Seeking Alpha
  • Today - Tuesday, April 21, 2015

  • 4:20 AM
    • 1. Flat is the new up: "Revenue numbers dropped for the 12th consecutive quarter and the company managed to miss estimates this quarter too. But CEO Ginni Rometty noted that if you exclude results from foreign currency exchange as well as businesses that IBM will be divesting itself of overall revenue growth was flat."
    • 2. Cloud computing results were mostly positive: "The cloud business was generating revenue at an annualized rate of $3.8 billion, up from $2.3 billion a year ago. It’s a move in the right direction but for a company that generates around $90 billion a year in revenue the cloud services business isn’t moving the needle just yet."
    • 3. IBM is a slow ship to turn: "Rometty is in her fourth year as CEO and while she has doing some things to spread out and revive IBM’s revenue streams the results have been slow in coming."
    • Source: Dave Dierking
    • Previously: International Business Machines beats by $0.09, misses on revenue (Apr. 20)
    • Related: International Business Machines' (NYSE:IBM) Q1 2015 Results - Earnings Call Transcript (Apr. 20)
    • Related: IBM Stock And The Case For Exceptional Patience (Apr. 20)
    | Comment!
  • 2:22 AM
    • According to a new filing, Yahoo (NASDAQ:YHOO) and Microsoft (NASDAQ:MSFT) have amended the terms of their 10-year search pact to allow either party terminate their agreement at any point in time on or after Oct. 1.
    • Under the original deal, which began in February 2010, Yahoo could only terminate the pact if the revenue from each search failed to meet certain financial-performance benchmarks.
    • The two also restructured the agreement's search terms last week, stating the partnership is non-exclusive for both desktop and mobile.
    • Yahoo reports earnings after the bell today.
    • Previously: Microsoft, Yahoo restructure search pact; no PC/mobile exclusivity (Apr. 16 2015)
    | Comment!
  • Monday, April 20, 2015

  • 7:35 PM
    • Chinese wireless firms jumped in U.S. trading today in reaction to new easing from China, where the central bank cut its reserve requirement ratio a percentage point to 18.5%
    • China Mobile (NYSE:CHL) gained 5.4% today and is up another 3.2% after hours; China Telecom (NYSE:CHA) closed up 4.9%; and China Unicom (NYSE:CHU) closed up 5.3% (and is up now 0.2% after hours).
    • China Unicom was among leaders among Hong Kong stocks today, trading 2.2% higher there, while China Telecom was up 2.8%.
    • China Mobile provided unaudited key indicators from its Q1, noting that while operating revenue was up 3.9% Y/Y (to 160.9B yuan) and EBITDA up 2.8% (to 59.2B yuan), net profit slipped 5.6% Y/Y to 23.8B yuan.
    • As the substitution impact of over-the-top business (including apps like Tencent's WeChat) on China Mobile's traditional business "continued to intensify, voice services and SMS and MMS services further declined," the company noted, with voice and SMS usage down 1.3% and 4.5% respectively.
    • "The Group is at a critical stage of transformation of its development," writes Chairman Xi Guohua, noting that capex and cost input continue to remain high amid heavy demand for resources from 4G construction, business development and customer retention.
    | Comment!
  • 7:11 PM
    • Ahead of tomorrow's FQ4 report, CalAmp (NASDAQ:CAMP) announces it has bought Crashboxx, a startup working on "insurance telematics applications across the entire auto insurance lifecycle, from driver risk assessment through claims processing automation." The company is paying $1.5M in cash up-front + earn-outs based on post-acquisition sales targets.
    • CalAmp: "[Crashboxx's] proprietary driver behavior, crash detection, crash notification and physical and bodily damage estimation technologies are extraordinarily unique within the emerging insurance telematics marketplace. Innovations including automated first notification of loss and near real time estimation of damages and bodily injury could drive significant business efficiencies and [ROI] for both insurance carriers and fleet managers."
    • Though the Industries page on CalAmp's site currently lists 11 different verticals for which it provides telematics, fleet-tracking, and asset/device management solutions, insurance isn't one of them.
    | Comment!
  • 6:53 PM
    • The U.S. Navy has "created a sole source solicitation notice" for American Superconductor's (NASDAQ:AMSC) high-temperature superconductor (HTS) equipment. AMSC has also "established a relationship with the Navy to develop HTS power cable hardware for ship board power applications."
    • AMSC notes it has collaborated with the Navy for several years on an HTS-based degaussing system, and that the system's core components are "transferable to other applications being targeted for ship implementation."
    • The company notes its ship protection systems for the Navy reduce a ship's magnetic signature, which in turn interferes with the ability of an undersea mine to detect and damage a ship. It claims its products can cut degaussing system weight by 50%-70%. On its site, AMSC claims its Amperium HTS wire "conducts approximately 200 times the electrical current of copper wire of similar dimensions."
    • Shares have risen to $8.41 AH, hitting their highest levels since a 1:10 reverse split took effect on March 25.
    | 2 Comments
  • 6:41 PM
    • CenturyLink (NYSE:CTL) has acquired database service provider Orchestrate, in order to add its capabilities into the CenturyLink Cloud platform.
    • Orchestrate promises to save clients the hassle of running their own database instances by providing multiple varieties of database-as-a-service offerings.
    • It's one of a few recent moves by CenturyLink to shore up data analytics, including the fall acquisitions of DataGardens and Cognilytics.
    • Orchestrate's key leadership is joining CenturyLink, including co-founders Antony Falco (CEO) and Ian Plosker (CTO).
    • The two firms are recent partners, as Orchestrate became available via CenturyLink Cloud early last month.
    | 1 Comment
  • 6:28 PM
    • Angie's List (NASDAQ:ANGI) is partnering with online small business lender OnDeck Capital (NYSE:ONDK) to offers loans up to $250K and lines of credit up to $20K to local service providers using its platform.
    • The announcement comes ahead of Angie's Wednesday Q1 report. Shares rose 6.7% in regular trading amid a market rally, and are down 0.3% AH. OnDeck, which reports on May 4, was nearly flat today.
    | Comment!
  • 6:10 PM
    • On top of beating Q1 estimates, Fortinet (NASDAQ:FTNT) has guided in its earnings slides (.pdf) for Q2 revenue of $224M-$228M (+23% Y/Y at midpoint) and full-year revenue of $935M-$940M (+22% at midpoint), above consensus estimates of $222.1M and $926.1M.
    • With heavy spending weighing on EPS, Q1 and full-year EPS guidance is respectively at $0.08-$0.09 and $0.51-$0.52 vs. consensus estimates of $0.11 and $0.50.
    • With strong corporate security IT spending acting as a tailwind, Q1 billings totaled $254.3M, +36% Y/Y (much better than 26% revenue growth) and easily topping guidance of $226M-$230M. Q2 billings guidance is at $263M-$268M (+25% at midpoint), and full-year guidance at $1.105B-$1.12B (+24% at midpoint). Given Fortinet's history, the guidance might prove conservative.
    • CEO Ken Xie is in a good mood. "Our first quarter billings growth was the highest since becoming a public company over five years ago ... we grew the number of large deals closed against competitors and added over 8,000 customers to our base of more than 200,000 ... we feel Fortinet's scale is starting to provide more of a competitive differentiator on multiple fronts."
    • The billings growth resulted in the UTM hardware leader's deferred revenue balance rising 33% Y/Y to $600.2M. It also yielded free cash flow of $59.7M, well above net income of $13.5M. Operating expenses rose 40% Y/Y to $131.2M (outpaced revenue and billings growth), with sales/marketing spend accounting for $91.3M.
    • FTNT +8.6% AH to $37.60, making new highs along the way.
    • Q1 results, PR.
    | Comment!
  • 5:39 PM
    • Backing up industry speculation to the effect (as well as a 2014 Digitimes report that pointed in this direction), Re/code reports Qualcomm's (NASDAQ:QCOM) Snapdragon 820 baseband/app processor (its next-gen flagship) will be made using Samsung's (OTC:SSNLF) 14nm FinFET (3D transistor) manufacturing process. Qualcomm has historically relied on TSMC (NYSE:TSM) to make its most advanced processors, though it also does business with other foundries.
    • The scoop follows a slew of reports stating Samsung's 14nm process will be used to manufacture at least a majority of Apple's A9 CPUs; KGI reported last week TSMC (set to ramp 16nm FinFET production) managed will handle 30% of A9 production after (Samsung 14nm partner) GlobalFoundries encountered yield issues.
    • No word on whether Samsung will reward Qualcomm's decision by using the 820 in future high-end phones. Samsung opted to use its Exynos 7420 processor (also made using its 14nm process) instead of Qualcomm's Snapdragon 810 (made using TSMC's 20nm process) in the Galaxy S6, and is also using its own baseband modems in a large chunk of S6 units.
    • The 820, which makes use of Qualcomm's next-gen Kryo CPU core and Zeroth neural networking tech, begins sampling in 2H15. The timetable suggests commercial hardware featuring the SoC could arrive in 1H16 (in time for the Galaxy S7?). Qualcomm's FQ2 report is due on Wednesday.
    | 15 Comments
  • 5:04 PM
    • In addition to missing FQ2 estimates, Sanmina (NASDAQ:SANM) is guiding for FQ3 revenue of $1.5B-$1.55B and EPS of $0.48-$0.52, below a consensus of $1.64B and $0.56.
    • The contract manufacturer attributes the outlook to "continued headwind in our communications networks segment." Industrial, medical, and defense sales are expected to grow.
    • Op. margin (non-GAAP) rose 10 bps Y/Y to 3.7%. $21.6M was spent to buy back 1M shares. Sanmina ended FQ2 with $407.7M in cash, and $470M in debt.
    • Shares have tumbled to $20.75 AH.
    • FQ2 results, PR
    | Comment!
  • 4:52 PM
    • In addition to beating FQ3 estimates, Lam Research (NASDAQ:LRCX) is guiding for FQ4 revenue of $1.46B (+/- $50M) and EPS of $1.46 (+- $0.07), above a consensus of $1.39B and $1.35.
    • Shipments are expected to rise to $1.6B (+/- $50M) from FQ3's $1.497B (+20% Q/Q and topping a guidance midpoint of $1.45B). CEO Martin Anstice sings a well-known refrain. "Our differentiated products and services are directly addressing the market driving technology inflections of multi-patterning, 3D device architecture and advanced packaging."
    • The deferred revenue balance rose 30% Q/Q to $485.2M. Gross margin (non-GAAP) fell 70 bps Q/Q and 80 bps Y/Y to 44.7%. Operating expenses rose 11% Y/Y to $355M. $124.9M was spent on buybacks.
    • Shares have risen to $77.52 AH; the all-time high is $85.70. Goldman's table-pounding was well-timed.
    • Peers are getting a lift: Applied Materials (NASDAQ:AMAT) is up 1.6% AH to $22.11, and KLA-Tencor (NASDAQ:KLAC) is up 1.1% to $59.20. KLA reports on Thursday.
    • FQ3 results, PR
    | Comment!
  • 4:49 PM
    • Rogers Communications (NYSE:RCI) grew revenues more than 5% in Q1, though adjusted net income slipped some 19% and missed expectations due chiefly to an 8% increase in depreciation and amortization.
    • Revenue by segment: Wireless, C$1.79B (up 4%); Cable, C$870M (up 1%); Business Solutions, C$94M (flat); Media, C$464M (up 26%).
    • Adjusted operating profit fell 3% (Wireless -3%, Cable -2%, Media -33%, Business Solutions stable). Wireless results were affected by selling more subsidized smartphones, while Cable results saw impact from investments in programming and customer value enhancements.
    • Postpaid average revenue per account rose to $107.47 from the prior year's $103.10. Total network revenue of C$1.67B was up from previous C$1.64B, tempered by a slight drop in average wireless postpaid accounts (to 5M from 5.1M).
    • The company says it activated 700K smartphones (32% new subscribers); smartphone customers represented 83% of wireless postpaid subscribers at Q1's end.
    • Consolidated free cash flow of C$266M (-25%). Cash from operating activities of $227M.
    • Press release
    | Comment!
  • 4:34 PM
    • Ultra Clean Holdings (NASDAQ:UCTT): Q1 EPS of $0.14 beats by $0.01.
    • Revenue of $125.31M (-13.1% Y/Y) misses by $0.15M.
    • Shares -7.32%.
    • Press Release
    | Comment!
  • 4:33 PM
    • With a Q1 EPS beat in tow, IBM is reiterating full-year EPS guidance of $15.75-$16.50 (compares with a $15.89 consensus). Big Blue also still expects free cash flow to be flat relative to a 2014 level of $12.4B.
    • Forex had an 8% impact on Y/Y revenue growth, up from Q4's 4.4%. Divestments had a 4% impact.
    • Helping EPS beat estimates in spite of a revenue miss: 1) Gross margin rose 80 bps Y/Y to 49.3%. 2) Non-GAAP SG&A spend fell 18% Y/Y to $5B, and R&D spend fell 9% to $1.3B (forex and divestments played a role). 3) $1.2B was spent on buybacks.
    • Segment performance: Global tech services revenue -11% Y/Y to $7.9B; op. profit of $994M. Global business services -13% to $4.3B; op. profit of $597M. Software -8% to $5.2B; op profit of $1.94B. Hardware -23% to $1.7B; op. profit of  $24M. Financing -10% to $0.5B; op. profit of $515M.
    • Geographic performance: Americas revenue -3% to $9.3B (+2% adjusted for forex and asset sales). EMEA -19% to $6.1B (-2% adjusted). Asia-Pac -18% to $4.1B (-2% adjusted).
    • The services backlog fell by $17B Y/Y to $121B; IBM says it's flat on an adjusted basis. Hardware revenue was up 30% adjusted for forex and the x86 server division sale, thanks to a 118% increase System z mainframe revenue (upgrade cycle). Power systems revenue fell 3%, a smaller drop than in recent quarters; storage revenue fell 8%. Within software, middleware fell 5%.
    • Free cash flow was $1.1B, trailing net income of $2.9B. "Cloud delivered as a service" revenue is now on a $3.8B/year run rate, up $500M Q/Q. Analytics revenue rose 12% Y/Y.
    • IBM -0.4% AH to $165.50. Shares rose 3.4% in regular trading ahead of the report, aided by a market rally and possibly an upbeat Barron's column.
    • Q1 results, PR,
    | 16 Comments
  • 4:31 PM
    • HealthStream (NASDAQ:HSTM): Q1 EPS of $0.10 beats by $0.03.
    • Revenue of $47.2M (+23.1% Y/Y) beats by $1.58M.
    • Press Release
    | Comment!
  • 4:21 PM
    • Fortinet (NASDAQ:FTNT): Q1 EPS of $0.08 beats by $0.02.
    • Revenue of $212.9M (+26.0% Y/Y) beats by $7.69M.
    • Shares +5%.
    • Press Release
    | Comment!
  • 4:12 PM
    • Badger Meter (NYSE:BMI): Q1 EPS of $0.29 misses by $0.13.
    • Revenue of $83.64M (+0.2% Y/Y) misses by $4.59M.
    • Press Release
    | Comment!
  • 4:09 PM
    • Equinix (EQIX +1.6%) should post revenue and EBITDA ahead of Street estimates amid "y/y growth in MRR ... and a secular shift to the cloud," according to Pacific Crest's Michael Bowen and Trevor Upton. It's one of five stocks that Pacific Crest mentioned buying into upcoming earnings in its Q1 Communications Services Preview.
    • The stocks all get an Outperform rating from the analysts. Equinix received a $255 price target and the firm "would remind investors that our bull case on shares remains $280." Shares closed today at $239.80 and the firm reports April 29.
    • Rackspace (RAX +0.9%) also benefits from shifting business, the firm says: "We believe we are in the early stages of a secular shift from on-premise data centers to hybrid clouds made up of private and public cloud platforms. We believe the company is executing more efficiently and improving its managed service value proposition." Their price target is $58; shares closed today at $52.53 and the company reports May 11.
    • SBA Communications (SBAC +1.8%) got a price target of $138 on expectations of strong leasing activity and hearing about positive impact from the FCC's last spectrum auction; it closed today at $121.84 and reports on Friday.
    • Cogent Communications (CCOI +1%) received a price target of $45 and closed today at $34.24; it reports May 7. GTT Communications (GTT +1.6%) got a $24 target and closed today at $18.31; it reports May 7 as well.
    | Comment!
  • 4:09 PM
    • Sanmina (NASDAQ:SANM): FQ2 EPS of $0.50 misses by $0.03.
    • Revenue of $1.52B (+2.7% Y/Y) misses by $80M.
    • Shares -7.53%.
    • Press Release
    | Comment!
  • 4:08 PM
    • Lam Research (NASDAQ:LRCX): FQ3 EPS of $1.40 beats by $0.10.
    • Revenue of $1.39B (+13.0% Y/Y) beats by $20M.
    • Shares +5%.
    • Press Release
    | 1 Comment
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