relate.
    | Comment!
  • 3:55 PM
    • Rice Energy (RICE +7%) posts strong gains after Imperial Capital initiates coverage with an Outperform rating and $27 price target.
    • The firm calls Rice "a small but rapidly growing pure-play" natural gas producer that is well positioned to weather today's challenging price environment, noting the breakeven level for ~80% of the company's wells is below $2.60/Mcf.
    • Rice's positions in Marcellus and Utica shale dry gas plays are among the lowest cost natural gas resource plays in the U.S., Imperial says, poised to be disproportionate winners for meeting growing U.S. natural gas needs over the next few years.
    | 1 Comment
  • 2:53 PM
    • TowerJazz (TSEM +4.4%) is up 13% on the week, making new 52-week highs along the way. Today's gains come on volume of 1.6M shares, soundly above a 3-month daily average of 1M.
    • On Wednesday, Chardan Capital hiked its target for the Israeli specialty foundry by $2 to $17. SA Pro author Jaret Wilson provided an upbeat column last week: He thinks government approval of a planned Indian fab could arrive soon, and reports hearing TowerJazz might launch a new MEMS manufacturing JV.
    | Comment!
  • 2:42 PM
    • BMO has launched coverage on ServiceNow (NOW +5%) with an Outperform rating and $77 target ahead of its Jan. 28 Q4 report. Shares are now less than $3 away from an all-time high of $71.80 (set 11 months ago).
    • The cloud IT service desk software vendor received bullish coverage from BofA/Merrill last month, as well as an RBC Top Pick call.
    | Comment!
  • 2:35 PM
    • A week after the WSJ reported E2open (NASDAQ:EOPN) is looking for a buyer, the cloud business process software vendor is once more shooting higher. Volume has been moderate - 306K shares vs. a 3-month daily average of 624K.
    • Shares are now up 29% from a Jan. 9 low of $5.21. But they're still 77% below a 52-week high of $29.82.
    | Comment!
  • 2:34 PM
    • Magnum Hunter (MHR +17.2%) continues strong gains sparked by favorable comments this morning from CEO Gary Evans, who sought to assure investors that the company's borrowing base will not shrink as it has taken measures to improve the balance sheet.
    • Evans says the company will stop spending on drilling or fracking until oilfield service costs come down, saying MHR is shooting for 40% discounts but that it will take time to reach the target.
    • MHR has not yet announced its 2015 budget, but Evans guesses it may total ~$100M, down from its $400M plan for last year.
    • Evans adds that he is not worried about falling oil prices because MHR has transformed itself from an oil company to a natural gas company, with 90% of its output coming from natural gas and natural gas liquids.
  • 2:30 PM
    • Hit hard in recent weeks, Enphase (NASDAQ:ENPH) is rebounding strongly today. 630K shares have been traded vs. a 3-month daily average of 741K.
    • Friday short-covering could be driving the solar microinverter leader's gains: 4.2M shares (over 17% of the float) were shorted as of Dec. 31.
    | Comment!
  • 2:25 PM
    • Applied Materials (AMAT -1.7%) and ASML (ASML -1.5%) are off moderately after chip equipment peer KLA-Tencor (KLAC -7.1%) offered soft guidance (for the third quarter in a row) to go with an FQ2 beat. The Nasdaq is up 0.3%
    • On the CC (transcript), CEO Rick Wallace stated KLA has seen orders from both foundry and logic clients for sub-20nm manufacturing equipment "pushed to later in the calendar year." KLA thinks the delays "reflect yield and process stability issues associated with bringing these advanced device architectures to market."
    • In July and October, KLA primarily referenced foundry clients when explaining its light guidance. The logic client reference could be about Intel (by the far the biggest of them), which provided a conservative 2015 capex budget last week.
    • Wallace also mentioned some orders related to "trailing-edge" manufacturing processes have been "a bit elusive," and that (notably) KLA thinks this is due to "some competitive dynamics in terms of second source strategies and so on."
    • Analysts pressed KLA regarding its foundry-related issues, given TSMC is spending heavily and ASML reported strong Taiwanese foundry bookings (presumably from TSMC) earlier this week. On the other hand, memory was a strong point for both KLA and ASML in calendar Q4, respectively accounting for 44% and 27% of the companies' bookings.
    | Comment!
  • 1:45 PM
    • Lululemon (LULU +4.1%) trades above $66 for the first time since 2013 as investors continue to pour in.
    • The general take on Lululemon is that production execution has been been improved by management and that the retailer's assortment is still firmly on-trend.
    • Investment firm Topeka Capital Markets and SA contributor Main Street Wins get credit for taking the long view on LULU through some turmoil.
    • Shares of LULU are now up 75% over six months in a dazzling comeback.
    • Previously: Lululemon higher after lifting Q4 guidance (Jan. 12 2015)
    | Comment!
  • 1:22 PM
    • Barnes & Noble (NYSE:BKS) is up 3.88% on above-average volume.
    • The sorting out of short positions on BKS is in the background as shares find their way back to within a dollar of a 52-week high.
    • The B&N retail chain has put up solid core comps over the last two quarters with a thinned-out bookstore herd helping to hold up demand.
    | 1 Comment
  • 1:22 PM
    • A German court has ruled ZTE and Asus didn't infringe the German parts of Vringo's (NASDAQ:VRNG) '136 and '941 European patents. The first patent covers devices (including hotspot-capable hardware) that provide data services between two networks, and the second is related to navigation systems providing traffic info. (8-K)
    • Vringo says it's exploring all possible remedies, including appeal. A German court is also set to rule on the validity of the '136 and '941 patents (the hearing date hasn't yet been set).
    • Vringo has been squaring off against ZTE in many different locales. Last month, a U.K. court ordered ZTE to pay Vringo $938K to cover the latter's legal costs for an infringement suit related to the U.K. part of Vringo's '919 European patent.
  • 1:03 PM
    • After barely moving in AH trading yesterday in response to its FQ1 beat and strong FQ2 guidance, Skyworks (SWKS +2.3%) has risen above $81 today as a flurry of bullish analyst reactions arrive. Rivals/fellow iPhone suppliers Qorvo (QRVO +4.8%) and Avago (AVGO +1.6%) are heading in the same direction.
    • Brean's Mike Burton, hiking his Skyworks target by $22 to $92: "The [FQ1] upside was predominantly driven by the Integrated Solutions segment as Apple's iPhone 6/6+ ramped ... we believe LTE growth in China and several new model ramps (Samsung Galaxy S6 amongst others to be unveiled in Barcelona) coupled with Skyworks Solutions less seasonal Broad Markets business is driving the better-than-seasonal guidance."
    • Burton also thinks Skyworks is on its way to achieving a 50% gross margin (up from FQ1's 46.7%), and notes inventory days (58) were down by 15 Y/Y.
    • Canaccord's Mike Walkley: "We believe Skyworks' diverse analog portfolio is enabling content share gains with its smartphone customers. Further, we anticipate Skyworks' share gains in markets such as WiFi 802.11ac, wireless infrastructure, and the IoT market are also driving strong growth trends." His FY16 (ends Sep. '16) EPS estimate has been hiked by $0.66 to $5.89.
    • On the CC (transcript), CEO David Aldrich noted Skyworks' non-mobile design wins include a GM telematics platform, Cisco home gateways, ZigBee connectivity modules for Philips/LG smart light bulbs, Amazon's Echo and Fire TV devices, and a DirecTV set-top. China's Xiaomi has joined Apple and Samsung as a major mobile client.
    • Qorvo reports on Jan. 28.
  • 12:53 PM
    • Peabody Energy (BTU -5.6%) is downgraded to Negative from Stable at Standard & Poor's, based on the rating agency's view that metallurgical coal prices will remain depressed for at least another year.
    • In light of updated price assumptions, the firm believes it is less likely that BTU can improve its credit measures to fall in line with the current aggressive financial risk profile assessment within the next 12 months.
    • S&P reaffirms its BB- corporate credit rating on the company.
    | Comment!
  • 12:46 PM
    • "We now see a more credible pathway to unlocking the substantial trapped value in the E"Trade (ETFC +8.8%) franchise," says Credit Suisse, upgrading to Outperform from Neutral following Q4 results last night.
    • Compass Point reiterates its Buy rating and lifts the price target to $28 from $24.
    • Alongside the earnings beat, the company announced regulatory approval to operate E*Trade bank at a 9% leverage ratio and to remove its broker dealers from under the bank - the result of which will allow a Q1 capital distribution to the parent of about $430M. The company plans to request another $75M in Q2, along with quarterly dividends equal to what the bank earns.
    • "We are now faced with the high quality challenge of what to do with the capital and I assure you it is top of mind for us," says CEO Paul Idzik on the earnings call (transcript), suggesting cutting debt by $400M is at the top of the list.
    • Previously: E*Trade +4.3% after beat, green-light for bank dividends (Jan. 22)
    | Comment!
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