Tuesday, September 1, 2015
- The bear market continues in China, where the Shanghai Composite is lower by 3.5% in early Wednesday trading.
- The Hang Seng (NYSEARCA:EWH) is down 1.2%. The Nikkei - which fell 3.8% on Tuesday - is putting in a modest early bounce, up 0.7%. Sydney (NYSEARCA:EWA) is off by 1%.
- Broad China ETFs: FXI, YINN, PGJ, GXC, FXP, YANG, CHN, MCHI, TDF, XPP, YAO, GCH, YXI, CN, CHXF, FCA, JFC
- JPMorgan has had an about-face on Vivendi (OTCPK:VIVHY -1.7%), with analyst Marcus Diebel and team bumping the media conglomerate up two notches, to Overweight from Underweight.
- One aspect of their previous bearish stance was the company's acquisitiveness and the prospect that it might overpay for targets -- pressure relieved by the recent drop in asset prices.
- But the team also says Vivendi's music division is at an inflection point with help from streaming music sales: Recorded Music revenues headed for double-digit growth rates from 2017.
- "Streaming services are becoming increasingly popular with consumers and reached 41M subscribers globally in 2014 vs. 28M in 2013," the analysts write, noting after years of declining music revenues, the sales should grow by 0.3%, 2.5% and 11% through 2015-2017 respectively.
- The average streaming subscriber has about 10% higher value for Vivendi than customers buying digital downloads and physical formats, JPMorgan says.
- CBS (CBS -3.2%) plans a record amount of live-streaming NFL coverage this season, with all streams available for free to the public.
- Games will include two regular-season games, four playoff games, and Super Bowl 50, and will be available through its website for laptops, desktops and tablets, and on TV via some connected devices (including Xbox One, Apple TV, Chromecast, and Roku products).
- Coverage will also be streamed to Verizon customers' mobile devices via NFL Mobile.
- The first streaming game broadcast will be the Oct. 4 game in London between the New York Jets and Miami Dolphins; West Coasters will need to set an alarm, though, as the game's at 9:30 a.m. ET.
- The second game will be the Thanksgiving Carolina Panthers vs. Dallas Cowboys contest. AFC playoff games will be streamed as well.
- Qihoo (NYSE:QIHU) is up 2.5% after hours after beating Q2 EPS estimates and posting in-line revenue. Like several other U.S.-traded Chinese companies, Qihoo has declined to provide guidance in its Q2 report, after doing so in prior quarters.
- Top-line performance: Online ad revenue +71.6% Y/Y to $293.9M. Internet value-added service revenue -16.4% to $122.2M. The former was boosted by search ad growth; the latter fell due to the government's suspension of online lottery sales.
- Metrics: Total users of Qihoo's PC products/services rose by 11M Q/Q and 18M Y/Y to 514M. Users of Qihoo's 360 Mobile Safe product rose by 21M Q/Q and 158M Y/Y to 799M. Monthly active users for Qihoo's PC browsers - they drive search/home page traffic - rose by 12M Q/Q and 43M Y/Y to 388M. Average daily clicks on Qihoo's 360 personal startup page fell by 13M Q/Q and 72M Y/Y to 677M.
- Financials: Gross margin fell to 76.2% from 79.3% a year ago. Operating expenses (non-GAAP) rose 27% Y/Y to $232.5M. Qihoo ended Q2 with $1.3B in cash/investments, and $1.6B in long-term debt.
- No decision is said to have been made regarding the $77/share going-private offer Qihoo received in June.
- Q2 results, PR
- Republic Airways (NASDAQ:RJET) may be nearing bankruptcy after the Teamsters union decides against overturning a local union decision blocking a pilot vote on the carrier's final contract offer.
- The Teamsters “will not take the extraordinary circumstance of ordering an election over the unanimous and emphatic objections of Local 357’s democratically elected local leadership,” says a letter from General President James Hoffa to the airline’s local.
- RJET has said it may be forced into a court-supervised restructuring such as a Chapter 11 bankruptcy if a new contract is not secured.
- RJET -10.5% AH.
- In developments today at advertising giant WPP (WPPGY -3.5%): Jamie Gutfreund has been named global chief marketing officer at WPP's veteran New York-based agency Wunderman.
- Gutfreund was CMO at Deep Focus, and prior to that chief strategy officer at The Intelligence Group.
- Earlier, WPP's venerable Grey Group acquired Thailand-based agency nudeJEH, which will be renamed GREYnJ United. NudeJEH was itself the result of a combination, Nude Communication and JEH United.
- Starz (STRZA -1.8%) has added its Starz Play service to Roku's streaming platform.
- The service is Starz's TV Everywhere offering for authenticated subscribers. It's offering Roku owners a growing slate of original programming, along with early-window films from Disney, Sony, and others.
- The move adds to Starz Play's reach; it's also available on Amazon Fire TV and Fire TV Stick, Xbox One/Xbox 360, and Chromecast, as well as iOS/Android devices.
- Ambarella (NASDAQ:AMBA) has guided on its FQ2 earnings call (webcast) for FQ3 revenue of $90M-$93M, in-line with a $92.3M consensus.
- Wearable (action camera) video processor revenue is expected to be down Q/Q and Y/Y in FQ3, something Ambarella blames on product launch timings - major camera launches/ramps occurred in FQ2 this year rather than FQ3. IP security camera and drone-related demand is expected to be stronger.
- Gross margin (non-GAAP) rose 50 bps Q/Q and 20 bps Y/Y in FQ2 to 65.3%; FQ3 GM guidance is at 62.5%-64%. Operating expenses rose 29% Y/Y to $22.7M. As previously forecast, drones (boosted by DJI/Yuneec product launches) made up over 10% of revenue for the first time.
- The company insists its competitive position hasn't changed, and argues its video expertise will help it fend off the likes of Intel and Qualcomm, who are looking to sell app processors/SoCs into the drone market.
- Ambarella has fallen to $82.65 after hours. GoPro (NASDAQ:GPRO) has fallen to $42.65.
- Ambarella's FQ2 beat, PR
- Earlier: GoPro, Ambarella fall after negative Cleveland Research note
- Update (6:40PM ET): Ambarella is now down 9.1% after hours, and GoPro down 5.5%.
- Horsehead Holding (NASDAQ:ZINC) -4.1% AH after reporting its Mooresboro, N.C., zinc facility produced ~3,200 tons of zinc metal in August, bringing quarter-to-date production to more than 7K tons after two months.
- The company says August production was limited by equipment downtime primarily related to plugging of lines carrying feedstock, gypsum and lime, which forced idling of the plant for several days; and lower than expected current efficiency in the cell house, which resulted in reduced production for a given power input.
- ZINC says modifications were made to reduce the frequency of the plugging issues, and current efficiency has since improved and is expected to continue to improve in September.
- AeroVironment (NASDAQ:AVAV) has fallen to $21.84 after hours following its FQ1 miss. Drone (UAS) division sales fell 2% Y/Y to $40.2M; EV charging system (EES) division sales fell 36% to $6.9M.
- In spite of the FQ1 miss, AeroVironment is maintaining FY16 (ends April '16) revenue of $260M-$280M (consensus is at $269.4M) and gross margin of 36%-37.5%. A likely reason: Funded backlog totaled $89M at the end of FQ1, up 37% Y/Y.
- Gross margin rose to 34% from 27% a year ago, and operating expenses rose 22% Y/Y to $25.1M. AeroVironment ended FQ1 with $261M in cash/investments, and no debt.
- FQ2 results, PR
- Following a string of recent station acquisitions, Gray Television (GTN -6.2%) says it's agreed to acquire KCRG-TV, the ABC affiliate in Cedar Rapids, Iowa, for $100M in cash on hand.
- It's Gray's first station in Iowa, and adds to the company's stable of stations that are top-rated in their market area.
- The acquisition is immediately cash flow accretive, Gray says, as the purchase price is about 6.9 times a blended average of KCRG's 2015-2016 pro forma broadcast cash flow. Gray's operating the station as it's closed on non-license assets.
- The station was sold by The Gazette Company, run as a trust for the employees' benefit, which put the station on the air in 1953 and also owns The Cedar Rapids Gazette.
- Previously: Gray Television taking direct control of its national ad sales (Aug. 31 2015)
- AT&T (T -2.6%) files an 8-K saying it's learned of a "mini-tender" offer by TRC Capital Corp., to purchase up to 3M outstanding shares for $31.30/share.
- The company recommends rejection of the unsolicited offer, which is set to expire on Sept. 25. The offer price is below AT&T's current closing price of $32.33.
- AT&T warns that TRC Capital has approached other companies' shareholders with similar "mini-tenders" -- which avoid many SEC requirements by seeking less than 5% of outstanding shares.
- Continuing the activist efforts it launched when the company was known as JDS Uniphase, Sandell Asset Management (5.1% stake) has called on Viavi (NASDAQ:VIAV) to launch a strategic review to maximize the value of its net operating losses (NOLs).
- Sandell notes remarks from CFO Rex Jackson indicating Viavi has $4B-$4.5B in federal NOLs alone. It argues Viavi could receive over $10/share in a buyout, and could be worth over $12/share if it transformed into a "tax-advantaged platform company."
- Shares rallied today in the face of a 2.9% Nasdaq drop. UBS recently estimated Viavi's NOLs totaled $4.5B, and that its deferred tax assets had a face value of $1.5B.
- Adding to today's 8% dive, WTI crude oil is lower by another 1.3% in after hours action to $44.39 per barrel after the American Petroleum Institute reports a far higher-than-expected 7.6M barrel increase in stocks for the week ended August 28.
- USO -1.8% after hours
- Previously: Crude oil continues wild ride ... today it's down (Sept. 1)
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, UGA, USL, DNO, UHN, OLO, SZO, OLEM
- H&R Block (NYSE:HRB) today closed the sale of its bank operation to BofI Federal Bank one month ahead of schedule.
- As part of the new capital structure plans, the company launches a $3.5B buyback, and with it a modified Dutch auction to purchase up to $1.5B of common stock at not less than $32.25 per share and not more than $37 (the stock closed today at $32.95). This represents about 16% of the float.
- Source: Press Release
- Shares +6.2% after hours to $35.
- A conference call to discuss is set for 4:30 ET
- Continuing a rough 2015, 3D Systems (DDD -6.6%), Stratasys (SSYS -5.8%), Organovo (ONVO -10.6%), Arcam (OTCPK:AMAVF -6.1%), and Voxeljet (VJET -4.9%) have seen outsized losses on a day the Nasdaq fell 2.9%. Volume was generally below-average.
- Short interests indicate many shorts with large profits have chosen not to cover: 3D Systems had 35% of its float shorted as of Aug. 14, Stratasys 28%, Organovo 26%, and Voxeljet 11%.
- Earlier today, Stratasys announced the Objet30 Dental Prime, a 3D printer aimed at smaller dental labs. The company promises the printer's High Quality mode can deliver "intricate, delicate features required for precise fittings on crown, bridge, and prosthetic models" via 16-micron layers.
- Meanwhile, Organovo CEO Keith Murphy defended his company in a talk with Benzinga - he discussed partnerships with Merck, L'Oreal, and Yale, and downplayed Organovo's FQ1 numbers. "We reported about $300K in revenue for the first quarter, and we're seeing some reaction to that, I would say. The bigger picture is, last quarter we had $2 million in booked contracts. The fact that these (contracts) take a couple of quarters to be recognized as revenue shouldn't surprise anyone."
- Citigroup's energy analysts defend their bullish take on big oil stocks such as ConocoPhillips (COP -2.6%), Total (TOT -2.1%) and Statoil (STO -4.5%), pointing to 30-year valuation lows, upside asymmetric risk on oil prices and signs that managements are doing enough to turn the corner on better capital allocation and cost-cutting.
- Favoring COP, TOT and STO, the firm says its sector investment criteria are (1) growth - companies that have near-term growth are less reliant on simply cutting costs; (2) better capital allocation - combined with growth, it should deliver 2-3x the ROE uplift than cost-cutting can; and (3) a strong enough balance sheet to manage the early part of the cycle.
- Citi is staying away from Exxon Mobil (XOM -4%) because of its valuation premium to peers and low growth and from Chevron (CVX -3.2%) due to its slow response in a lower commodity world.
- Lucas Energy (LEI +40.7%) enjoys one of the day's rare rallies after saying had secured a new $2.4M line of credit, boosting its borrowing capacity to $200K/month over the next year.
- Borrowing under the new credit line is subject to several restrictions, including LEI's stock continuing to trade on the NYSE; loans will be recorded as convertible promissory notes with a $1.50/share exchange rate, subject to shareholder approval, and paying 6% yearly interest.
- LEI also says it amended terms of its senior secured note, extending its due date to Oct. 31, 2016.
- Coal stocks (KOL -4.4%) are surrendering large chunks of their recent gains, as might be expected, but J.P. Morgan analysts think coal's share of the U.S. power market might have hit its low point, seeing grid inflexibility making a reduction in coal’s share below ~30% difficult without more investment in the grid, pipelines and more gas power plants.
- The JPM team thinks it is reasonable to assume that once the U.S. gas market begins to balance and the gas price picks up, coal’s market share will recover to the mid or even high 30s prior to the introduction of the greenhouse gas rule, assuming the rule overcomes its many legal challenges.
- Meanwhile, the firm cuts its 2016 EPS estimate on Alliance Resource Partners (ARLP -1.7%) to $0.83 from $0.89, and imitates a 2016 estimate on Peabody Energy (BTU -17.98%) for a loss of $0.37, Arch Coal (ACI -28.9%) for a loss of $6.78, and Cloud Peak Energy (CLD -22.1%) for a loss of $0.21.
- Tesla Model X buyers at the top of the reservation list have begun to make their configuration choices. Many of the selection choices are being shared on the Tesla Motors Club board.
- Another potential rival to Tesla (NASDAQ:TSLA) in China is starting to make some headway. NextEV is backed by some notable China-based investors, including Tencent, and has some well-known designers and engineers in the fold. The startup hopes to introduce a high-performance EV model in 2016.
- Shares of Tesla are down 4.1% to $238.94.
- Nothing to see here, move along. After crumbling below $40 per barrel last week, the price of the world's most important commodity shot higher by 27% over the three sessions starting on Thursday.
- Today's 8% decline brings black gold back to $45.35 per barrel, roughly the spot at which it started the week, and at about the same level it was at a month ago.
- USO -6.5%
- The teams at Citigroup and Goldman offer competing views on oil. "Sell the news and buy the facts," says a bearish Citi, calling the massive rally a combination of short-covering and chart readers picking bottoms. Reports of OPEC's willingness to talk to non-OPEC producers (Russia) about bringing prices higher "[were] a gross misrepresentation" of the facts, says Citi, noting most OPEC honchos are on holiday, and the lack of any follow-up to the stories suggests there was no change in policy.
- Goldman thinks there's more to the rally and suggested clients to buy the XLE January $70 call to gain exposure (one could pick it up now for a lot cheaper than when Goldman made the recommendation a few hours back).
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, UGA, USL, DNO, UHN, OLO, SZO, OLEM
- The financial sector is leading the market lower today, but these sessions often see money flow into REITs. There's no green to be found, but mortgage REITs like Annaly Capital (NLY -0.3%), American Capital Agency (AGNC -0.2%), Anworth Mortgage (ANH -0.2%), Chimera (CIM -0.1%), CYS Investments (CYS -0.1%), Invesco (IVR -0.3%), and Dynex (DX -0.7%) are outperforming by a wide margin.
- Equity REITs are doing better than the XLF and S&P 500, but still sharply lower: Realty Income (O -1.5%), Omega Healthcare (OHI -2.2%), HCP (HCP -1.2%), Gramercy Property (GPT -1.9%), Equity Residential (EQR -2.4%), Kimco (KIM -2.1%), Simon Property (SPG -2.2%), Public Storage (PSA -1.1%), Hospitality Properties (HPT -2.1%), Stag Industrial (STAG -1.2%)
- ETFs: IYR, VNQ, MORL, REM, MORT, DRN, URE, RQI, SCHH, ICF, SRS, RWR, RNP, JRS, KBWY, RFI, NRO, DRV, RIT, REK, RIF, FRI, FTY, PSR, DRA, FREL, WREI, LMBS, IARAX
- The dream of higher interest rates is looking a little fuzzier at the moment, as China leads markets lower again, and the Fed's Eric Rosengren suggests the conditions for a rate hike have still yet to be met. If Friday's payroll number disappoints - and there's at least some reason to expect that - a Sept. move looks off the table.
- The Financial SPDR (NYSEARCA:XLE) is down 3% vs. the S&P 500's 2.3%.
- Life insurers: MetLife (MET -3.7%), Prudential (PRU -3.9%), Lincoln National (LNC -4.2%)
- Money-center banks: Citigroup (C -4.4%), JPMorgan (JPM -3.6%), Wells Fargo (WFC -3.8%)
- Regional banks: U.S. Bancorp (USB -4.3%), Regions Financial (RF -4.1%), KeyCorp (KEY -4.3%), SunTrust (STI -4.2%), M&T Bank (MTB -4.2%)
- Online brokerage: E*Trade (ETFC -4.8%), Schwab (SCHW -3.8%), Ameritrade (AMTD -3.4%)
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, IAT, SEF, IYG, FXO, FNCL, KBWB, QABA, FINU, KBWR, KRU, RWW, RYF, FINZ, KRS
- ConocoPhillips (COP -3.3%) says it is laying off 400 employees and 100 contractors in Canada, ~15% of its workforce in Canada, as part of a 10% global workforce reduction amid low oil prices.
- COP plans to cut 500 jobs at its Houston headquarters out of the 3,750 workers it employs there.
- "We don’t see a lot of correction in the short-term... It’s really kind of changing the way we work," a COP spokesperson says.
- News of the cuts came on the same day COP announced first oil at its new Surmont 2 thermal project in northern Alberta.
- CenterPoint Energy (CNP -3%) is reiterated with a Buy rating and $25 price target at Argus, which believes CNP’s fundamentals remain strong based on a growing rate base through an expanding infrastructure improvement program and projected benefits from its Enable Midstream Partners joint venture.
- CNP enjoys across-the-board operating efficiencies and, assuming economic conditions continue to improve, Argus expects it to invest its cash in non-regulated energy-related assets that have the potential for higher long-term returns, and says the company also benefits from positive relations with state and federal regulators.
- Argus thinks CNP has the potential to generate total returns for shareholders of 8%-9% annually over the next 4-5 years.
- Oceaneering (OII -6.4%) says in prepared remarks ahead of a Morgan Stanley conference presentation says its H2 outlook by business segment may have been "a bit optimistic."
- "Expected work is being postponed and the summer 'call out' market and rig contract renewals are weaker than anticipated. However, we currently believe our earnings can still be within our guidance range as lower unallocated expenses will somewhat mitigate the shortfall from operations," says OII exec Marvin Migura.
- Says it intends "to continue paying a quarterly cash dividend, which is currently $0.27/share."
- Sprint (NYSE:S) says it's investing $150M in Chicago by the end of 2016, nearly doubling its headcount there with more than 750 new jobs and up to $250M of network spend across Chicagoland over the next two years.
- Chicago will be the first Sprint city to see deployment of LTE-Advanced.
- The new jobs -- building on the existing "Sprint for Chicago" initiative to improve customer service, which promised 300 new jobs in March -- include retail positions, wireless experts for the company's house-call "Direct 2 You" service, and network techs and engineers.
- Meanwhile, boosted by continuing SoftBank support, Sprint shares are bucking today's sharply lower market, up 0.5% while the S&P 500 is down 2.5%.
- Though the Nasdaq is off 2.4% on a day in which Chinese macro concerns are running high, Dangdang (DANG +2.5%) is higher after beating Q2 EPS estimates (while missing on revenue) against a backdrop of low expectations. No guidance has been provided.
- Lifting EPS: Fulfillment spend fell to 8.9% of revenue from 10.7% a year ago, marketing spend fell to 3.2% from 4.6%, and G&A spend to 2.1% from 2.3%. Tech/content spend remained at 2.6% of revenue. Gross margin fell to 14.8% from 15.2% in Q1 and 20.1% a year ago.
- GMV rose 32.1% Y/Y to $304.9M, active customers 15% to 9.7M, and orders 19% to 19.5M. Mobile accounted for 40% of orders vs. 41% in Q1 and 17% a year ago. Media revenue rose 18.3% Y/Y to $224.5M; general merchandise revenue rose 61.7% to $136.7M.
- Dangdang still hasn't made a decision on the $7.81/share going-private offer it received in early July.
- Q2 results, PR
- ConocoPhillips (COP -3.6%) says it has safely delivered its first barrels of oil at its Surmont 2 in-situ oil sands facility in Canada that has been under construction for five years.
- COP says the project in northwestern Alberta will extract heavy oil buried too deep to mine using steam to heat up the thick crude to allow it to flow; the company says Surmont is the largest steam-assisted gravity drainage system in the world.
- It is COP's second and larger phase of a 50/50 joint venture in the Canadian oil sands with Total (NYSE:TOT); the two projects combined are expected to bring up 150K bbl/day, with the second facility building up production to 118K bbl/day through 2017.
- NextEra Energy (NEE -2.7%) and Hawaiian Electric (HE -2.7%) pledge 50 new commitments as part of their proposal to merge that they say would accelerate Hawaii’s goal of getting all of its power from renewable resources.
- The companies say the commitments, filed with the Hawaii Public Utilities Commission, strengthen the benefits the merger will produce for customers, saving them nearly $465B plus ~$500M in economic benefits to the state in the first five years after the merger closes; NEE also says it will maintain HE’s charitable donations and keep the utility locally managed.
- NEE has faced rising state opposition to its $2.63B takeover of HE; Hawaii's governor has said he was against the deal because it failed to align with the state’s goal of 100% renewable power, and the state's consumer advocate has said the deal is not in the public interest.
- Puerto Rico's OFG Bancorp (OFG -14.5%) fell as low as about $6.70 in last Monday's panicky action, but had bounced nearly 30% from that level after yesterday's 19% gain.
- It's back to the downside today, and the stock is lower by 15% to $7.34.
- Alone among the notable news items (other than Puerto Rico's continuing debt troubles) since last Monday was the purchase of 7K shares by board member Josen Rossi at prices less than $7 per share.
- Popular (BPOP -2.5%), First Bancorp (FBP -3.7%)
- J.C. Penney (NYSE:JCP) is up 3.4% as yesterday's rally fueled by a Deutsche Bank upgrade keeps its legs.
- Shares of JCP are starting to threaten the $10 level where they haven't traded since last October.
- Previously: Deutsche Bank buys the J.C. Penney turnaround story (Aug. 31)
- Freeport McMoRan (FCX -7.4%) is downgraded to Neutral from Buy with an $12 price target, lowered from $20, at Citigroup, which says the copper sector has not reduced production enough to account for falling prices.
- FCX has guided to strong cash flow of $6.3B for 2016, at $2.25/lb. copper and $54/bbl oil, but the guidance included considerable working capital drawdown, which Citi estimates at $1.8B while saying there is "very little incremental deleveraging opportunity."
- According to the Citi report, the best opportunity for FCX to improve its free cash flow is to eliminate or at least reduce its exposure to oil and gas.
- Global miners are having a rough time as weak China data batters stocks: BHP -6.7%, RIO -5.3%, VALE -3.5%, TCK -7.6%.
- Ahead of the vaunted launch of Netflix (NFLX -6.3%) service in Spain next month, Vodafone Spain (VOD -1.7%) has signed a deal to become the first pay TV provider to offer Netflix in the country.
- Vodafone says it can deliver Netflix's app to subscribers without a set-top box update. Perhaps more important for subscribers, they'll have an integrated search engine for programming on Vodafone's service, and Netflix offerings will be part of the recommendations section.
- Netflix has been stacking up deals with (smaller) pay TV providers, including Cogeco's Atlantic Broadband earlier this summer, Cable One, Mediacom, Suddenlink and Grande Communications.
- Previously: Netflix sets October for delayed launch in Spain (Jun. 03 2015)
- Previously: Netflix eyes tough market in Spain (Mar. 08 2015)
- Sasol (SSL -3.5%) is looking for contractors to help it become the first commercial oil producer in Mozambique and to extend a gas pipeline that will increase exports to neighboring South Africa.
- SSL, which has produced gas in Mozambique since 2004, proposes building a pipeline across the provinces of Gaza and Inhambane that will feed into supplies to its plants over the border; the planned oil plant would have capacity to produce as much as 15K bbl/day, along with gas and liquid petroleum gas.
- SSL says it will disclose more details once Mozambican authorities approve its field development plan, and it also will offer an update on its projects when it announces full-year results on Sept. 7.
- Neonode (NASDAQ:NEON) has signed "a multi-year, multi-device license agreement with a leading Japanese printer OEM." Epson and Canon are possibilities.
- The company notes the licensing deal follows a development agreement, and notes its zForce IP is being increasingly used by printer OEMs to create touch controls that replace physical buttons.
- Shares are back above $3. They fell as low as $2.21 during last month's market plunge.
- Petrobras (PBR -6.1%) plunges in early trading after UBS cuts the company’s 2015 profit estimate by 80% and global investors move away from riskier assets.
- UBS cites the weakening Brazilian currency as sapping profitability; in recent days, the real has slumped to its lowest level since December 2002.
- UBS now sees PBR's 2015 EPS at 0.18 reais/share (~US$0.05), down from a previous outlook for 0.89, and 2016 EPS of 0.52 reais/share, down from a prior target of 0.73.
- The Brazil government’s “slower fiscal adjustment now looks to stall, with the planning ministry announcing a primary fiscal deficit target of 0.5% of GDP for 2016,” implying heightened inflation risks, says the head of Latin America strategy for Jefferies.
- Pengrowth Energy (NYSE:PGH) says it will change its dividend policy, moving to a quarterly payment at a rate of $0.01 per share per quarter ($0.04 per share annually).
- The new dividend policy will take effect following the payment of the $0.02/share dividend payable on Sept. 15, 2015 with the first quarterly payment expected to be paid on Dec. 15, 2015.
- PGH -7%.
- Internap (NASDAQ:INAP) has hired Morgan Stanley and law firm Greenberg Traurig to help evaluate its strategic options.
- The company doesn't formally state a sale is among the options being explored, but does suggest it. CEO Michael Ruffolo: "Internap is well positioned in an industry that is rapidly consolidating. We have been consulting with our advisors regarding industry developments and Internap's unique assets and market position."
- The company has a high level of oil exposure - 15.4% vs. the peer group average of 5.9% - says Cantor analyst David Chiaverini, downgrading Gladstone Capital (GLAD -3.1%) to Hold, with price target lowered fifty cents to $9.
- “We fear that BDC portfolio companies exposed to oil and gas may face valuation write-downs in coming quarters given the still-low price of oil despite last week’s bounce-off the lows.”
- He notes a weakening in GLAD's credit quality in Q2, with the NPL ratio rising 70 basis points on a fair value basis to 3.5%, and 320 bps on a cost basis to 13.4%. Peers reported similar ratios up just 30 bps and 100 bps, respectively.
- The dividend remains safe, says Chiaverini, thanks to the external advisor's promise to waive advisory fees indefinitely.
- Previously: Apollo Investment and Gladstone Capital downgraded (Sept. 1)
- Cleveland Research states GoPro's (NASDAQ:GPRO) supply chain has cut its forecasts following an August demand slowdown.
- Pac Crest's Brad Erickson issued a more positive note last Wednesday, stating August U.S. checks were encouraging and that GoPro is "beginning to build inventory a bit sooner than last year in front of the all-important holiday."
- Video processor supplier Ambarella (NASDAQ:AMBA), which reports after the bell, has followed GoPro lower. The Nasdaq is down 1.8%.
- Yesterday: GoPro rolls out tool for quickly creating YouTube/Facebook-friendly videos
- Headlining the unexpected decline in the August PMI to 51.1 from 52.7 previously was a big drop in New Orders to 51.7 from 56.5.
- Production fell to 53.6 from 56.0. Employment 51.2 vs. 52.7. Supplier Deliveries 50.7 vs. 48.9. Prices 39.0 vs. 44.0. Backlogs 46.5 vs. 42.5. Exports 46.5 vs. 48.0.
- Already lower on the session as stocks tumble, the 10-year Treasury yield is mostly ignoring the soft PMI, still down five basis points at 2.17%.
- TLT +0.4%, TBT -0.8%
- ETFs: TBT, TLT, TMV, TBF, EDV, TMF, TTT, ZROZ, TLH, SBND, VGLT, UBT, DLBS, TLO, TENZ, LBND, DLBL, TYBS, VUSTX
- Previously: ISM Manufacturing below estimates for August (Sept. 1)
- Full report from the ISM
10:04 AM| 10:04 AM | Comment!
- While the disruption in the oil and gas market should present tasty investment opportunities for lenders with sufficient capacity to take advantage, Apollo Investment's (AINV -2.3%) relatively high leverage level could limit its ability to participate, says Cantor analyst David Chiaverini, cutting the stock to Hold from Buy, with price target trimmed $1 to $7.
- Apollo's credit quality continues to be decent despite its very high oil and gas exposure, says Chiaverini, and the dividend appears to be sustainable through at least 2016.
- Previously: Apollo Investment and Gladstone Capital downgraded (Sept. 1)
- PostRock Energy (PSTR -7.5%) says Terry Carter has retired as President and CEO, effective immediately, and current VP of operations Clark Edwards will take over as Interim President and CEO.
- Edwards has held various for the company and its predecessor entities since 2007 and served as PSTR's VP of operations since February 2012.
- Late yesterday, PSTR said its stock would be delisted by Nasdaq, and it will not request an appeal.
- With weak equity markets playing a role, QIWI has fallen below $25 after missing Q2 estimates and reporting ruble-based payment revenue growth slowed to 20% Y/Y from Q1's 35%. Other revenue (interest, inactivity fees, kiosk sales/renting, ads) grew 18%, down from Q1's 31%.
- The company now expects 18%-22% 2015 ruble-based revenue and net profit growth, up from a prior 12%-16%. However, the guidance accounts for the Contact and Rapida acquisitions (on the books as of June 1).
- Qiwi isn't shy about sharing bad news/business risks: The company notes Russia's economic slowdown "could have a significant negative effect on both consumer spending and the banking system in Russia." It also states macro pressures could "adversely affect the purchasing power of Russian population as high inflation combined with decreasing real wage put pressure on the disposable income," and that the Russian central bank has been "imposing some additional controls and monitoring requirements on agents through the banks."
- Payment revenue totaled $33.8M, and other revenue $11.7M. Payments volume (boosted by Contact/Rapida) rose 31% Y/Y in Q2 to $3.7B. With Contact/Rapida having lower revenue yields, average net revenue yield fell to 1.24% from Q1's 1.59% and Q2 2014's 1.35%.
- Q2 results, PR
- General Motors (NYSE:GM) unit sales -0.7% to 272,512 units, a better mark than the wide range of -1% to -3% growth forecast by analysts.
- Retail sales were up 6% during the month.
- Commercial sales and government sales were also higher.
- The automaker ended the month with 63 days supply, compared to 64 days supply a month ago.
- GM -1.36% to $29.03 in early trading.
- With major U.S. stock index futures now down nearly 3%, the NYSE pulls out the rarely-used (at least prior to last week) Rule 48 in an attempt to smooth the market open.
- Unlike a circuit breaker which puts a halt to trading, Rule 48 speeds the open by suspending the requirement that stock prices be announced at the open.
- Dollar Tree (NASDAQ:DLTR) reports same-store sales rose 2.7% in Q2.
- Gross profit rate fell 580 bps to 28.4% due to markdown expenses related to acquisition of Family Dollar stores.
- SG&A expense rate remained flat Y/Y at 23.7%.
- Store count +8,698 Y/Y to 13,864, during the quarter the company acquired 8,284 Family Dollar stores.
- Retail selling square footage +63.4% to 108.2M.
- Q3 Guidance: Net sales: $4.78B to $4.87B; Same-store sales: low single-digit increase.
- FY2015 Guidance: Net sales: $15.3B to $15.52B; Same-store sales: low single-digit growth.
- DLTR -6.15% premarket.
- U.S. stock index futures are down 2% as the globe sells off on the first day of September.
- Shanghai fell just 1.2%, but the Hang Seng dropped 2.2% and the Nikkei 3.8%. Europe's lower by about 2% a midday.
- The 10-year Treasury yield shot higher yesterday, but has retreated five basis points this morning to 2.17%. Gold is up 0.9% to $1,143 per ounce and oil is down 2.3% to $48.05.
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- Previously: China worries weigh heavily on world markets (Sept. 1)
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