Today - Tuesday, September 16, 2014
- Microsoft (NASDAQ:MSFT) says it is raising its quarterly dividend by 11% to $0.31/share and appoints two new directors to replace two board members who decided not to seek re-election.
- CEO Satya Nadella continues to remake MSFT's board; the latest changes bring in Kraft Foods CFO Teri List-Stoll and Visa CEO Charles Scharf, effective Oct. 1.
- A top AT&T (NYSE:T) executive says the company is open to acquisitions in Mexico, where America Movil (NYSE:AMX) has said it would sell off parts of operations to cut its market share to below 50% from 70% to avoid a regulatory crackdown, creating a rare opening for an acquirer to get a foothold in the country.
- AT&T's attention is focused on closing the $49B deal for DirecTV, but Chief Strategy Officer John Stankey says Mexico is a fast-growing market of interest to the company, and that AT&T has the wherewithal to do other deals if opportunities arise.
- "Based on Rackspace's (NYSE:RAX) reaccelerated revenue growth and its potential trajectory for the coming year, the board concluded the company is best positioned to maximize shareholder value by executing its strategy as the #1 managed cloud company."
- A share repurchase plan was also nixed as the company wants to maintain flexibility.
- Graham Watson is out as CEO, and Taylor Rhodes has been appointed to replace him and to join the board. Watson is now non-executive chairman. Rhodes joined Rackspace in 2007 and has been president since February.
- Shares -16.5% AH
- Guidance is on the light side, with FQ4 revenue expected at $1.025B-$1.075B vs. the Street outlook of $1.09B, and EPS of $0.26-$0.32 vs. the Street at $0.31.
- Guidance is located in the earnings call presentation. The live call starts at 5 ET.
- ADBE -4% AH
- Previously: Adobe Systems beats by $0.02, misses on revenue
- "We are bolstered by the fact that the patents were again found valid and that it was confirmed that Apple's VPN on Demand functionality infringes the VirnetX (VHC -41.7%) patents," says CEO Kendall Larsen. "We look forward to readdressing the FaceTime infringement and damages issues as soon as possible."
- Source: Press Release
- Previously: VirnetX plunges as jury award over Apple is vacated
- Google (GOOG +1.3%), Mercedes-Benz (OTCPK:DDAIF), and Volkswagen (OTCQX:VLKAY) have been issued permits by the California Department of Motor Vehicles to operate self-driving cars on public roads.
- The permits still require a backup human to sit in the front seat to monitor the driving situation.
- Though self-driving cars are still just a novelty for now, tech advances stemming from development have already been introduced in current models.
- What to watch: Fully autonomous cars are expected to be introduced over the next five years for use within campuses, retirement communities, or business complexes.
- Tracking 60 semiconductor M&A deals since 2009, analyst Rajvindra Gill says the median enterprise value/sales ratio is 2x, and the mean 2.4x. The average 1-day premium takeout price has been 31%.
- Given Entropic's (ENTR +8%) recent struggles, Gill puts a conservative 1.5x revenue estimate on the stock and comes up with a number around $4.50 per share. Murata's purchase of PSMI last month is a good comp, and that was done at 2.1x EV/Sales, representing a 62.5% premium to the previous price.
- Previously: Entropic up 7.7% as strategic options to be explored
- China's investigation of Qualcomm (QCOM +0.9%) is nearing an end and about to enter the "punishment phase," says analyst Stacy Rasgon, basing his view on "news flow" over the past few days.
- The result, he says, is likely to lead to changes in the company's business practices, noting among the charges is Qualcomm's charging of royalties based on the value of the device itself. The changes, then, might see Qualcomm matching its royalty rate to the value of the chips instead.
- These sorts of resolutions take time, reminds, Rasgon, in which Qualcomm would have to submit proposals, and then Beijing would vet them, getting input from OEMs. He reiterates his Market Perform rating.
- "Tableau's (DATA +2.6%) valuation relative to its potential revenue growth [is] compelling," says analyst Phil Winslow, upgrading to Outperform and lifting the price target to $100 from $87.50. Trading at an enterprise value to revenue ratio of 10.2x, Tableau isn't cheap, concedes Winslow, but is only just above its historical average.
- Tableau, says Winslow, should be able to expand the market for business intelligence tools to small and medium enterprises, as well as grow within the enterprise customer base. He's also sees potential in international sales as Tableau gets just 23% of revenue from outside North America vs. the industry grabbing 53% of revenue overseas.
- It doesn't take much to move Digital Ally (DGLY +8%), and the release of a Justice Department report titled, "Implementing a Body-Worn Camera Program" appears to be doing the job today.
- "Body-worn cameras can help improve the high-quality public service expected of police officers and promote the perceived legitimacy and sense of procedural justice that communities have about their police departments."
- Also higher, but somewhat calmer is Taser International (TASR +0.8%).
- Telecom Italia (TI -1.2%) is evaluating a potential acquisition of Brazilian carrier Oi (OIBR +11.8%) through its Tim Participacoes (TSU -2.1%) unit to challenge Telefonica (TEF +0.9%) in Latin America's largest phone market, Bloomberg reports.
- In a deal, Tim, Brazil's second largest mobile phone company, would gain Oi’s fixed-line network to sell broadband services after losing out to Spain's Telefonica in a bid to merge with another local landline provider, GVT.
11:37 AM| 19 Comments
- The Board intends to consider a wide range of possibilities and Barclays has been retained to assist.
- The announcement comes as the company - citing less seasonal strength than expected in the DBS and ODU businesses - cuts Q3 guidance, now forecasting revenue of $43M, and a non-GAAP loss of about $0.15 per share.
- Source: Press Release
- ENTR +7.7% premarket
- According to a report in the state-owned 21st Century Business Herald, Apple (NASDAQ:AAPL) may not get Beijing's approval for iPhone 6 sales until next year.
- Meanwhile, China Mobile (NYSE:CHL) Chairman Xi Guohua tells reporters he doesn't know when the new iPhones will be available, and his company will focus on selling cheaper phones which don't require subsidies. "The direction of our development is to completely focus on the mass market,” says Xi. “We have 4G devices selling for ¥1K. I believe, subsidy or no subsidy, discount or no discount, the common person will be able to appreciate this.”
- China Mobile fell the most in two years in Hong Kong acton overnight, down 3.9%. Apple is lower by 1.1% premarket.
- Orange (NYSE:ORAN) confirms it is launching a friendly takeover offer for Jazztel (OTCPK:JAZTF); as reported earlier, ORAN is offering €13/share ($16.80) in cash.
- ORAN says in a statement that the deal would make it the second largest fixed-line broadband Internet operator in Spain, after market leader Telefonica (NYSE:TEF).
7:01 AM| Comment!
- Although a sale price as high as ~C$300M ($270M) had been rumored earlier, Reuters reports that VimpelCom (NASDAQ:VIP) and Egypt's Global Telecom will sell their stake in wireless carrier Wind Canada to Globalive Capital for C$135M ($122M).
- The proceeds of the sale will go to Vimpelcom, in repayment of part of the debt owed to the company.
- Previously: VimpelCom reportedly nears deal to sell Wind Mobile stake for ~$270M