Seeking Alpha
  • Friday, May 22, 2015

  • 7:22 PM
    • Amazon (NASDAQ:AMZN) is prepping Handmade, a marketplace for handcrafted goods that takes direct aim at market leader ETSY. The WSJ reports Etsy sellers have received invites offering a sneak peek at Handmade, and directing them to a questionnaire regarding which products they offer.
    • Amazon's huge customer base and fulfillment infrastructure could quickly make it a thorn in Etsy's side. At the same time, Etsy's cult following and large network effect of craft/vintage goods buyers and sellers arguably make it tough to dislodge. Also (as noted by the WSJ), Etsy's 3.5% cut and $0.20 listing fee might make it cheaper than Handmade - Amazon currently takes up to a 15% cut on marketplace sales.
    • Amazon is two months removed from launching a home services site that competes against Angie's List. The company has also recently launched a restaurant takeout/delivery service that competes against GrubHub.
    • ETSY -1.2% AH to $16.96. Shares plunged on Wednesday thanks to the company's Q1 numbers, briefly dipping below April's $16 IPO price.
  • 6:50 PM
    • Slides leaked by a Chinese site Intel (NASDAQ:INTC) plans to launch the first CPUs for its 14nm Skylake platform (successor to the current-gen/14nm Broadwell line) in August/September, and gradually flesh out its Skylake lineup over the following 4-5 months. Intel has said Skylake will launch in 2H15.
    • Desktop Skylake chips codenamed Skylake-S will reportedly arrive in August and September - with Intel skewing its Broadwell launches towards notebooks and tablets, some PC OEMs are opting to pass on launching desktop Broadwell parts and wait for Skylake.
    • Reportedly due in September: High-end notebook CPUs (Skylake-H), mainstream notebook CPUs (Skylake-U), and ultrabook/tablet CPUs (Skylake-Y). Additional Skylake-H parts are said to be due in October/November, and additional Skylake-U/Y parts in January.
    • Whereas Broadwell prioritized lowering power draw and enabling new form factors (see Apple's 12" retina MacBook), Skylake appears to emphasize CPU/GPU performance gains as much as power savings. The PC industry is counting on Skylake and Windows 10 to spark a 2H15 rebound following a rough start to the year.
    • Separately, Digitimes reports Intel and Chinese mobile SoC partner Rockchip have stepped up their efforts to sell Rockchip's 3G Atom SoC (part of the SoFIA line, launched in March) to white-box Chinese tablet makers. As part of the effort, Intel is said to be offering a $3 subsidy for each device using the chip.
    • 7" tablets using the Rockchip SoC reportedly wholesale for just $45. With the help of generous marketing subsidies, Intel shipped 46M tablet CPUs last year, beating a goal of 40M.
  • 5:25 PM
    •, a provider of home/business security, video monitoring, energy management, and automation services, has filed for an IPO under the symbol ALRM. The underwriters: Goldman, Credit Suisse, BofA/Merrill, Stifel, Raymond James, William Blair, and Imperial Capital. (prospectus)
    • claims 2.3M subscribers and 25M connected sensors/devices for its services, which are backed by online/mobile monitoring and alerting. Sales and hardware installations are handled by a network of 5K+ service providers. Rivals include Google's Nest/Dropcam smart thermostat and home camera unit, as well as connected home security services from the likes of AT&T and Comcast.
    • The company had 2014 revenue of $167.3M (+28% Y/Y), and net income of $13.5M. $111.5M of the revenue came from software/subscriptions, and $55.8M from hardware. Q1 revenue totaled $46M (+25% Y/Y), and net income $3M.
    • VC firms TCV and ABS Capital respectively own 42.9% and 41.6% stakes. The FT reported last year ABS was thinking of taking public, and that the company was believed to be worth $1.5B-$2B.
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  • 5:03 PM
    • e-Future (NASDAQ:EFUT): Q1 EPS of RMB1.25 vs. RMB1.21 in 1Q14
    • Revenue of RMB23.6M (+3.1% Y/Y)
    • Press Release
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  • 4:20 PM
    • Ruckus (NYSE:RKUS) discloses Bill Kish, one of the company's two co-founders and and currently its CTO, is resigning, effective May 29. He's also stepping down from the board.
    • No explanation has been given for Kish's departure, nor has a replacement been named.
  • 4:10 PM
    • A Florida federal judge has granted an Ericsson (NASDAQ:ERIC) motion for summary judgment on three 4G patents asserted by WiLAN (NASDAQ:WILN). Ericsson was ruled not to infringe two of the patents, and the third was deemed invalid. The trial for the related case has been cancelled.
    • WiLAN says it's reviewing the decision with its trial counsel, and notes the counsel's preliminary view is that "there are grounds to appeal" the ruling to a federal appeals court (the CAFC).
    • WiLAN fell to $2.02 in regular trading (its 52-week low). The company had sued both Ericsson and Alcatel-Lucent for infringing the aforementioned patents; Alcatel had settled.
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  • 3:43 PM
    • The FCC will charge satellite TV providers like Dish Network (NASDAQ:DISH) and DirecTV (NASDAQ:DTV) a per-subscriber fee as it does cable and telephone TV providers, it said in an order -- and it is considering lowering the fees for cable and IPTV now that satellite firms are part of the mix.
    • The DBS firms had been paying a per-license fee. The new per-subscriber fee looks to be $0.12/year, which would offset the fees for cable and IPTV to $0.95 from $1.01.
    • The fees fund the FCC operations and are based on amount of work dealing with a particular service; Dish and DirecTV argued that DBS generated "nowhere near the regulatory costs of cable."
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  • 2:56 PM
    • HP (NYSE:HPQ) has rallied towards $35 after beating FQ2 EPS estimates (while missing on revenue) with the help of spending declines made possible by job cuts, and providing in-line FY15 EPS guidance.
    • Also going over well: 1) HP forecast its PC/printing spinoff will yield "dis-synergies" of $400M-$450M, less than many expected. 2) CFO Cathy Lesjak stated on the CC (transcript) HP aims to "take up to $2 billion of gross annualized costs" out of its struggling enterprise services ops (-16% Y/Y in FQ2) over the next 3 years.
    • Morgan Stanley (Overweight rating) notes that while PC revenue fell 5% Y/Y, units rose 2% thanks to share gains, and that HP also appears to be gaining server share; x86 server revenue was up 11% Y/Y, while high-end systems fell 15%.
    • Wells Fargo (Outperform): "We believe the split should realize greater value and provide more nimble structures for decision making. We believe both entities will have room to lever up to return cash to shareholders or drive growth/cash flow through M&A,"
    • Needham (Hold) is more worried about top-line weakness, even if some "pockets of positives" existed. "At surface level, it was another quarter (14 out of the last 15) where revenue has fallen yoy with this time in every division (sigh)."
    • Lesjak noted printing sales were "pressured by a highly competitive market and aggressive pricing," thanks in part to forex. CEO Meg Whitman stated IT outsourcing sales (-20% in FQ2) have been hurt by "large-scale secular trends" such as austerity programs, data center automation, and a shift towards a consumption sales model from a contract model; cloud services adoption might also be a factor.
    | 1 Comment
  • 2:28 PM
    • Though no major news has arrived, VirnetX (VHC -5.5%) has gradually sold off this week to its lowest levels since January. Volume has generally been moderate.
    • The security/communications IP licensing firm is 11 days removed from seeing an unfavorable USPTO ruling and announcing it has hired IP monetization firm IPVALUE, and 8 days removed from launching its Gabriel secure collaboration suite.
  • 2:21 PM
    • Down in AH trading yesterday after providing mixed FQ2 results and light FQ3 revenue guidance thanks to soft SAN product sales, Brocade (NASDAQ:BRCD) is doing much better today. Shares are within $0.40 of a 52-week high of $12.96.
    • Likely helping: CEO Lloyd Carney stated on the CC (transcript) Brocade thinks its IP networking revenue (+19% Y/Y in FQ2, expected to grow 9%-13% Q/Q in FQ3) will now likely beat an 8%-12% target growth range in FY15 (ends Oct. '15). Strong sales to U.S. federal and service provider clients, as is router sales growth.
    • SVP Jason Nolet mentioned Brocade received 62% of its FQ2 IP networking revenue from data center sales (as opposed to campus sales), an all-time high. He added strong demand for high-density 10G/100G blades boosted router demand (+40% Y/Y), and that Brocade's VDX Ethernet switch line (+14%) is benefiting from new switch launches and EMC IP storage deployments.
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  • 1:47 PM
    • Digitimes reports Samsung "has stepped up" its purchases of chips from Himax (NASDAQ:HIMX) and other Taiwanese suppliers. The site adds Himax, traditionally an LCD driver supplier to Samsung, will begin shipping OLED drivers to the company in Q3.
    • Soft early-2015 sales to Samsung and Chinese smartphone OEMs have weighed on Himax. There have also been concerns Himax will lose share at Samsung as the latter begins more widely using OLEDs (long a staple on its high-end phones) within cheaper phones.
    • Shares are up 8.4% since Rosenblatt upgraded on Wednesday morning.
  • 1:19 PM
    • CNBC's David Faber reports Microsoft (MSFT -0.7%) held "significant talks" earlier this spring about acquiring Salesforce (CRM +2.4%), but the companies "remained far apart on a price." Microsoft was reportedly willing to offer $55B for Salesforce (current market cap of $49.3B); Salesforce CEO Marc Benioff is said to have wanted as much as $70B.
    • Faber adds the talks aren't expected to restart anytime soon. Aside from the price difference, Satya Nadella was reportedly "somewhat reluctant to pull the trigger on a deal of such size and consequence for his company."
    • Bloomberg reported on May 5 Microsoft is "evaluating a bid" for the cloud CRM software giant - Microsoft's name had already loomed large in speculation about a rumored suitor. Reuters reported soon afterwards Microsoft wasn't currently weighing an offer.
    • Salesforce has spiked higher on the report. Shares are up 6.3% since the company posted an FQ1 beat and reported 31% Y/Y deferred revenue growth on Wednesday afternoon.
  • 12:51 PM
    • As part of a broader chip stock coverage launch, Mizuho's Vijay Rakesh has assigned Buy ratings to Micron (MU +2.2%), Avago (AVGO +1.8%), and Synaptics (SYNA +2.6%). His targets are respectively $39, $150, and $115.
    • Like other bulls, Rakesh sees Micron's PC DRAM sales (recently under pressure) improving in 2H15, aided by the launch of Windows 10 and Intel's 14nm Skylake CPU platform. He also downplays concerns about Micron's 20nm DRAM transition, thinks tri-level cell (TLC) and 3D NAND ramps will drive NAND gross margin improvement, and likes the hiring of Ernie Maddock as CFO.
    • Rakesh forecasts Avago will continue benefiting from strong FBAR filter sales (boosted by 4G phone growth), growing smartphone dollar content, and the Chinese 4G ramp (aided by recent carrier tariff cuts). "AVGO is completely booked on its FBAR filter capacity through 2015 and the ramp of its industry leading 8-inch FBAR wafer capacity will likely lead to significant operational efficiencies versus its peers"
    • He also notes Cisco is seeing strong sales for its ASR 9000 edge router line, which Avago has exposure to, and expects the Emulex deal to boost margins and EPS.
    • TDDI (integrated touch/display driver) ICs, fingerprint sensor sales, and Chinese 4G demand are expected to act as tailwinds for Synaptics. Rakesh forecasts the company will produce FY16 (ends June '16) free cash flow of $304M, and thinks this could pave the way for buybacks.
    • Synaptics has made fresh highs, and Avago is within $5 of a high of $136.28. Micron remains 25% below a high of $36.59.
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  • 12:50 PM
    • Despite an LTE buildout that's mostly done, AT&T (T -1.2%) is still out looking for more 700 MHz spectrum, filing to buy three C Block licenses to cover parts of Kentucky, Ohio and West Virginia, as well as other licenses to cover southern and eastern Illinois.
    • After the transaction with East Kentucky Network, AT&T would hold 113-145 MHz (43-55 MHz below 1 GHz) of spectrum in those three CMAs, and the Illinois deal with Cellular Properties would leave it with 101-173 MHz (31-68 MHz below 1 GHz) of spectrum in those areas.
    • AT&T claims it covers 308M with LTE and so, like T-Mobile, it's likely working to expand into areas where it didn't have coverage.
    | 1 Comment
  • 12:23 PM
    • Re/code, which was the first to report Apple (AAPL +0.8%) plans to launch a Web TV service, now reports Apple wants to include "widespread access" to local U.S. TV channels, a feature not provided by Dish and Sony's offerings.
    • Apple's efforts are said to have "complicated its negotiations with the broadcast TV networks, because most broadcasters don’t own all their local stations." Some execs also state broadcasters will have to invest in streaming infrastructure to support local feeds.
    • As a result, the service might not launch in early fall, the target date Apple has given programmers. However, TV execs think it will eventually launch, and that money (rather than technical issues) is the main hurdle. The WSJ reported earlier this week Apple hopes to unveil the service at WWDC next month ahead of a fall launch.
    • Separately, research firm Slice estimates (based on an analysis of online sales receipts) U.S. Apple Watch orders have generally been below 30K/day (implies a quarterly run rate of ~2.7M) following big early sales. Altogether, Slice thinks Apple sold nearly 2.5M Watches in the U.S. from April 10 (the day pre-orders started) through May 18.
    • KGI's Ming-Chi Kuo recently cut his 2015 Apple Watch shipment forecast to 15M (others have forecast 20M-30M), citing a lack of major changes to shipment times in spite of supply constraints. Kuo also estimated ~80% of Watch orders are for the larger 42mm models.
  • 12:09 PM
    • The Shanghai exchange rose 2.8% overnight to a 7-year high, and has once more taken U.S.-traded Chinese Internet/mobile names higher with it.
    • Major gainers include Renren (RENN +10.4%), Youku (YOKU +14.1%), SouFun (SFUN +10.8%), Weibo (WB +4.4%), Dangdang (DANG +7.9%), Momo (MOMO +9.7%), and iDreamSky (DSKY +4.9%). Ctrip and eLong are also up sharply, following news an investor group featuring Ctrip bought a 62.4% stake in eLong from Expedia.
    • Renren, whose stable of online P2P lending investments has been drawing attention, is now up 31% since its May 12 Q1 report. Youku is up 33% since providing strong Q2 guidance to go with mixed Q1 results on Wednesday evening. Momo is up 44% since delivering market-pleasing Q1 results on Monday afternoon.
  • 11:46 AM
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  • 11:24 AM
    • Michael Moe discloses he bought 1,500 GSV Capital (GSVC -0.1%) shares on Tuesday at $10.34.
    • The purchase comes as GSV continues trading at a sizable discount to its Q1-ending NAV of $15.66/share. Barrington Research recently argued investor nervousness about GSV's Twitter exposure has hurt its valuation.
    • Shares rose on Monday after Carl Icahn disclosed a $100M investment in GSV portfolio company Lyft.
  • 11:12 AM
    • France's Altice (OTC:ATCEY) is advancing its ambitions for a purchase of Time Warner Cable (NYSE:TWC) by talking with banks about raising debt for a bid for the highly-targeted cableco, Reuters reports.
    • The company is talking with JPMorgan Chase, Nomura, BNP Paribas, SocGen, Barclays and RBC among others.
    • If Altice were to go forward, it would try not to burden its balance sheet unnecessarily, sources tell Reuters, and financing could include a high-yield bond as well as loans.
    • It's not a light concern. With Altice's agreement to buy Suddenlink for $9.1B, not to mention the recent purchase of SFR, the company is taking on debt in a hurry. The Suddenlink deal is expected to be financed in dollar-denominated debt that would be ringfenced at Suddenlink: "It is a purely US business so it would make sense to raise the debt in dollars," says a banker.
    • Altice says total leverage, including full synergies, will be 6.1x 2014 EBITDA.
    • TWC, meanwhile, seems to be moving on the news of each day: With chatter that a bid could come in at $170/share, TWC is up 2.7%, to $170.
    • Previously: Altice enters the U.S. with Suddenlink stake (May. 20 2015)
    • Previously: Cable M&A: Altice reportedly looking at TWC as well as Suddenlink (May. 19 2015)
    • Previously: Vivendi chooses to sell SFR to Altice in €17B+ deal (Apr. 06 2014)
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  • 11:11 AM
    • Shopify (Pending:SHOP) is now up 76% from its $17 IPO price, and 7% above a post-IPO opening trade of $28.00. The Canadian e-commerce software/payment service provider's valuation is up to $2.2B, or a steep 21x 2014 sales.
    • SA author West Coast Growth Picks was bullish going into the IPO, noting Shopify has nearly doubled its merchant base each of the last 3 years and still gets 84% of its revenue from the U.S., U.K., and Canada (leaving plenty of room for international growth)
    • Lior Ronen has been more cautious on account of Shopify's valuation, arguing SMB Web services provider Wix (WIX +0.2%) is a better deal given its far lower P/S multiple. Though not a direct Shopify rival, Ronen sees Wix benefiting from the launch of e-commerce services aimed at getting smaller merchants to upgrade to premium subscriptions.
    • Prior Shopify coverage
    • Update: Don Dion, who recommended buying into the IPO, is now closing out his position.
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