Today - Tuesday, March 11, 2014
- BrightWire and Marbridge Consulting report China Mobile (CHL -0.6%) has told its phone suppliers all 4G phones provided from May onwards must support five air interfaces - 4G TD-LTE and FDD-LTE, 3G TD-SCDMA and W-CDMA, and 2G GSM. Currently, OEMs can get away with supplying phones supporting only the three interfaces used by China Mobile - TD-LTE, TD-SCDMA, and GSM.
- The move could benefit baseband chip giant Qualcomm (QCOM -0.4%), given the company's expertise in supporting a huge variety of air interfaces and frequency bands. That is, provided the Chinese government's antitrust probe doesn't get in the way.
- Strategy Analytics estimates Qualcomm, buoyed by a dominant 4G baseband position (97% share as of Q1 2013), had a 64% 2013 baseband revenue share. But competition is intensifying: Intel, Broadcom, MediaTek, and Nvidia are all in the midst of launching 4G baseband parts.
- Last November, Qualcomm announced the Gobi 9x35, a next-gen 4G baseband that offers theoretical max speeds of 300Mbps (2x its predecessor) and supports six air interfaces.
- Paycom Software, a developer of cloud-based talent management, payroll, and HR management software, has filed for a $100M IPO under the symbol PAYC. Barclays, JPMorgan, Pac Crest, Stifel, and Canaccord are underwriting.
- Paycom argues its apps are differentiated in part by their ability to leverage an integrated platform that eliminates redundant data entry and the need to access multiple databases.
- The company claims to have 10K+ clients, with none accounting for more than 0.5% of revenue. Rivals include cloud HR software leader Workday, smaller vendors Cornerstone OnDemand and Ultimate Software, and enterprise software giants SAP and Oracle (both have made acquisitions in this space).
- Paycom had 2013 revenue of $107.6M (+40% Y/Y), and net income of $5.4M. Sales/marketing spend equaled 40% of revenue, and the company's deferred revenue balance totaled $12.6M at the end of 2013.
- Given how peers have performed lately, investor interest could be strong.
- Though ChipMos (IMOS -2%) missed Q4 EPS estimates by $0.09 (the company blames higher tax expenses and non-controlling interests), it's guiding for Q1 revenue to be "flat to up in the low single digits" from a Q4 level of $163.9M. That's favorable to a $161.4M consensus.
- Q4 revenue (-5% Q/Q) was in-line with guidance for a 4%-8% drop. Likewise, gross margin (18.9%, up from 13.7% a year ago and down from 22.2% in Q3) came within a guidance range of 16%-20%.
- Q1 GM is expected to be in a range of 17%-21%, and opex is expected to total 6%-8% of revenue. ChipMos' full-year capex is expected to be less than $80M. Tax rates are expected to remain high in Q1 before normalizing in Q2.
- The company says it remains "very positive" about its LCD driver/assembly ops, and expect process improvements to lower its materials costs.
- Q4 results, PR
- Twitter (TWTR +1.9%) has hired Baljeet Singh, a former senior YouTube exec responsible for developing the site's skippable pre-roll video ads (later imitated by many others).
- Singh is tasked with improving Twitter's video discovery features and content base, and of ramping its video ad sales. His hiring comes after Twitter began showing embedded photos/videos in user Timelines, and launched several ad products aimed at TV networks and advertisers.
- Separately, Twitter is continuing its ad expansion efforts by testing a click-to-call button (long a staple of Google and Yelp's mobile ads) that would allow users to directly call advertisers.
- Digiday observes the test is part of a broader push by Twitter to offer direct response ads that can do things such as "generate leads, drive app downloads, collect consumers’ email addresses and induce incoming calls."
- Previous: Twitter's 10-K shows ad impression growth, falling prices
- An rally that has already yielded huge gains for fuel cell and other alternative energy stocks is now propelling smart grid/wind turbine maker American Superconductor (AMSC +12.8%) higher.
- Last month, AMSC rallied on an FQ3 beat and a favorable legal ruling in its long-running battle against ex-customer Sinovel. 9% of the float was shorted as of Feb. 14.
- As part of a chip sector coverage launch, Ascendiant Capital's Cody Acree (previously with Williams Financial) has started AMD (AMD +3.5%) with an Outperform and $5 PT.
- Acree: "While we are not expecting any singular dramatic near-term catalyst, we do see the company working through a methodic restructuring and repositioning that has already reduced spending and earned significant [design] wins."
- Acree notes AMD's restructuring has lowered headcount by 15% and opex by 26%, while helping the chipmaker once more be cash flow positive. He also expects new APU launches to allow AMD to "regain moderate share" in the consumer PC space.
- Previous: AMD jumps following CEO's CNBC talk
- Re/code reports Jive Software (JIVE +8.1%) "has explored a sale during the last several months," and has hired boutique tech i-bank Qatalyst Partners (led by Frank Quattrone) to help find a buyer.
- No word on Jive's asking price. Oracle, SAP (previous), and Workday are all said to have passed on the enterprise social networking software vendor, which has seen its sales pressured by competition from the likes of Salesforce, IBM, and Microsoft's Yammer unit.
- Nearly 1/6 of the float was shorted as of Feb. 14.
- Pac Crest's Brent Bracelin (Outperform, $14 PT) reports Fusion-io's (FIO +5.6%) channel partners are seeing improved demand for the company's new storage appliances and software.
- He also thinks Fusion-io could benefit from the launch of a 3rd-gen server flash module platform, and from diminishing competition. The PCIe flash module space has seen some consolidation, and Violin Memory recently suggested it's abandoning the market. But competition is still provided by Western Digital, Intel, LSI, and others.
- Fusion-io's sales were hit hard last year by declining orders from Apple and Facebook. The company is counting on a stronger enterprise push (led by new CEO/ex-H-P exec Shane Robison) and growing sales to other Web/cloud clients (e.g. Salesforce, Pandora, Yelp, Alibaba) to spark a turnaround.
- Ahead of a big speech at the U.S. Chamber of Commerce, SoftBank's (SFTBF, SFTBY) Masayoshi Son is promising a "massive price war" if skeptical regulators allow Sprint (S +0.7%) to merge with T-Mobile USA (TMUS +2.4%).
- As expected, Son also insists Sprint and T-Mobile, who between them have a giant portfolio of high-frequency spectrum assets, could act as a credible last-mile broadband rival to phone/cable duopolies if they joined forces.
- AT&T (T -0.8%) and Verizon (VZ -0.6%) are ticking lower, while Sprint and T-Mobile are up moderately. AT&T has already been cutting prices to counter T-Mobile's aggressive moves - moves that have contributed to FCC/DOJ doubts about the merits of a Sprint/T-Mobile deal.
- Verizon, for now, is refusing to take part in a price war, and betting its service quality and unmatched 4G coverage will lead its pospaid subs to continue paying a premium.
- Yesterday: U.S. mobile roundup
- A jury has ruled memory card/SSD maker PNY should pay SanDisk (SNDK +1%) $28.5M in damages for failing to pay sums owed on account of its licensing deal with the company.
- Though licensing/royalty revenue has been declining as a percentage of SanDisk's total revenue, it still accounts for a substantial portion of the company's gross profit, thanks in part to the 100% gross margins it carries.
- The trial took place in Silicon Valley's Santa Clara County, where SanDisk is headquartered.
- Vipshop (VIPS -4.1%) has been cut to Neutral by Goldman. Shares blasted off last week in response to the company's Q4 beat and strong guidance.
- Unisys (UIS -6.5%) has been cut to Market Perform by Raymond James.
- Aixtron (AIXG -1.6%) has been cut to Neutral by BNP Paribas.
- As part of a chip sector coverage launch, AppliedMicro (AMCC +1%), TowerJazz (TSEM +1.5%), Neonode (NEON +1.6%), RF Micro (RFMD +1.8%), and TriQuint (TQNT +1.6%) have been started at Buy by Ascendiant Capital.
- Pac Crest's Andy Hargreaves has upgraded Apple (AAPL) to Outperform, and set a $635 PT. He thinks a 4.7" iPhone 6 will arrive in the fall (in-line with reports), and that a base model will sell for a relatively steep subsidized price of $299; that could imply an unsubsidized price of $749.
- Hargreaves estimates a 4.7" iPhone could boost the iPhone's total FY15 (ends in Sep.) unit sales by 10M to 170.4M, while lifting its ASP by $36 to $641 and its EPS contribution by $4 to $33.04.
- He isn't counting on a 5.5" iPhone (also rumored to be in the pipeline) arriving this year. At the same time, he thinks new product launches (an iWatch?) provide "optionality" to Apple shares.
- Hargreaves downgraded Apple on Jan. 16, 2013, when shares were at $471.
- AAPL +0.8% premarket
- GT Advanced Technologies (GTAT) signs a $336M deal to supply Cosmos Chemicals Berhad with equipment and technology for a 25,0000 metric ton annual (MTA) polysilicon facility in Sarawak, Malaysia.
- The size of the deal compares with the almost $300M in revenue that GT generated in 2013, although the time element for the order doesn't appear to have been provided.
- It's also worth pointing out that Cosmos Chemicals Berhad needs to secure final financing for the project. (PR)
- Microsoft (MSFT) is carrying out a massive launch of hotly anticipated computer game "Titanfall" today, with the company hoping that the sci-fi combat title will boost sales of the Xbox One, which appears to be lagging behind Sony's (SNE) PlayStation 4.
- The strategy is one that worked with "Halo," a sci-fi shooter game that was launched in 2001 and became a blockbuster that fueled sales of the Xbox.
- Titanfall was developed by Respawn Entertainment and is being published by Electronic Arts (EA).
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