Today - Monday, March 30, 2015
- Ensco (NYSE:ESV) -2.7% AH after disclosing it received a notice of early termination for its DS-4 drilling rig operating in the Gulf of Mexico, in the latest example of the severe downturn in the contract drilling market.
- BP is employing the drillship at a $560K dayrate with a contract set to expire in July 2016, and is utilizing ESV's DS-3 drilling rig in the Gulf at a $480K dayrate with a June 2016 expiration.
- ESV says it is marketing DS-4 to potential customers for new contracts beginning after the estimated termination date.
- Blackstone Group (NYSE:BX) is down 1.8% in late trading as it's putting up $1.2B-plus to buy three hotels from a Paulson & Co. consortium, The Wall Street Journal is reporting.
- The hotels -- the Ritz Carlton and J.W. Marriott in Orlando, Fla., and the J.W. Marriott in Scottsdale, Ariz. -- aren't small properties, with more than 2,500 rooms and 472K square feet of meeting space in total.
- The sales consortium includes Paulson, Winthrop Realty Trust (NYSE:FUR) and Capital Trust (now the Blackstone Mortgage Trust, BXMT).
- It's the dissolution of the CNL Hotels & Resorts portfolio that the group had picked up via foreclosure and distressed sales, and could mark a jump-start to transactions in the group-travel segment.
- Vaalco Energy (NYSE:EGY) -15% AH after saying its first exploration well on Block 5 offshore Angola was found to be water-bearing, and the well will be plugged and abandoned.
- The well was drilled to a total vertical depth of 1,829 meters; given the disappointing results, EGY says it will not go forward with earlier plans to drill to 2,250 meters for geologic and geophysical correlation.
- EGY says it completed the seismic processing of 2,025 sq. km of 3D data in the outboard portion of Block 5,and has identified several new pre-salt and post-salt leads as future exploration targets to be evaluated.
- Teck Resources (NYSE:TCK) -7.3% AH after saying it is not in any type of deal discussions with Antofagasta (OTC:ANFGF), and there are no other corporate developments that justify any significant movement in its share price.
- TCK was responding to earlier reports that the two companies were exploring a potential merger that would create one of the world's largest copper miners.
- CyrusOne (NASDAQ:CONE) announces a 12.2M share secondary with 1.83M greenshoe, with proceeds to be used to purchase the limited partnership interests in the company's operating partnership from two subsidiaries of Cincinnati Bell.
- Upon completion, Cincinnati Bell expects to own about 24.8% of CyrusOne (or 22% if the underwriter option is exercised in full).
- Source: Press Release
- Shares -2.8% after hours.
- Exxon Mobil (XOM +2.4%) says it began production at its Hadrian South gas development in the deepwater Gulf of Mexico with facilities tied back to the nearby Lucius project, reducing additional infrastructure requirements.
- XOM expects daily gross production from Hadrian South, its deepest subsea tie-back in nearly a mile and a half of water, to reach ~300M cf of gas and 3K barrels of liquids from two wells.
- Hadrian South is a subsea production system with flowlines connected to the Anadarko-operated Lucius truss spar, which started production in January.
- With the startup of Hadrian South and Lucius, XOM's total Gulf of Mexico net production capacity has increased by more than 45K boe/day.
- XOM holds a 46.7% interest in Hadrian South, with partners Petrobras (NYSE:PBR) at 23.3% and Eni (NYSE:E) holding a 30% stake; XOM owns a 23.3% interest in Lucius.
- Teck Resources (TCK +10.9%) and Antofagasta (OTC:ANFGF +4.1%) are exploring a merger that would create one of the world’s largest copper producers, Bloomberg reports.
- The mining companies reportedly have held early-stage talks, and any agreement is said to hinge on the approval of the families that control each company.
- With a market value of ~C$11.3B, TCK is Canada’s third-largest mining group and London-listed Antofagasta has a market value of ~£7.3B ($10.8B), so a purchase of either company would be one of the mining industry’s largest deals over the past five years.
- Sprint (NYSE:S) is up 2.5% as it announces an investment in Chicago: $45M in network infrastructure by 2016's end, targeted toward making the city Sprint's first LTE Advanced network, and 300 new jobs by the end of 2015.
- Chicago has acted as a rollout laboratory for Sprint in the past. The company says its customers' wireless usage there has increased more than 640% since 2012.
- The move will mean more than 46 new retail locations in Chicago this year; in the metro area, more than 115 stores, and more than 540 jobs overall.
- Previously: Sprint tumbles; more color on possible network expansion (Mar. 10 2015)
- Previously: Sprint rumored to work on 9,000-site LTE expansion (Feb. 25 2015)
- Today's notable tech gainers include industrial laser maker IPG Photonics (IPGP +4.3%), cloud classroom software provider 2U (TWOU +5.8%), California solar installer Solar3D (SLTD +10.3%), Korean analog/mixed-signal chipmaker MagnaChip (MX +6.8%), privileged account security software vendor CyberArk (CYBR +5.3%), haptic tech provider Immersion (IMMR +4.6%), and solar power optimizer maker/recent IPO SolarEdge (SEDG +4.8%). The Nasdaq is up 1.1%.
- There are relatively few major decliners. The group includes Chinese online video platform Youku (YOKU -4.5%), Chinese solar cell/module maker Yingli (YGE -5.6%), authentication hardware/software provider Vasco (VDSI -3%), and IP licensing firm Marathon Patent Group (MARA -8.8%).
- Solar3D is now up 97% from a March 18 close of $2.57. SolarEdge is up 23% from last week's $18 IPO price. Immersion might be getting a lift from a Barclays report stating Analog Devices will be supplying converter ICs to help enable haptics support on future iPhones/iPads.
- Youku has fallen to fresh 52-week lows, and is now down 18% since posting Q4 results and disclosing an SEC inquiry on March 19. Marathon is down 11% since reporting last Thursday.
- Previously covered: BlackBerry, Altera, Ambarella, OTI, Angie's List, You On Demand, 500.com, Chinese online real estate
- After rising 1.7% on Friday in response to the company's mixed FQ4 results, BlackBerry (NASDAQ:BBRY) has sharply reversed course today as more sell-side reactions to the numbers arrive.
- MKM (Neutral) is skeptical BlackBerry can hit an FY16 (ends Feb. '16) goal of doubling software revenue. "Software revenues came in at only $67mn in 4QFY15, including only ~$13mn in EZPass conversions ... We view the Software guidance as overly ambitious given the EMM competitive landscape. Moreover, Services revenues are expected to continue to decline ~15% per quarter throughout 2016..."
- Credit Suisse (Underperform): "We continue to see headaches for the services business, as we believe that (1) subscriber base will continue to erode, (2) ARPU will fall due to the shift toward BB10, (3) the monetization of EZ Pass remains difficult in a competitive MDM market environment ... we are also concerned that GM’s in the services segments may start to come down as revenue pressures persist ... We assume FY16/17 services revenues are $846/$467mn."
- UBS (Neutral): "[B]ased on current visibility and our own surveys, interest in BES12 and BBRY [value-added service] offerings remains low, and we remain doubtful BBRY will hit its [software] target. In the meantime, cost cuts and cash flow have stabilized business."
- RBC (Sector Perform) is relatively positive. "[QNX is] seeing connected car uptake. There’s strong enterprise interest for Work/Life and Meeting ... There’s some traction for hardware and Passport/Classic may be receiving decent reception ... ASPs improved to $211 vs. $180 in F3Q and are expected to trend higher, which coupled with COGS reductions, may increase hardware margins in F2H16."
- Friday's BlackBerry earnings coverage
- On Track Innovations (NASDAQ:OTIV) has sold off after holding its Q4 earnings CC this morning (webcast).
- The NFC/contactless payment hardware maker has been volatile since posting Q4 results on Thursday morning. Shares jumped on Thursday, but gave back a large portion of their gains on Friday, and are now close to where they traded going into earnings.
- OTI soared last Wednesday after the company won a summary judgment against T-Mobile that (among other things) prevents T-Mobile from challenging infringement of an OTI NFC patent in an upcoming jury trial.
- The company saw a 12% Y/Y revenue drop in Q4, a 300 bps drop in gross margin to 46%, and a 30% drop in operating expenses to $5M. It ended the quarter with $16.4M in cash/short-term investments.
- Nano cap Genetic Technologies (GENE +30.1%) rebounds off its 200-day moving average on turnover of almost 8M. Shares had corrected over 67% from the peak of $11 on February 18. The initial up move was stoked by the company's announcement of emerging market uptake of its breast cancer risk predicting test.
- Previously: Genetic Technologies up on breast cancer test uptake (Jan. 29)
- World Wrestling Entertainment (WWE -16%) falls sharply lower after the company discloses some streaming subscriber information.
- CEO Vince McMahon says the online TV network has 1.3M subscribers after running a free promotion in February.
- Execs indicated during Q&A that they would stick with a pricing of $9.99 for the service.
- A total subscriber count of 3M to 4M users is still the company's goal.
- Shares of WWE are still up 13.2% YTD despite today's slide.
- WWE Network Wrestlemania conference call webcast.
- After initially trading lower today, SolarCity (SCTY +1.5%) has caught a bid from an Elon Musk tweet stating a "major new Tesla product line -- not a car" will be unveiled on April 30.
- Musk is the chairman of both SolarCity and Tesla. 15 months ago, the companies announced a backup energy storage solution for SolarCity solar installations that relies on Tesla battery packs. Tesla's gigafactory plans have fueled speculation the company could become a major battery supplier to third parties.
- Elon Musk says Tesla Motors (NASDAQ:TSLA) will unveil a "major" new non-automotive product line during a presentation at the Hawthorne Design Studio on April 30.
- The exec also tweeted out a quick note of confidence on the EV automaker's prospects in China.
- Product-guessing should keep Tesla watchers busy for the bulk of April.
- Shares of Tesla moved higher off the development and are now +2.3% for the day after sitting in negative territory.
- "We've wanted to upgrade Broadcom (NASDAQ:BRCM) since the company's analyst meeting in Dec, but have been waiting for a pullback and a catalyst. We believe we got both last week," says Nomura's Romit Shah, upgrading the chipmaker to Buy and hiking his target by $10 to $50.
- Shah: "Broadcom remains very cheap, per our estimation, trading at 15x free cash flow (minus stock comp), versus a comp average of 18x. The discount reflects distrust in management after one bad acquisition and failed attempts in baseband." He thinks management isn't getting enough credit for recent moves to cut stock compensation spend (often criticized), boost capital returns, and increase financial transparency.
- Shares have gradually moved higher amid a 1% gain for the Nasdaq. They're within $2.50 of a 52-week high of $46.31. They moved higher during the final minutes of trading on Friday following reports Intel is in talks to acquire FPGA vendor Altera.
- Nomura downgraded Broadcom to Neutral last May, when shares were at $30.56.
- Following talks with CEO Fermi Wang and CFO George Laplante, Canaccord's Matt Ramsay (Buy) has hiked his Ambarella (NASDAQ:AMBA) target by $7 to $81. The move follows a Friday target hike (to $70) from Chardan Capital.
- Ramsay now thinks Ambarella will get a $10+ ASP on A7L video processor sales for Xiaomi's recently-launched Yi camera, while reaping gross margins above the company's 59%-62% target range. Meanwhile, self-driving cars, facial recognition, video broadcasting, drones, home security cameras, security video processing are all seen as growth opportunities.
- He's also upbeat on Ambarella's ability to differentiate long-term (a historical concern). "Ambarella's lineup of application-specific video encoding processors is differentiated in terms of video quality, video compression efficiency and power efficiency. We believe leadership in each of these vectors is both significant and sustainable and will allow Ambarella to maintain its leading market share position..."
- Shares are making fresh highs. They're up 45% YTD, and now trade for 33x Ambarella's FY16 (ends Jan. '16) EPS consensus; the FY16 revenue growth consensus is at 29.3%.
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