Monday, March 10, 2014
- Document Security Systems (DSS) is suing Samsung, TSMC, and NEC in the Eastern District of Texas for allegedly infringing patents related to chip manufacturing. (PR)
- DSS says it bought the patents in question in 2013 to support hardware/peripherals development, including for devices using its AuthentiGuard anti-counterfeiting tech.
- Seth Klarman is warning of an impending asset price bubble, calling out "nosebleed valuations” in high-flying stocks such as Netflix (NFLX) and Tesla (TSLA) and warning of the potential for a brutal correction across financial markets.
- “Any year in which the S&P 500 jumps 32% and the Nasdaq 40% while corporate earnings barely increase should be a cause for concern, not for further exuberance," the Baupost Group head wrote in a letter to clients.
- "There is a growing gap between the financial markets and the real economy... and the overall picture is one of growing risk and inadequate potential return almost everywhere one looks."
- In a semi-rebuttal, Vanguard's Jack Bogle agrees stocks are in "risky territory" but says investors shouldn't be trying to time the market in any case, and the problem with selling stocks based on such a prediction is you won't know when to re-enter: "Will [Klarman] call you and tell you when it's time to get back in?"
- While most Chinese Internet stocks sold off due to disappointing export data, E-House (EJ +3.3%) rallied on news its Leju online real estate ad/listing subsidiary has filed a draft F-1 with the SEC for an IPO.
- Also helping: E-House announces Leju has formed a far-reaching partnership with Chinese messaging/gaming leader Tencent. The companies will "jointly develop software and tools" for Tencent's wildly popular WeChat (Weixin) mobile messaging platform, and will also "pursue additional opportunities for potential cooperation," including ones related to Tencent's massive QQ and Qzone platforms.
- BlackBerry (BBRY) has sold its Irving, TX U.S. headquarters to Canadian real estate firm Brookfield Property for an undisclosed sum. The company is leasing back 37% of the campus, which sports six buildings and 460.3K sq. feet of office space spread out over 12.9 acres.
- BlackBerry, which has carried out huge job cuts, rallied in January after announcing it planned to unload the majority of its Canadian real estate holdings (3M+ sq. feet altogether) via sale-leaseback deals.
- Vringo (VRNG) had 2013 revenue of $1.1M, and a net loss of $52.4M ($0.63/share). $41.7M of the net loss was from continuing ops, and the remainder from discontinued ops.
- Legal costs totaled $20M, G&A and other expenses $6.3M, equity compensation $12M, and patent amortization costs $3.4M.
- Vringo ended 2013 with $33.6M in cash/equivalents. Average 2013 operational cash burn was $2M/month, yielding full-year cash burn of $24M.
- The company expects its burn rate to decrease in 2014, and thinks its year-end funds "will be sufficient" to support its 2014/2015 operations, even if there's no "significant revenue event."
- Press release
- As is the case with enterprise/carrier Wi-Fi rival Ruckus Wireless, Bernstein is launching coverage on Aruba Networks (ARUN) with an Underperform. The firm's PT is $14, 36% below current levels.
- On the other hand, Bernstein has started coverage on Ubiquiti (UBNT) with an Outperform and $65 PT (38% above today's close). Uiquiti also competes in the enterprise Wi-Fi space (its solutions are generally SMB-focused), but the majority of its sales come from other types of wireless networking systems.
- ARUN -0.7% AH
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- Angie's List (ANGI) has hired Robert Wiseman, the CTO of travel giant Sabre's travel network, airline solutions, and Travelocity ops, to be its new CTO. Wiseman had held his prior job for eight years.
- Manu Thapar, Angie's last CTO, left the company in September. Shares sold off on the news; B. Riley speculated Thapar's exit may have been due to the poor performance of Angie's local services marketplace.
- As part of a broader coverage launch of networking hardware vendors, Bernstein has started Ruckus Wireless (RKUS) with an Underperform. Its PT is a mere $7 (over 50% below current levels).
- The launch comes with Ruckus shares close to their 2014 highs (but still well below early 2013 levels) following a February Q4 beat.
- Kara Swisher reports Naoko Okumoto, the Yahoo (YHOO -1.7%) exec in charge of managing the company's relationship with 35%-owned Yahoo Japan, has left the company.
- Yahoo Japan's sales fell 4% Y/Y in Q3 to $992M, but its net income rose 15% to $365M. The Japanese Web portal's shares are trading close to their 52-week high in Tokyo. Yahoo's stake has a current market value of ~$12B.
- Okumoto is the latest of several execs to leave Yahoo's struggling Asia-Pac unit. Yahoo's own Asia-Pac revenue (ex-TAC), pressured by the mobile shift, fell 10% Y/Y in Q4 to $195M (16% of total revenue).
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- An RBC survey of 1K+ U.S. consumers found 44% stating they use Netflix (NFLX -1.9%) to watch TV shows and movies. That figure is up from 37% a year ago, and represents the first time it exceeds the one achieved by YouTube (43%, up from 40%). Hulu fell to 27% from 28%, and Amazon (boosted by Prime sub growth) rose to 22% from 15%.
- 2/3 of Netflix users said they're either "extremely satisfied" or "very satisfied" with the service, up from 63% in November. 69% said they're "not at all likely" to cancel their subscriptions, up from 66% a year ago. Those high satisfaction rates could be helpful if/when Netflix goes through with a price hike.
- Meanwhile, Netflix's February ISP speed data suggests its direct peering deal with Comcast provided a lift to streaming speeds: Netflix subs using Comcast had an average speed of 1.68Mbps, up from 1.51Mbps in January.
- The figure is still below the 2Mbps+ average speeds Comcast subs were seeing as recently as last September, and also trails those for many other top U.S. ISPs. However, the Netflix/Comcast deal only appears to have gone into effect in mid-to-late February.
- Chinese Internet and solar names, many of them among the standouts of the 2013/2014 tech rally, are heading into the close with steep losses after the Chinese government reported exports fell 18.1% Y/Y in February (much worse than expected).
- Internet decliners: WUBA -10.7%. YOKU -7.3%. ATHM -7.2%. QUNR -6.4%. NQ -6%. RENN -5.2%. CTRP -5.2%. YY -4.4%. WBAI -4.4%. KONG -5.5%.
- Solar decliners: JKS -6.3%. YGE -5.8%. TSL -6.7%. CSUN -4.9%. CSIQ -4.5%. DQ -4.2%. HSOL -4.5%.
- Solar ETFs: KWT, TAN
- AT&T (T -0.3%), which unflinchingly stuck with a premium pricing strategy for years, has announced yet another price cut for its Mobile Share plans (previous), as it tries to fend off a share-gaining Verizon and a resurgent T-Mobile.
- The price of Ma Bell's low-end 2GB Mobile Share plan has been cut by $15/month. The base price for a single user is now $40/month; adding a smartphone via AT&T's Next upgrade plan adds $25/month to the bill. Opting for a traditional phone subsidy/contract instead of Next costs $40/month.
- T-Mobile (TMUS +0.3%) , meanwhile, has simultaneously increased its data allotments for cheaper postpaid plans - a $50/month plan featuring unlimited voice/text now provides 1GB of data, up from 500MB - and hiked the price of its unlimited data offering by $10 to $80/month.
- Verizon (VZ -0.5%), which has offered some minor price cuts and promotions lately, insists it won't depart from its premium pricing strategy. CFO Fran Shammo: "We’re not going to buy customers ... You have to earn customers." Shammo also reiterates Verizon's support for subsidies (and with them, service contracts), and says the carrier will take a cautious approach to installment plans.
- Bloomberg reports SoftBank's (SFTBF, SFTBY) Masayoshi Son, facing regulatory opposition to his plans for a Sprint (S +0.4%) bid for T-Mobile, will shift from arguing a merger is needed combat Verizon/AT&T to arguing a deal will allow Sprint/T-Mobile to act as a last-mile broadband alternative to phone/cable duopolies. Son is due to make a speech tomorrow.
- The Telegraph reports Amazon (AMZN -0.7%), already widely rumored to be prepping a sub-$300 Android gaming console/streaming set-top, is "on a hiring spree to recruit industry heavyweights in Seattle and Silicon Valley" for its young Amazon Game Studios unit, and hopes to turn it into "a major operation."
- Not surprisingly, Amazon is said to be interested in using games (much like other content) as "bait" to drive console sales. The company recently bought 75-employee game studio Double Helix, and is also reportedly making outreaches to 3rd-party game publishers.
- Re/code has reported Amazon is hoping to launch its set-top in March. Of course, the WSJ reported last October Amazon hoped to have a box ready by the holidays.
- Amber Road's (AMBR) price range spells a valuation range of $261M-$311M. The provider of cloud-based trade management/supply chain software is selling 4.8M new shares, and 1.7M on behalf of existing holders.
- Amber Road had 2013 revenue of $52.5M (+21% Y/Y), and a net loss of $19.2M. The company's deferred revenue balance stood at $30.8M.
- IPO underwriters: Stifel, Pac Crest, Canaccord, Needham, Raymond James
- Raymond James is suspending coverage of NeoPhotonics (NPTN -3.5%), previously rated Outperform, until the optical component vendor updates its financials.
- RJ: "The company has not filed with the SEC on a timely basis and it has disengaged with the investment community. NeoPhotonics has not filed a 10-Q for its September quarter, will soon be late filing its 10-K for 2013, and we have no clear indication of when the new auditors will complete the financial review."
- NeoPhotonics announced last November it's restating its Q1 and Q2 2013 results. The company recently amended its credit facility to extend the deadline for the filing of its Q1-Q3 reports to April 7. Its 2013 10-K needs to arrive by May 1.