Seeking Alpha
  • Today - Wednesday, April 23, 2014

  • 4:59 AM
    • Asian stocks trade mixed and European shares are mainly lower, with a strong showing on Wall Street yesterday helping to boost sentiment, but with disappointing PMI data out of China and France dampening the mood.
    • Japan +1.1%, Hong Kong -1%, China -0.3%, India +0.5%.
    • Euro Stoxx 50 -0.3%, London flat, Paris -0.4%, Frankfurt -0.3%, Milan -0.2%, Madrid +0.2%.
    • U.S. stock futures: Dow, S&P and Nasdaq flat.
    | Comment!
  • 4:17 AM
    • Eurozone flash manufacturing PMI has increased to 53.3 in April from 53 in March and missed consensus that was also 53.
    • Services has risen to a 34-month high of 53.1 from 52.2 and vs 52.4.
    • Composite output has climbed to a 35-month high of 54 from 53.1 and vs 53.1.
    • Manufacturing output has increased to 56.5 from 55.6.
    • The growth was led by Germany, while France stabilized.
    • The data indicates that eurozone GDP is on course to rise 0.5% in Q2 following 0.4% growth in Q1.
    • The bloc experienced a return to job creation, says Markit, suggesting that companies believe "that the recovery has legs and is looking increasingly sustainable." However, Markit warns of "growing fears that deflationary pressures are intensifying."
    • The euro rises further, having gained a boost from German PMI, and is +0.25% at $1.3839. (PR)
    | 1 Comment
  • 3:31 AM
    • Ericsson's (ERIC) Q1 EBIT rose to 2.6B Swedish kronor ($395M) from 2.1B a year earlier but missed consensus of 3.5B kronor.
    • Net profit almost doubled to 2.12B kronor from 1.21B kronor.
    • Operating income jumped 25% to 2.63B kronor.
    • Sales dropped to 47.5B kronor from 52.03B kronor and undershot forecasts of 50.8B kronor, hurt by two major North American projects peaking in H1 2013 and by reduced activity in Japan.
    • The gross margin increased to 36.5% from 32% and topped expectations of 34%.
    • North America sales -23% and North East Asia -19%, although there was growth in China, the Middle East and Latin America. Western Europe was flat.
    • Wins five-year project from Vodafone; terms undisclosed.
    • Shares slump 5.4% in Stockholm. (PR)
    | Comment!
  • Tuesday, April 22, 2014

  • 7:00 PM
    • iRobot (IRBT) expects Q2 revenue of $138M-$145M and EPS of $0.15-$0.25 ($0.20 midpoint) vs. a consensus of $143.8M and $0.23. Full-year guidance is for revenue of $560M-$570M and EPS of $1-$1.15 ($1.075 midpoint) vs. a consensus of $562.8M and $1.11.
    • Gross margin rose 150 bps Y/Y in Q1 to 45.3%. Opex rose 16% to $43.7M.
    • Home robot sales grew 17% Y/Y to $108M, and carried a 50.4% gross margin. Defense/security robot sales fell nearly 50% to $5.6M, and carried a 37.2% gross margin.
    • Q1 results, PR
    | Comment!
  • 6:43 PM
    • Allied Nevada Gold (ANV) +4.7% AH after announcing Hycroft mill expansion pre-feasibility study results, including 26.5% internal rate of return and $1.7B net present value.
    • Average annual production for the first five years of full production (2018-22) to total ~450K oz. of gold and 21M oz. of silver, or ~800K gold equivalent oz.
    • Average adjusted cash costs per oz. for the first five years of full production at $478/year, with a mining and processing life of 20 years.
  • 6:15 PM
    • Though VMware (VMW)'s license revenue rose 15% Y/Y in Q1 to $561M (beating guidance of $545M-$555M), the company disclosed on its CC license and total bookings growth was less than 10%, with sub-10% bookings growth in all three major geographies. Total bookings had risen at a mid-teens clip in Q4.
    • Nonetheless, VMware is maintaining its prior forecasts for 2014 revenue of $5.94B-$6.1B (+14%-17%) and license revenue of $2.55B-$2.63B (+12%-16%). AirWatch is expected to contribute $100M.
    • Q2 revenue, which assumes a $22M contribution from AirWatch, is expected to grow 15%-18% Y/Y to $1.425B-$1.465B (consensus is at $1.44B). License revenue is expected to grow 14%-16% to $605M-$615M.
    • Some bright spots: End-user computing license bookings (PC virtualization, will include AirWatch going forward) rose 35%, and cloud management license bookings over 30%. Also, ~50% of VMware's costly enterprise license agreements (ELAs, 25% of bookings) included its far-reaching vCloud Suite.
    • VMware's unearned revenue balance totaled $4.17B at the end of Q1, up 20% Y/Y. $169M was spent on buybacks.
    • Parent EMC, which reports tomorrow morning, is following VMware lower.
    • Q1 results, PR, CC slides
    | 1 Comment
  • 5:58 PM
    • Skechers (SKX) +12.4% AH after easily beating Q1 earnings and revenue estimates despite the harsh winter, and CEO Robert Greenberg expects the positive trend to continue through Q2, as April ordering has been strong and backlog continues to grow.
    • Other retailers have talked about excess inventory and the need to provide customer discounts, but SKX Q1 sales jumped 21% to $546M, including a double-digit increase to its wholesale customers both in the U.S. and abroad; comparable sales rose 5.6%, above the industry average, in its own stores.
    • Sterne Agee's Sam Poser says SKX has controlled inventory and expenses while introducing products such as shoes with Memory Foam, which will allow the company to increase average selling price by $5/pair while the feature would increase costs only by up to $0.50/pair.
    | Comment!
  • 5:42 PM
    • While Intuitive Surgical's (ISRG) Q1 revenue was in-line with the forecast given in its April 8 warning, the company has cut its 2014 procedure growth guidance to 2%-8%, down from a prior 9%-12%.
    • Q1 procedure growth was 7%, down from a Q4 level of 12% and a full-year 2013 level of 16%.
    • As previously forecast, systems revenue fell 56% Y/Y in Q1 to $106M. Intuitive blames U.S. systems weakness on lower procedure growth, Obamacare-driven changes in hospital spending priorities, and "the impact that anticipation of a new system may have had on customer capital-spending decisions."
    • Q1 results, PR
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  • 5:40 PM
    | Comment!
  • 5:29 PM
    • YUM's worldwide system sales rose 4% Y/Y in Q1 vs. 5% in Q4. Restaurant margin rose 330 bps Y/Y to 19.2%.
    • The China division continued to rebound from last year's avian flu-related woes: Same-store sales rose 9% Y/Y (11% at KFC), and system sales 20%. The division's restaurant margin rose 680 bps to 23.4%.
    • KFC division system sales +4%, same-store +1%. Pizza Hut system sales flat same-store -2%, Taco Bell system sales flat, same-store -1%, India division +21%, with 25% unit growth offsetting a 1% same-store decline.
    • $170M has been spent on buybacks YTD. Food and paper costs equaled 26.6% of revenue vs. 26.8% a year ago.
    • Yum plans to open at least 700 new Chinese restaurants this year, and 1,250 in other international markets. The company still expects at least 20% 2014 EPS growth.
    • Q1 results, PR
    | 1 Comment
  • 5:15 PM
    • YUM! Brands (YUM): Q1 EPS of $0.87 beats by $0.02.
    • Revenue of $2.72B (+7.1% Y/Y) misses by $80M.
    • Shares +2.1% AH.
    • Press Release
    | Comment!
  • 5:13 PM
    • XOOM expects Q2 revenue of $38M-$40M and EPS of $0.02-$0.06, in-line with a consensus of $39.4M and $0.05. But full-year guidance is for revenue of $157M-$162M and EPS of $0.15-$0.22, above a consensus of $156.9M and $0.09.
    • With shares having fallen hard since Xoom provided soft guidance in its Q4 report, investors are quite happy to see those numbers.
    • Gross sending volume +49% Y/Y in Q1 to $1.6B. Transactions +42% to 2.9M, active customers +34% to 1.13M, new customers +7% to 117.1K.
    • Gross margin rose 420 bps Y/Y to 73.3%. Opex rose 56% to $25.8M.
    • Q1 results, PR
    | Comment!
  • 5:08 PM
    • A check of action in the mortgage insurers today following MGIC Investment's (MTG +7.3%) Q1 results finds them accentuating the positive. MGIC's earnings came in ahead of expectations as legacy issues continue to fade, but the mortgage/housing slowdown is also leaving a mark. New insurance written fell from a year ago, as did revenue and net premiums written.
    • CEO Curt Culver notes the "significant decline in refinance transactions compared to last year and the slow start in home sales."
    • Genworth (GNW +4.7%), Radian (RDN +3.7%), Old Republic (ORI +2.1%), NMI Holdings (NMIH +1.1%), Essent Group (ESNT +0.2%).
    | Comment!
  • 4:56 PM
    • Lemelson Capital says it has bought 368.4K Kulicke & Soffa (KLIC +6.6%) shares over the last 14 months (less than a 1% stake), and calls on the chip equipment maker to launch a major buyback program.
    • Lemelson notes Kulicke has $556M in cash/equivalents (some of it offshore), and averaged $131M in annual free cash flow from 2010-2013. The firm estimates a $250M buyback at $12/share would boost EPS by 38%.
    • Barron's called Kulicke "a company that looks ripe for an activist investor" last October, given its huge cash balance and lack of a dividend or buyback plan. Kulicke has argued in the past it needs to keep its cash in case M&A opportunities emerged.
    • Share are up another 1.2% AH.
    | Comment!
  • 4:46 PM
    • In addition to beating FQ2 estimates, Skyworks (SWKS) is guiding for FQ3 revenue of $535M and EPS of $0.73, well above a consensus of $488.2M and $0.63.
    • Gross margin rose 250 bps Y/Y to 44.7%. While revenue rose 13% Y/Y, opex only grew 2% to $109.8M. 2M shares were repurchased.
    • Rival RF Micro (RFMD) is up in sympathy ahead of its April 29 FQ4 report. Others that might get a lift: TQNT, AVGO, ANAD.
    • FQ2 results, PR
  • 4:26 PM
    • Plug Power (PLUG) -6.7% AH after announcing a proposed public offering of common stock; the size is not disclosed.
    • PLUG plans to use the proceeds for working capital and general corporate purposes, which may include capital expenditures and potential acquisitions.
  • 4:22 PM
    • AT&T (T) had 625K postpaid net adds in Q1 (313K via branded tablets), up from 566K in Q4. Connected device net adds totaled 693K; prepaid and reseller net losses respectively totaled 50K and 206K.
    • However, wireless service revenue rose just 2.2% Y/Y, down from 4.8% in Q4 (did price cuts play a role?). Meanwhile, wireless op. margin only rose 30 bps to 28.3% after growing 690 bps in Q4.
    • Churn was at 1.39% vs. 1.43% in Q4 and 1.38% a year ago. Smartphones now account for 78% of AT&T's postpaid base, up from 77% in Q4 and 72% a year ago. AT&T's Next upgrade program saw 2.9M sign-ups. That contributed to a 52% Y/Y increase in equipment sales (pressured margins).
    • Total wireless subs +8% Y/Y to 116M. Postpaid subs +4% to 73.3M.
    • Wireline revenue fell 0.4% Y/Y vs. 1.4% in Q4; op. margin fell 110 bps to 10%. 634K and 201K U-verse Internet and TV subs were added vs. 630K and 194K in Q4. Total U-verse revenue rose 29% Y/Y.
    • Wireline voice connections -11% Y/Y to 27.7M, broadband connections nearly flat at 16.5M, video connections +19% to 5.7M.
    • $1.2B was spent on buybacks, down from $1.9B in Q4. AT&T is reiterating full-year capex and free cash flow guidance of $21B and $11B, respectively.
    • Q1 results, PR
  • 4:21 PM
    • Sanmina Corp (SANM): FQ2 EPS of $0.44 beats by $0.05.
    • Revenue of $1.48B (+3.5% Y/Y) beats by $20M.
    • Shares +6.9%.
    • Press Release
    | Comment!
  • 3:56 PM
    • Solar stocks are among the biggest winners (TAN +5.2%) on a good day for momentum stocks.
    • SunEdison (SUNE +11.6%) is leading the pack after David Einhorn disclosed he has added to the position he started in Q4, and predicted lower solar costs and rising electricity prices should make the company a "winner." Einhorn is less crazy about tech momentum plays in general.
    • Meanwhile, Canadian Solar is benefiting from a Japanese module deal, and SunPower (SPWR +6.5%) and SolarCity (SCTY +6.4%) are getting a lift from a Goldman note calling the companies its two best solar ideas. SunPower reports on Thursday.
    • Other notable gainers: YGE +7.9%. DQ +9.2%. JKS +7.4%. SOL +6.8%. HSOL +6.7%. ENPH +6.2%. JASO +4.5%.
  • 3:47 PM
    • The path for Anworth's (ANH +0.6%) stock price continues to be upward amid activist investor Arthur Lipson's effort to boot management and replace the board. "Existing management, which is the McAdams family, has certainly failed shareholders,” says Lipson. “The simplest route could be to liquidate the company.”
    • Following Phil Goldstein's successful campaign pressuring Javelin Investment to get busy with buybacks, Anworth looked like the next weakest in the herd, and Lipson's Western Investment began building a stake in December (it now owns about 4% of the company).
    • Anworth in March did boost its buyback program and looked to expand its investment options with the formation of Anworth Properties. Later that month, it lifted the quarterly dividend by 75%.
    • Now up 30% YTD, the stock price of $5.50 compares to end-of-year book value of $5.98 per share.
    • Western's proxy statement
    • The annual meeting is May 22.
    | Comment!
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