Today - Friday, October 9, 2015
- Less than two hours after Reuters reported the company is in talks with P-E firms about potentially selling itself, SolarWinds (SWI +6.5%) announces it "has commenced a review of its strategic alternatives," including a possible sale or other business combination. JPMorgan and law firm DLA Piper have been hired to help out.
- Shares have pared the initial gains seen following Reuters' report, but remain sharply higher.
- Baird has launched coverage on Sigma Designs (NASDAQ:SIGM) with an Outperform rating and $14 target.
- The launch follows a nosedive that occurred in the wake of Sigma's Sep. 9 FQ2 report (occurred in spite of an FQ2 beat and above-consensus FQ3 guidance).
- Shares currently go for 17x an FY17 (ends Jan. '17) EPS consensus of $0.46, and less than 1x FY17E sales after backing out net cash.
- Arguing Rapid7's (NASDAQ:RPD) recent selloff provides a chance to obtain growth at a reasonable price, Barclays Saket Kalia has upgraded the security threat exposure management (TEM) and incident-detection/response software/services firm to Overweight, while keeping his target at $28.
- Kalia expects Rapid7's revenue to grow at nearly a 30% CAGR through 2017, and notes shares are trading at a discount to peers. He adds growing cybersecurity threats are transforming TEM from a "compliance/check-the-box tool to a proactive, high ROI security tool."
- Shares are up 52% from their $16 July IPO price, but down 9% from a post-IPO opening trade of $26.75.
- Cowen has reiterated an Outperform rating and $60 target for Universal Display (NASDAQ:OLED). Shares have rallied towards $39.
- Earlier this week, Cowen argued Samsung's Q3 pre-announcement boded well for Universal, given Samsung's better-than-expected numbers appeared to stem from OLED and logic IC strength. "When we visited Seoul in September, Samsung noted rising [OLED panel] shipments to other OEMs along with better Y/Y compares for Galaxy models. We note recent [OLED-supporting] models including Google Nexus 6P, and Microsoft Lumia 950/950 XL."
- Short-covering could be helping out: Universal had 3.7M shares (nearly 10% of the float) shorted as of Sep. 15.
- Reuters reports SolarWinds (SWI) is talking with several P-E firms about potentially selling itself.
- The systems/app management software vendor's shares have spiked higher. They're still more than $7 below a 52-week high of $53.44.
- A slew of enterprise tech firms have been acquired by P-E over the last two years. Examples include Riverbed, Tibco, and Informatica.
- Amid a refocus on Sweden and Europe, TeliaSonera (OTCPK:TLSNY +1.2%) is shuffling its Danish team, naming that unit's CEO Soren Abildgaard as the company's chief commercial officer and putting him in charge of its merged commercial/tech unit.
- The combination of the commercial and technology groups came ahead of the departure of veteran technology SVP Malin Frenning.
- Morten Bentzen, who has been head of enterprise in Denmark, will replace Abildgaard as Telia Denmark's CEO.
- The Swedish company decided last month to get out of Eurasia to focus more on Western business.
- Earlier this week, Danske Bank downgraded TeliaSonera to Hold, from Buy.
- Considering the stock deeply undervalued on a sum-of-the-parts basis, JPMorgan's Mark Strouse has hiked his SunEdison (SUNE +0.8%) target by $2 to $21, while reiterating an Overweight rating.
- The target hike reflects "a higher than previously estimated value" for SunEdison's project development ops. Strouse: “Since SUNE intends to only sell completed projects to warehouses in the future, we are revising our cash flow estimates, eliminating the gross margin deferrals ... Global wind and solar generating capacity should reach about 1.4TW as soon as 2020, yielding up to ~$170 billion of cash available for distribution.”
- He admits capital constraints could pose a risk to future development efforts, but adds SunEdison's warehouse facilities provide it with access to 3rd-party funds.
- Prior SunEdison coverage
- BT Group (BT -0.6%) is keeping up the pressure in its response to a strategic review by UK telecom regulator Ofcom, saying that there's no case for divesting its Openreach wholesale access business -- a move it says would hurt the UK's "digital health" -- and pointing regulators instead toward the dominance of pay-TV rival Sky (OTCQX:SKYAY -0.9%).
- The regulator is conducting its first strategic review of the sector in 10 years amid some key and rapid change.
- BT in February agreed to a $19B acquisition of EE, the UK's top mobile firm, raising vocal calls from competitors (especially Vodafone) over network access. Liberty Global (LBTYA +0.3%) and Vodafone (VOD +0.3%) discussed -- and then dropped -- a merger or asset swap in Europe. And the UK's second- and fourth-largest mobile firms are pursuing a $15.7B merger.
- This summer, a determined BT CEO Gavin Patterson threatened the specter of a decade of litigation over Openreach if the company were forced to unload it. Now it says that the existing "functional separation" of its units has served the UK "exceptionally well over the past decade."
- Elsewhere, Citigroup today reiterated its Neutral rating on BT Group.
- Previously: BT Group up as Societe Generale reiterates Buy rating (Sep. 23 2015)
- Previously: BT Group recommits to 10M homes with ultrafast broadband by 2020 (Sep. 22 2015)
- Previously: Vodafone, rivals renew call for BT Openreach split (Sep. 21 2015)
- Twitter (TWTR +1%) has updated to Twitter's Amplify video ad platform to let advertisers buy pre-roll ads for various content categories, rather than having to set up a deal with a particular content publisher. The solution also lets advertisers can target specific audience groups watch a type of content.
- Publishers currently supporting the service include Sports Illustrated, The Weather Channel, Fox, and AOL. They receive a cut of ad revenue via automated payments.
- The solution has much in common with how YouTube (still by far the biggest player in online video ads) monetizes its content. One notable difference: Twitter is taking a 30% cut on ad sales, less than YouTube's 45%. Facebook has also been gradually rolling out new video ad buying options and formats. However, the company has said it's uninterested in pre-roll ads.
- Shares have rallied strongly during a week that has seen Jack Dorsey named permanent CEO, and the Moments (Project Lightning) curated event stream service roll out.
- LastPass provides a single sign-on service that stores password data for sites and cloud apps, and automatically enters it when a login page appears. It also allows online shopping profiles with saved billing data to be set up.
- LogMeIn (LOGM -1.3%) is buying LastPass for $110M in cash up-front, plus up to $15M in milestone/retention payments. The deal is expected to close in "the coming weeks."
- LastPass' service, which is offered via free, premium, and enterprise pricing tiers, will be integrated with LogMeIn's existing identity management offerings, including its Meldium enterprise single sign-on service (supports 2,350 apps).
- LogMeIn: "In the near-term, both the Meldium and LastPass product lines will continue to be supported, with longer-term plans to center around a singular identity management offering based on the LastPass service and brand." Microsoft and VMware are among the other companies to have shown an interest in enterprise identity management services for cloud apps.
- In Tokyo to meet with execs at parent SoftBank, Sprint's (NYSE:S) new CFO Tarek Robbiati elaborated on reports of coming cost cuts -- confirming news that the company will cut $2B via operating costs and finding another $500M in equipment spending that can be reduced.
- “Our cost structure is bloated,” Robbiati said, without identifying the number of jobs that could go by the wayside. The company employed about 31,000 people by the end of March.
- Sprint has about $20B in operating expenses and an industry-heavy $7.1B in capital expenditures. Cuts will be targeted and not necessarily across the board, the company says.
- SoftBank (OTCPK:SFTBY), for its part, has taken its stake in Sprint to 83% through steady buys.
- The cuts make Sprint look like a company that's "playing for time, and trying to conserve cash to make it until a new administration when they can try again to find a merger partner,” says bearish Craig Moffett. “There doesn’t seem to be a plan B any more.”
- Previously: Sprint memo: Up to $2.5B in cost cuts will mean job reductions (Oct. 01 2015)
- Previously: Sprint falls another 6%; in 'valley of darkness' amid network fixes (Sep. 29 2015)
- Previously: Sprint confirms it'll skip spring broadcast airwaves auction (Sep. 28 2015)
- First Analysis has upgraded Castlight (NYSE:CSLT) to Overweight. The firm's target is $8.
- The upgrade appears to be a valuation call: It comes with the cloud healthcare-management software firm down 71% from its $16 early-2014 IPO price going into today. Shares had fallen 60% since First Analysis launched coverage at Equal Weight on Dec. 5, 2014.
- Castlight has risen to $4.82 premarket.
- Telecom Italia (NYSE:TI) has hired Deutsche Bank to sell its stake in Infrastrutture Wireless Italiane, or Inwit, its spun-off mobile towers unit, Bloomberg reports.
- TI has a 60% stake worth €1.6B ($1.8B) in the towers firm, which has gained 20% in price since an initial public offering earlier this year.
- Bidders could include Cellnex (itself a towers unit spun off from Abertis) and infrastructure fund F2i SGR -- with whom TI was linked in talks about a purchase of a minority stake in fiber-optic carrier Metroweb. The TI board is set to meet in a week to discuss that potential deal.
- In Milan trading, Telecom Italia is up 2.2%; Inwit is up 1.4%.
- Previously: Telecom Italia mulling 40% stake in fiber carrier Metroweb (Oct. 08 2015)
- Previously: Reuters: Telecom Italia wants to close on Inwit deal by year-end (Sep. 28 2015)
- Software company Daegis (NASDAQ:DAEG) +93% premarket after agreeing to be acquired by OpenText (NASDAQ:OTEX) for $0.82/share, or ~$13.5M in cash.
- DAEG offers products for information governance, application migration, data management and application development; the company says ~20% of Fortune 100 companies use its solutions.
Thursday, October 8, 2015
- 11 months after announcing it plans to enter the ARM server CPU market, Qualcomm (NASDAQ:QCOM) says it has begun sampling to "tier-1 data centers" (possibilities include Amazon, Google, and Facebook) a development platform featuring a pre-production version of a 24-core CPU.
- Details are limited for now, though Qualcomm does state it's using custom ARM cores, as it does for many Snapdragon mobile processors. It also promises an upcoming server CPU "will be competitive in performance and price with current and future Intel (NASDAQ:INTC) chips," and that it will arrive "sooner rather than later" (no specific ETA is provided).
- AppliedMicro (NASDAQ:AMCC) and Cavium (NASDAQ:CAVM) are early leaders in the budding market for ARM server CPUs. Others in the space include AMD, Texas Instruments, and Marvell. Various Web/cloud service providers have shown interest in deploying the chips. But for now, they generally continue buying Intel Xeon CPUs by the thousands.
- Also: Qualcomm is partnering with FPGA vendor Xilinx (NASDAQ:XLNX) to create systems that pair Qualcomm server CPUs with Xilinx FPGAs to provide workload acceleration. Intel is doing something similar with Xilinx archrival Altera, which it's in the process of acquiring.
- A partnership has also been formed with InfiniBand/Ethernet connectivity hardware and chip developer Mellanox (NASDAQ:MLNX). Mellanox's 10-100G InfiniBand and Ethernet gear will be optimized for Qualcomm's CPUs.
- Some of the loudest cheers for baseball's Toronto Blue Jays, as they end a 21-year playoff drought, may be coming from the suites of Rogers Communications (RCI +1.4%), which bought the team 15 years ago.
- Hitting the AL playoffs (and the revenue boost that entails) has helped drive the team's value up to an estimated $1.5B, making the gain a ten-bagger for Rogers.
- “The Blue Jays are more valuable in Rogers Communications’ hands than any other ownership group by virtue of the company owning the team, the ballpark, the radio and TV channels where the games are broadcast, and bringing it all under one umbrella,” says researcher Peter Schwartz.
- That success doesn't just accrue to team value; the company's Sportsnet channel has posted its highest ratings ever, and ad revenue is up in low double digits -- not counting the playoffs.
- Revenue for Rogers from baseball could rise by C$60M (about $40M), says Macquarie's Greg MacDonald, though that is a drop in the bucket compared to team ROI.
- Previously: Rogers names new media chief to succeed departing Pelley (Jul. 07 2015)
- Boom times for African mobile companies may be coming to an end with growth about to slow down sharply, says industry group GSMA. And that could encourage consolidation.
- Subscriber growth of 13% from the past five years will become 6% in the next five, as Africa faces its own "rural challenge" despite relatively low penetration.
- Low spending power in rural areas means expansion is even more difficult than in the U.S., though not even half the continent's population will have subscribed to a mobile service by 2020, the study says.
- That could drive consolidation so players can achieve economies of scale required to take on that expense. Already dealing: Vodacom (OTC:VODAF) bought Neotel to force competition with Telkom (OTCPK:TLKGY +3.9%); Millicom (OTCPK:MIICF -0.7%) bought Tanzania's Zantel from the UAE's Etisalat. Other key players: Orange (ORAN +0.6%), making a major expansion in the region; MTN Group (OTCPK:MTNOY +1.2%), the continent's biggest wireless operator.
- Previously: Orange shuffles Africa/Middle East leadership (Oct. 01 2015)
- After a September pummeling, high-yield bonds are having an entirely different month, and telecom bonds (worst last month) have "knocked the cover off the ball so far in October."
- That's according to Marty Fridson of Lehmann Livian Fridson. Telecom bonds had tumbled to a -5.34% total return last month, displacing usual suspects of energy/metals/mining, and led by the drop in Sprint (S -0.9%) bonds after a Moody's downgrade. It wasn't just Sprint, though, as wireline, wireless and satellite were well represented by other companies with -5% returns or worse.
- This month is a different story. Junk bonds overall are up 0.65% in the first six days, and longer-dated Sprint issues have returned 6.58%-10.58% for that period, as the spread widening may have gotten overdone.
- "By the end of September, 10 Sprint issues had option-adjusted spreads wider than the median for the CCC1 category (using BofA Merrill Lynch’s blended notation), which was 838 basis points, with the widest Sprint bond at 1,022," Fridson says.
- Frontier Communications (FTR +0.6%) is also bouncing back, with its bonds up as much as 5.58% for the first six days.
- Day two of Amazon's (NASDAQ:AMZN) AWS re:Invent conference has brought the beta launch of AWS IoT, a service for processing and analyzing data from numerous Web-connected embedded devices (cars, home appliances, industrial equipment, medical devices, etc.).
- AWS exec Jeff Barr: "Although critics sometimes dismiss [IoT] as nothing more than 'put a chip in it,' I believe that the concept builds upon some long-term technology trends ... To me, the most relevant trends are the decreasing cost of mass-produced compute power, the widespread availability of IP connectivity, and the ease with which large amounts of information can be distilled into intelligence using any number of big data tools and techniques."
- Microsoft, IBM, and Salesforce are among the companies to have already announced cloud-based IoT analytics/data-processing services. AWS IoT follows Amazon's March purchase of IoT service provider 2lemetry.
- Also launching today: AWS Mobile Hub, a solution promised to simplify "the process of building, testing, and monitoring mobile applications that make use of one or more AWS services." A console UI gives app developers the ability to pick "higher-level features" combining one or more services, SDKs, and pieces of code. Barr: "What once took a day to properly choose and configure can now be done in 10 minutes or so." A slew of AWS mobile app development services have launched over the last 3 years.
- Meanwhile, Amazon has received good reviews for yesterday's AWS announcements. Many observers note the new offerings, such as the Snowball storage/data-transfer appliance and database-migration services (not to mention a new Accenture business unit focused on AWS migrations), aim to make it as easy as possible for enterprises to ditch traditional IT infrastructures in favor of AWS' public cloud.
- The NYT's Quentin Hardy: "Previously, old-guard enterprise companies dismissed A.W.S. and cloud computing, then grudgingly ceded them a place for start-ups and new applications. But with about three-quarters of information technology spending going to maintaining legacy systems, they could afford to. Wednesday, Amazon went after the rest of their business."
- Comcast (CMCSA +2.2%) says it's engaging in yet another cableco "speed bump" for most of its customers in the Western U.S.
- It's set up new tiers -- Performance Pro, at 75 Mbps, and Blast Pro, at 150 Mbps.
- Customers currently getting 50 Mbps will be bumped to the 75 Mbps speed, and those getting 105 Mbps will get an increase to 150 Mbps, for no extra charge.
- Speed increases are coming to a dozen Western states by the end of the month, and to customers in Houston and Washington effective tomorrow.
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