Today - Monday, April 27, 2015
- KLA-Tencor (KLAC +3.1%), ASML (ASML +3.3%), Photronics (PLAB +2.5%), Ultratech (UTEK +1.4%), Xcerra (XCRA +1.9%), and Rudolph Technologies (RTEC +2%) are moving higher after Applied Materials (down 7.4%) abandoned its plans to merge with fellow chip equipment giant Tokyo Electron amid tough antitrust scrutiny. The Nasdaq is up 0.5%.
- Not counting divestments, Applied/Tokyo were expected to have ~1/4 of the chip equipment market post-merger, far above #2 ASML's ~15% and #3 Lam Research's ~9%. The unraveling of the deal could be fueling speculation Applied will turn its sights on another target.
- Rudolph reports after the close. KLA is 4 days removed from beating FQ3 estimates, reporting orders ($692M) near the high end of a $500M-$700M guidance range, and announcing plans to lay off ~10% of its workforce. FQ4 guidance was somewhat light: Revenue of $710M-$790M and EPS of $0.78-$1.02 vs. a pre-earnings consensus of $782.7M and $0.99. Orders are expected to total $550M-$750M.
- Rubicon Project (RUBI +1.8%) says it's completed its acquisition of Canadian "intent marketing" firm Chango.
- The firm says the deal allows Rubicon's premium customer base to access an incremental $35B of intent marketing spend.
- The two companies entered into an acquisition deal for about $122M (mostly in stock) late last month.
- Rosenblatt Securities (Buy, $11 target) sees Sky-mobi's (NASDAQ:MOBI) recent hiring of Xiaodong Chen (formerly the CFO of a solar firm) to be its CFO as a positive catalyst.
- Rosenblatt launched coverage on the Chinese mobile game/app store publisher with a Buy rating on Feb. 26. Shares have risen 48% since.
- Canaccord has downgraded 3D Systems (NYSE:DDD) and Stratasys (NASDAQ:SSYS) to Hold in the wake of 3D's Friday Q1 warning. UBS and Piper have respectively downgraded 3D to Sell and Underweight.
- Piper's Troy Jensen, who has cut his target all the way to $21, thinks the Q1 warning suggests 3D will have to "materially cut" full-year guidance when it reports on May 6, that its issues are "bigger than the company is communicating," and that "pending competition will prevent the company from rebounding from this depressed competitive state." He provided cautious reseller survey data 3 days before the warning.
- Canaccord, discussing its 3D downgrade: "[G]rowth for professional and production grade printers appears to be slowing. We believe customers are scrutinizing their purchasing decisions more closely following a period of accelerating adoption, especially for non-metal processes. We also think that HP's growing marketing presence (no machine until late 2016) is causing some dissonance in the market and is being used as an excuse to delay decisions." The firm thinks Stratasys is affected by slowing industry demand as well.
- Oppenheimer is "grudgingly" keeping an Outperform rating on 3D. "We believe revenue growth is running well below its 'normalized' trend given industry dynamics, and there is great potential for it to bottom and recover ... Valuation is no longer a catalyst, and it will take time to repair the significant (and deserved) reputational damage stemming from recent performance. But we still see the longer term potential as outstripping the risk..."
- Credit Suisse (Neutral): "Management is confident demand will return in subsequent quarters as OEMs have adjusted to the current environment and orders have picked up in Q2; we remain cautious given the recent trend of missed quarterly expectations."
- Following this month's departures of its CEO and COO, Zynga (NASDAQ:ZNGA) has entered retention agreements with General Counsel Devang Shah and CFO/Chief Accounting Officer David Lee.
- The two will receive a half-year's worth of their base salary and target bonus, along with an extra six months' vesting of equity awards, if they're terminated without cause or leave for "good reason."
- COO Clive Downie left the company last week, and on April 8 the firm said CEO Don Mattrick resigned, to be replaced by Zynga founder Mark Pincus.
- Micron (NASDAQ:MU) is offering $500M worth of senior notes due 2024, and $500M of senior notes due 2026. Pricing hasn't been set yet.
- The memory giant plans to use the proceeds to "repay, repurchase or make other payments with respect to the extinguishment of its debt, including its convertible notes, and for general corporate purposes."
- Micron also sold $1B worth of debt in January for refinancing purposes; last July, it launched a $750M debt offering to get rid of its obligations for convertible notes due 203. The company had $6.35B in cash/marketable investments at the end of its February quarter, and $6.7B in debt.
8:28 AM| Comment!
- Perfect World (NASDAQ:PWRD) enters a go-private transaction with Perfect Peony Holding Company at a price of $20.20 per share.
- The deal price from the entity led by Chairman Michael Chi is higher than the original privatization offer of $15.76/share made last December and a follow-up bid of $20/share in January.
- PWRD +2.54% premarket to $18.99.
- Looking to make North America its largest market, Cap Gemini (OTCPK:CGEMY) plans to buy U.S.-based iGATE (NASDAQ:IGTE) for $4B, or $48 per share.
- The deal, which has been agreed on by both boards, will be financed through a combination of the French company's cash, debt and an equity portion that will not exceed a 6% dilution of its share capital.
- Cap Gemini also expects the acquisition to enhance earnings by 12% in 2016 and 16% in 2017.
- Previously: IGATE reportedly sees buyout interest; shares +4.2% (Apr. 17 2015)
- Applied Materials (NASDAQ:AMAT) and Tokyo Electron (OTCPK:TOELY) said they will scrap plans for a merger that would have created a company with a market value of $29B, citing problems with the U.S. Department of Justice.
- The future of the deal was put into doubt earlier this year when the plan was delayed due to regulatory issues in several different countries.
- As the country looks to reduce its reliance on foreign technology, Qualcomm (NASDAQ:QCOM) has launched a division to help Chinese smartphone makers sell units overseas, looking to build stronger relationships following its record $975M antitrust fine.
- Qualcomm, which draws about half of its revenue from customers in China, established an office in Shenzhen last quarter to assist both small and large Chinese handset manufacturers build global businesses.
- Nokia (NYSE:NOK) on Sunday squashed rumors that it was planning a return to mobile-device manufacturing, which it exited last year by selling its once-dominant handset business to Microsoft.
- "These reports are false," Nokia declared, adding that the company "currently has no plans to manufacture or sell consumer handsets."
- Earlier this month, Nokia launched a $16.6B bid to acquire French rival Alcatel-Lucent, looking to solidify its position in the wireless infrastructure industry.
- Update: While Nokia has denied planning a return to phone manufacturing, Re/code reported last week the company might license its phone designs to third parties who would handle manufacturing and sales/distribution, much as it has licensed its N1 Android tablet design to Foxconn.
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