Seeking Alpha
  • Saturday, April 25, 2015

  • 2:47 PM
    • "We already own enough of it, thank you very much," says SoftBank (OTCPK:SFTBF) Internet/media chief Nikesh Arora about Yahoo Japan (OTCPK:YAHOY). Yahoo's (NASDAQ:YHOO) recently-disclosed efforts to explore options for its 35.5% YJ stake had fueled speculation SoftBank (owns 43% of YJ) would try to buy the stake.
    • At the same time, Arora, formerly Google's sales chief, states SoftBank (has a portfolio of 1,300+ investments) is up for making new investments in growth companies ... at the right price. With valuations for private U.S. tech companies having soared, India, which has relatively low Web, smartphone, and e-commerce penetration rates and a new government widely seen as more business-friendly than its predecessor, has been an area of interest.
    • SoftBank led a $627M funding round in Indian e-commerce marketplace Snapdeal last year, and has been rumored to be weighing a major investment in low-end Indian Android OEM Micromax. It has also led a $600M round for Chinese ride-sharing platform Kuaidi Dache (recently merged with top rival Didi Dache), and invested $250M in top Southeast Asian ride-sharing platform GrabTaxi.
    • The Japanese conglomerate's 797.7M-share Alibaba stake (current pre-tax value of $67.5B) leaves it with plenty of fresh powder for further dealmaking.
    | Comment!
  • 1:54 PM
    • 95% of all Oracle (NYSE:ORCL) products will be available as cloud-based services by the time the company holds this year's Oracle OpenWorld conference in October, says co-CEO Mark Hurd. He asserts 65% of Oracle products are offered via the cloud today.
    • Hurd: "We are still investing, very much in our traditional products. But that said, we are moving those products to now be available in the cloud at a really incredible pace ... We are not protecting, so to speak, anything."
    • Oracle has rapidly fleshed out its cloud app (SaaS), app platform (PaaS), and infrastructure (IaaS) lineup over the last 3 years through a mixture of acquisitions and internal product launches, with the goal of keeping clients from abandoning Oracle for either the offerings of cloud-focused rivals (e.g. Salesforce, Workday) or those of fellow IT giants making their own large cloud investments (e.g. SAP, Microsoft, IBM).
    • Though Oracle faces a tough sell with Internet firms and startups that have eschewed its offerings (often for some mixture of Amazon Web Services, open-source software, and apps from cloud-only upstarts), it's gaining traction with its core enterprise base: The company's SaaS/PaaS revenue rose 30% Y/Y in the February quarter to $372M, and its IaaS revenue rose 28% to $155M. At the same time, traditional software license revenue fell 7% to $1.98B (forex was a headwind).
    • In a recent note, D.A. Davidson (Buy, $51 target) reported its research indicates Oracle's SaaS/PaaS offerings "continue to gain customer traction and mindshare, particularly in Europe," where the company faces less competition from upstarts. "Most ... pure play SaaS vendors are in earlier stages of building the distribution and channel partnerships needed to succeed longer term in this geography."
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  • Friday, April 24, 2015

  • 7:30 PM
    | 7 Comments
  • 7:11 PM
    • After barely moving in response to its Q1 numbers yesterday, Proto Labs (NYSE:PRLB) sold off today in the wake of downgrades to neutral ratings from Piper and Craig-Hallum. Needham downgraded ahead of the report.
    • Though the custom parts maker narrowly beat Q1 revenue estimates and posted in-line EPS, it guided for on its CC (transcript) for Q2 revenue of $61M-$64M and EPS of $0.46-$0.50, below a consensus of $63.4M and $0.49 at the midpoints. Forex is expected to have a $2M impact on sales, up from Q1's $1.75M.
    • Proto's North American revenue rose 36% Y/Y in Q1 (23% excluding the FineLine acquisition). Japanese revenue rose 23% (43.5% in constant currency), and European revenue fell 5% (up 10% in constant currency). Unique product developers/engineers served rose 44% to 11K.
    • Gross margin fell 280 bps Y/Y to 60.2% - lower additive manufacturing margins had a 110 bps impact, and forex a 220 bps impact. GAAP operating expenses rose 33% to $19.4M (compares with 27% revenue growth).
    • Q1 results, PR
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  • 6:47 PM
    • Though NetSuite (NYSE:N) beat Q1 estimates, it guided on its Q1 CC (transcript) for Q2 revenue of $170M-$172M and EPS of $0.03-$0.04, below a consensus of $172.1M and $0.06. A strong dollar is blamed (26% of Q1 revenue was international).
    • Not counting the impact of the Bronto Software acquisition (announced yesterday morning, expected to close in early June), full-year revenue and EPS guidance of $715M-$725M and $0.32 is maintained. Counting Bronto, guidance is now at $730M-$743M and $0.23. Bronto is expected to contribute $40M-$45M to 2016 revenue.
    • Calculated billings rose 28% Y/Y in Q1 to $174M, topping revenue of $164.8M. However, growth slowed from Q4's 34%, and was below revenue growth of 34%. NetSuite thinks forex had a 5% impact on billings growth, up from Q4's 2%.
    • The deferred revenue balance rose 3% Q/Q and 36% Y/Y to $323.4M. GAAP operating expenses rose 29% Y/Y to $131.4M. A record number of $250K+ deals were struck.
    • NetSuite also guided light in January.
    • Q1 results, PR
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  • 6:23 PM
    • Marketo (NASDAQ:MKTO) sold off today in spite of beating Q1 estimates and issuing above-consensus sales guidance: The cloud marketing automation software provider expects Q2 revenue of $49.5M-$50.5M (consensus was at $49.2M) and 2015 revenue of $208M-$210M (consensus was at $205.5M).
    • The Street might have been looking for better EPS guidance in light of the top-line strength: Q2 EPS guidance is at -$0.22 to -$0.24 (-$0.22 consensus), and full-year guidance at -$0.81 to -$0.85 (-$0.82 consensus).
    • Calculated billings rose 37% Y/Y in Q1 to $49.9M, topping revenue of $46M (+42%), and the deferred revenue balance grew 6% Q/Q and 47% Y/Y to $66.9M. GAAP operating expenses rose 44% Y/Y to $48.5M. The customer count rose by 198 Q/Q to 3,972.
    • Q1 results, PR
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  • 6:12 PM
     
    • Reuters reports Nutanix, a fast-growing maker of integrated server/storage systems for companies adopting hyperscale data center architectures (beloved by many Internet firms), is in talks to hire underwriters for an IPO that could value it at over $2.5B.
    • Nutanix was valued at over $2B in a $140M 2014 funding round. To a large extent, its systems are aimed at companies that want the cost, integration, scalability, and deployment time benefits of hyperscale data centers, but (unlike Google, Facebook, or Amazon) don't want to take a do-it-yourself approach to hardware and management software.
    • As of last August, Nutanix had over 800 customers; its client list includes Starbucks, the U.S. Army, Best Buy, Honda, Yahoo Japan, and eBay. Last year, VMware launched a rival platform (known as EVO:RAIL) that leverages its vSphere server virtualization platform and has been adopted by OEMs such as EMC, Dell, and Fujitsu.
    | Comment!
  • 5:51 PM
    • A BlackBerry (NASDAQ:BBRY) spokeswoman: "At this time, we are considering the closure of our offices in Sweden [and] since this may impact approximately 100 employees, we are now initiating consultations with the employees’ trade unions." The comments follow Swedish media reports stating BlackBerry is closing down its local software design ops.
    • The company's Swedish design team stems from its 2010 acquisition of UI design firm The Astonishing Tribe (TAT). While the unit has contributed to a variety of products, much of the original TAT team has long departed.
    • BlackBerry, of course, has already cut plenty of jobs over the last two years. Its R&D spend fell 46% Y/Y in the February quarter, and its sales/marketing/admin spend 52%. The company's global headcount is around 7K.
    | 96 Comments
  • 5:50 PM
    • Windstream Holdings (WIN -5.6%) has completed the spinoff of telecom assets into its REIT Communications Sales and Leasing (Pending:CSAL).
    • The tax-free transaction means that share distribution and a reverse split will execute this weekend: Windstream shareholders will receive one share of CSAL for every five Windstream shares they held of record at 5 p.m. ET on April 10, with an ex-date of April 27.
    • After that, at 8 p.m. Sunday, Windstream will execute a one-for-six reverse split of its common stock. CSAL shares should be deposited into accounts by April 30.
    • CSAL will begin trading on Nasdaq on Monday.
    • As expected, Windstream shareholders of record April 10 will get a cash dividend of $0.0659. After the reverse split, the company expects to pay $0.60 annually via quarterly dividends.
    • Also: Windstream repaid $2.4B in debt and received cash proceeds of $1.035B to retire additional debt, and boardmember Francis X. Frantz will leave Windstream's board to serve as chairman of CSAL's board.
    • Related: Windstream Announces Redemption of Debt
    | 4 Comments
  • 5:32 PM
    • Marvell (NASDAQ:MRVL) now expects FQ1 revenue of $710M-$740M, well below prior guidance of $810M-$830M and an $816.3M consensus. All other guidance has been withdrawn.
    • The chipmaker blames "weaker than previously expected PC and storage markets and lower than expected emerging market demand." The former is presumably a reference to hard drive/SSD controller sales; the latter might be a reference to Chinese baseband chip sales.
    • PC sales were down sharply in Q1, thanks in large part to weak corporate and Japanese demand. Meanwhile, analysts have  voiced concerns about soft chip orders from Chinese smartphone OEMs.
    • Shares have fallen to $13.50 AH. They fell 1.6% in regular trading after several peers offered soft guidance. Full FQ1 results arrive on May 21.
    | 2 Comments
  • 5:21 PM
    • Energous (NASDAQ:WATT) has filed to sell up to $75M worth of stock, debt, and/or warrants through future offerings. (prospectus)
    • The wireless charging tech developer had $31.5M in cash at the end of 2014, and no debt. In March, the company said it had enough cash to last until Q2 2016.
    | 3 Comments
  • 5:14 PM
    • Thanks to a better-than-feared Q1 report that included lower-than-expected spending figures, Google (NASDAQ:GOOG) rallied to its highest levels of the month today. Class C shares are now up 16% from a January low of $487.56, and 6% below a 52-week high of $599.65.
    • At least 6 firms have hiked their targets. Deutsche's Ross Sandler (Buy) notes net profit margin was flat in Q1 "after imploding for three years," something he attributes to both cost discipline and management changes.
    • Looking at the top-line, Morgan Stanley (Equal-Weight) is worried U.S. revenue growth slowed to 11% Y/Y (the slowest pace since Q4 2009). With YouTube having likely grown over 40% Y/Y, MS thinks U.S. search revenue (higher-margin) was only up 9%-10%.
    • On the CC (transcript), CFO Patrick Pichette stated a mix shift towards YouTube ads - any un-skipped video ad is counted as a click - was pressuring Google's ad prices (CPCs), and not mobile. "Excluding the impact of YouTube TrueView ads, growth in site clicks would be lower, but still positive, and our CPCs would be healthy and growing year-over-year." Sales chief Omid Kordestani noted YouTube's TruView advertiser count rose 45% in 2014.
    • BofA/Merrill (Buy) is pleased with the CPC disclosure, as well as sales growth and margin stability. "We continue to see opportunity for sentiment improvement on new products (I/O in May), anticipation of new CFO, spending trajectory change, and YouTube strength.
    • Meanwhile, eyewear maker Luxottica has announced it's working with Google on a commercial version of Google Glass that will launch soon (no ETA is given). Sales of the $1,500 Explorer Edition ended in January.
    • Glass chief Ivy Ross previously stated the next version will be cheaper, have a longer battery life, and a better display and sound quality. Himax (NASDAQ:HIMX) is expected to remain Glass' microdisplay supplier, and Intel is expected to be its CPU supplier. Eric Schmidt affirmed Google's commitment to Glass last month.
    • Prior Google earnings coverage
    | 23 Comments
  • 4:24 PM
    • After pricing its 5.11M-share IPO at $17 (in the middle of a $16-$18 range), API management software vendor Apigee (Pending:APIC) opened at $20 but gradually sold off to close at $16.68, down 1.9%.
    • Apigee, whose platform helps companies develop, secure, publish, monitor, and (if they wish) monetize APIs for their apps, is currently worth $485M. For the 6 months ending Jan. 31, the company had revenue of $32.6M (+39% Y/Y) and a net loss of $26.8M. Intel (bought API management software firm Mashery in 2013) is a notable rival.
    • Prospectus, IPO analysis
    | 3 Comments
  • 3:50 PM
    • Moody's confirms its ratings on VimpelCom (VIP -3%) at Ba3 on the expectation that the telecom's financial metrics will be recovering in 2016.
    • The ratings agency notes that risks from the company's leverage (via VimpelCom Holdings) raising above a key threshold will be limited.
    • "Despite challenges, we expect VimpelCom to remain the third largest mobile operator in Russia in terms of subscriber numbers," says Moody's Artem Frolov.
    • The agency expects only a low single-digit percent decline in ruble revenues and earnings, for economic reaosns, and that VimpelCom has a solid cash balance, particularly after drawing $3.8B for the sale of its stake in Algeria's Djezzy.
    • Previously: VimpelCom completes sale of Algerian stake for $2.6B (Jan. 30 2015)
    | Comment!
  • 3:17 PM
    • Today's notable tech gainers include Chinese microblogging leader Weibo (WB +9.4%), VoIP/4G signaling infrastructure provider Sonus (SONS +5.9%), Chinese mobile game publisher Sky-mobi (MOBI +7.2%), Chinese auto site Bitauto (BITA +5.6%), and cloud e-mail encryption software provider Zix (ZIXI +3.2%). The Nasdaq is up 0.7%.
    • Notable decliners include set-top/pay-TV infrastructure provider Arris (ARRS -4.5%), M2M/fleet management hardware and software provider CalAmp (CAMP -6.6%), and optical component vendor NeoPhotonics (NPTN -5.9%).
    • Weibo, Sky-mobi, and Bitauto are taking part in a fresh Chinese tech rally. Weibo, also up strongly on Wednesday, is now up 21% from Tuesday's close. Zix is up 11% since posting Q1 results and reiterating its full-year sales guidance on Tuesday; a 14.7% Y/Y Q1 increase in orders to $14.3M is going over well. Sonus' gains come two days after the company posted Q1 results that were slightly better than the guidance provided in its March 24 warning.
    • Arris is giving back some of the huge Thursday gains seen on account of its $2.1B deal to buy set-top rival Pace (and take advantage of its lower tax rates); Synergy Research estimates Arris/Pace will have a combined 17% global video infrastructure share (nearly even with Cisco's 18%), and a  set-top share of ~30%. CalAmp is returning some of the huge Wednesday gains seen due to its FQ4 beat and solid FY16 guidance.
    • Previously covered: Chip stocks (a lot of them), Amazon, Microsoft, 3D Systems, Unisys, Silicon Motion, Rackspace, Netgear, AMSC, Verisign, Acacia, Infosys, Juniper, Ubiquiti, Maxwell, Synaptics, HomeAway, Gigamon
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  • 2:48 PM
    | 2 Comments
  • 2:46 PM
    • Unisys (NYSE:UIS) is down sharply after missing Q1 revenue estimates (while beating on EPS) thanks to a 16% Y/Y drop in non-U.S./Canada revenue. A strong dollar exacted a heavy toll: Non-U.S./Canada sales were down only 5% in constant currency.
    • Along with its results, the mainframe/IT services provider (4 months removed from getting a new CEO) has announced it's launching a restructuring expected to cut headcount by 8%, and yield $200M/year in savings by the end of 2016. $300M in restructuring charges are expected over the next several quarters.
    • The services backlog was $4.5B at the end Q1, -$300M Q/Q (seasonality) but flat Y/Y. Services revenue fell 6% Y/Y to $639M, while Technology (mainframe/server) revenue rose 3% to $82M. U.S. federal revenue +13%,, other public sector -10%, financial industry -10%, commercial industry -7%.
    • Gross margin fell 130 bps Y/Y to 16.2%, and operating expenses fell 4% to $147M. $128.8M was spent on SG&A, and $18.2M on R&D.
    • Q1 results, PR
    | Comment!
  • 2:32 PM
    • "By calendar 2016, we believe organic [constant currency] growth returns to low single digits with growing cloud business and earnings growth can potentially be restored to 10% or so with the leverage of share repurchase, and continued strong cash flow generation," writes Nomura's Rick Sherlund, upgrading Microsoft (NASDAQ:MSFT) to Buy following its FQ3 beat. His target remains at $50.
    • Sherlund, who downgraded in January on account of Microsoft's FQ2 numbers, still thinks the company will be in a transition period for a few quarters, and notes certain core businesses (e.g. Windows, traditional Office licenses) were soft. However, he thinks total Office revenue (traditional + 365) could start rising again in 2016 "given high interest and migrations among business users to Office 365 and new cross platform productivity tools for Windows, iOS and Android."
    • "In our view, Microsoft is well ahead of its large cap value peer group in the transition to the cloud," says UBS' Brent Thill (Buy, $50 target). Pac Crest's Brendan Barnicle (Outperform, $50 target) observes Office 365 still covers less than 10% of the Office installed base, leaving plenty of room for growth. He estimates Azure is on a $1.5B/year revenue rate (compares with $5.16B in trailing revenue for AWS and a $6.3B/year run rate for Microsoft's broader commercial cloud ops).
    • On the CC (transcript), CFO Amy Hood stated Microsoft's FY15 (ends in June) opex guidance ($32.4B-$32.5B) is now $2B lower than where it initially was. Adjusting for forex and the Nokia deal, opex rose just 1% Y/Y in FQ3 thanks to job cuts. Meanwhile, Satya Nadella mentioned Office iOS/Android app downloads have topped 100M.
    • Prior Microsoft earnings coverage
    | 8 Comments
  • 2:03 PM
    • Though the Nasdaq is up 0.7% thanks to market-pleasing earnings from Google, Microsoft, and Amazon, chip stocks (SOXX -2.1%) are adding to their Thursday losses after Freescale, Altera, Microsemi, and Maxim joined the ranks of chipmakers offering soft Q2 guidance; Texas Instruments, Xilinx, and Qualcomm did so on Wednesday afternoon.
    • NXP (NXPI -4.3%), set to merge with Freescale in a cash/stock deal, is selling off ahead of its April 29 Q1 report. RF chipmakers Skyworks (SWKS -3.8%), Qorvo (QRVO -4.4%), and Avago (AVGO -5.2%) are also seeing steep declines.
    • Other decliners include a slew of telecom/networking, microcontroller, and analog/mixed-signal chipmakers. The group includes Marvell (MRVL -3%), ON Semi (ON -6.9%), Atmel (ATML -3.3%), Cypress (CY -4%), Lattice (LSCC -3.9%), Semtech (SMTC -6.9%), Cavium (CAVM -6%), PMC-Sierra (PMCS -2.9%), InPhi (IPHI -3.8%), and Silicon Labs (SLAB -2.9%). Chip packaging/testing firm Amkor (AMKR -5.7%) is also off; its Q1 report arrives on Monday.
    • As was the case with TI and Xilinx, soft telecom equipment chip demand was often blamed by those guiding light yesterday afternoon. Freescale (FSL -3.5%) stated it expects network processor division sales to be down Q/Q and RF (base station power amplifier) division sales to be flat. Microcontroller, automotive, and analog and sensor division sales are expected to rise.
    • Altera (ALTR -3.3%) stated its "telecom and wireless business, and particularly our wireless business globally looks to be quite weak in [Q2], while the rest for our business will in aggregate be flat to slightly up." Regarding its Q1 miss, the company notes "Industrial, test, compute and storage, and to a lesser extent military, fell short of our forecast" (share loss to Xilinx?).
    • Maxim reports seeing "broad-based softness in communications infrastructure demand" and soft industrial bookings to go with healthier mobile/auto demand. The Galaxy S6 appears to be giving a lift to Maxim's mobile sales.
    • Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
    | 1 Comment
  • 1:23 PM
    • In addition to missing FQ3 revenue estimates (while beating on EPS), Maxim (NASDAQ:MXIM) has guided for FQ4 revenue of $570M-$610M and EPS of $0.35-$0.41, below a consensus of $618.5M and $0.44.
    • On its CC (transcript), the analog/mixed-signal chipmaker stated telecom/data center chip sales are expected to fall in FQ4, thanks to "broad-based softness in communications infrastructure demand" - TI, Xilinx, and Altera have also reported seeing soft telecom equipment chip sales.
    • Maxim also said it's "taking a cautious view" on industrial chip sales (they're expected to be flat Q/Q) due to "weaker than seasonal bookings trends." Mobile chip sales (lifted by Samsung's strong Galaxy S6 sales) are expected to be healthier, as are automotive sales.
    • FQ3 results, PR
    | Comment!
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