Seeking Alpha
  • Today - Wednesday, April 16, 2014

  • 11:53 AM
    • Though Adtran (ADTN -6.2%) has reiterated guidance for Q2 revenue of $172M-$180M (consensus is at $174.9M), the telecom equipment vendor is forecasting gross margin will drop to 49%-50% from Q1's 52.9%.
    • In addition, Adtran says U.S. carrier spending was slower than usual in seasonally soft Q1.
    • Shares are off sharply in response, after opening with just modest losses in response to Adtran's mixed Q1 results. Rival Calix (CALX -0.9%), which reports on April 29, is edging lower on an up day for the Nasdaq.
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  • 11:40 AM
    • ASML (ASML -5.5%) has lowered its 1H14 sales outlook. Moreover, the lithography equipment kingpin says logic IC customers are "encountering timing uncertainties in next-generation device designs" for 2H, and that NAND flash memory makers are "continuing their evaluation of [3D] NAND and future-node planar technologies, resulting in uncertainties for system demand."
    • ASML's remarks about logic customers might partly be a reference to Intel, which has reportedly delayed the launch of its 14nm Broadwell CPUs. NAND vendors have been keeping a lid on capex for some time; recent price pressure might encourage them to do so.
    • Chip equipment peers Applied Materials (AMAT -2%), KLA-Tencor (KLAC -2.5%), Lam Research (LRCX -2.5%), Axcelis (ACLS -2.6%), Camtek (CAMT -5.8%), and Ultratech (UTEK -0.9%) are off in sympathy. Compared with many other tech companies, the group has held up well during the March/April selloff.
    • One silver lining: ASML says multiple customers are qualifying 10nm EUV lithography equipment, and that it expects to recognize revenue on 8 EUV systems in 2014. Investments in both EUV and 450mm wafers have been delayed.
    • Gartner has forecast chip wafer fab equipment spend will grow 14.9% in 2014 to $31B, after falling 9.1% in 2013.
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  • 11:11 AM
    • xG Technology (XGTI -16.1%) has priced a 5.27M-share offering at $1.90, 12% below its Tuesday close of $2.17. Underwriters have a 790K-share overallotment option.
    • xG expects gross proceeds of $10M. The company had $5.5M in cash at the end of 2013, and $2M worth of convertible notes payable.
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  • 10:57 AM
    • "The outlook for storage spending continues to look mediocre as users pause and consider their alternatives. Although there still may be a storage upgrade cycle coming, we don't see it in our recent survey work," writes UBS, explaining why it's downgrading NetApp (NTAP -3%) to Neutral. EMC (EMC -1.3%) investors also aren't crazy about the commentary.
    • A recent Barclays CIO survey also indicated storage spend remains soft, albeit while painting a brighter picture for broader IT spending. IDC estimates external disk storage sales grew 2.4% Y/Y in Q4 after falling 5.6% in Q3, with EMC grabbing share from IBM and NetApp's share roughly holding steady.
    • UBS is also worried about intensifying competition from storage startups and cloud infrastructure providers. Smaller vendors offering all-flash or hybrid flash/hard drive arrays - examples include newly-public Nimble Storage and private Tintri and Nutanix - have seen rapid growth. NetApp is hoping to counter them with its upcoming FlashRay systems.
    • Cloud infrastructure giant Amazon Web Services has been growing rapidly as well, and rivals such as Microsoft and Google are doing their utmost to play catch-up. Amazon, Microsoft, and Google all recently announced huge price cuts for their cloud storage offerings.
    • Amazon and Google's platforms run on white-label hardware, and Microsoft is reportedly thinking of going down the same path.
    | Comment!
  • 10:24 AM
    • ITG Research's checks suggest Facebook's (FB -1%) ad prices (on a cost per click basis) fell Q/Q in seasonally soft Q1, and that its revenue will be in-line or below consensus.
    • OTR Global reported last month its Facebook checks pointed to softening news feed and FBX Exchange ad spend due to rising prices; Facebook's ad prices rose 92% Y/Y on a CPM basis in Q4.
    • On the other hand, Facebook ad software provider Nanigans has said Q1 ad spend was stronger than expected following a slow start, and that it saw Facebook ad prices rise 10% Q/Q "across the board."
    • Facebook, which has seen its estimates rise following three quarters of blowout revenue figures, reports on April 23. Shares are down moderately while the Nasdaq trades up 0.5%.
  • 9:55 AM
    • Yelp (YELP +2.1%) has been upgraded to Buy by Citi.
    • Cree (CREE +2%) has been upgraded to Buy by Needham ahead of its April 22 FQ3 report.
    • Youku (YOKU +1.2%) has been upgraded to Neutral by Goldman.
    • SouFun (SFUN +5.4%) has been upgraded to Buy by Goldman.
    • Motorola Solutions (MSI -1.6%) has been cut to Neutral by Nomura a day after announcing the Zebra Technologies deal and issuing a Q1 warning.
    • Control4 (CTRL +7%) has been upgraded to Strong Buy by Raymond James. Q1 results are due on May 1.
    • Nimble Storage (NMBL +5.4%) has been upgraded to Buy by UBS.
    • J2 Global (JCOM +7.1%) has been upgraded to Buy by Sidoti.
    • Xoom (XOOM +1.4%) has been upgraded to Equal Weight by Evercore ahead of its April 22 Q1 report.
    • Bitauto (BITA +9.1%) has been started at Outperform by Credit Suisse. Rival Autohome (ATHM +9.8%) has been started at Neutral, but is also up sharply.
    • IPO underwriters have given A10 Networks (ATEN +3.7%) five bullish ratings and one neutral one.
    | Comment!
  • 9:43 AM
  • 9:35 AM
    • 3D Systems (DDD) is acquiring Robtec, a Sao Paulo-based firm declared to be the largest additive manufacturing service bureau and 3D printer/scanner distributor in Latin America.
    • 3D will initially buy 70% of Robtec, and the remainder of its shares in 5 years. The deal's price tag is undisclosed; 3D says it will be accretive to EPS within 12 months of closing.
    • Robtec, which operates in Brazil, Mexico, Argentina, Chile, and Uruguay, will support 3D's Quickparts custom manufacturing/prototyping service. 3D has already acquired a string of service bureaus over the last couple of years. Services accounted for 28% of the company's Q4 revenue.
  • 9:18 AM
    • KING Digital is partnering with Chinese gaming/messaging giant Tencent (TCEHY) to bring Candy Crush Saga to the Middle Kingdom. The game will be distributed via both Tencent's QQ (PC messaging, 808M MAUs) and WeChat/Weixin (mobile messaging, 355M MAUs) platforms.
    • Candy Crush was responsible for 93M of King's 128M average Q4 DAUs. But bookings and unique payers started to slip in Q4 after seeing meteoric growth over much of 2013.
    • King is counting on newer titles such as Pet Rescue Saga and Farm Heroes Saga - they're promoted via Candy Crush and have moved up Facebook charts, but are nowhere are large right now - to help pick up the slack.
    | Comment!
  • 8:10 AM
  • 5:47 AM
    • ADTRAN (ADTN): Q1 EPS of $0.21 beats by $0.02.
    • Revenue of $147M (+2.8% Y/Y) misses by $2.65M.
    • Press Release
    | Comment!
  • 4:25 AM
    • ASML's (ASML) Q1 net profit almost halved to €249.1M ($344M) from €481M in Q4 but exceeded expectations of €230M. Profit in Q1 a year earlier was €96M.
    • Sales slumped 24% on quarter to €1.4B, as expected. On year, revenue rose 57% from  €892M.
    • ASML downgraded its H1 sales forecast due to slowing revenues in Q2, saying it expects turnover of €3B including extreme ultraviolet (EUV) systems for producing smaller chips. The company's prior guidance was €3B excluding EUV products.
    • "That ASML is now including EUV in its sales guidance means a difference on a yearly basis of around €500-600M, which is about 10% of sales," says ING analyst Robin van den Broek.
    • Shares are -3.6% in Amsterdam. (PR)
    | Comment!
  • 4:08 AM
    • Alibaba Group (ABABA) could file the prospectus for its U.S. IPO on Monday, Reuters reports, adding that the listing could be worth over $16B.
    • The report comes after major shareholder Yahoo (YHOO) disclosed that Alibaba's Q4 net income surged 110% to $1.35B as revenue jumped 66% to $3.06B.
    • Alibaba's results helped Yahoo's shares climb 6.8% in AH trading. In Tokyo, shares in SoftBank (SFTBF), which owns 37% in Alibaba, jumped 8.5%.
  • Tuesday, April 15, 2014

  • 7:03 PM
    • Microsoft's (MSFT) new Azure Intelligent Systems Service allows companies to capture and manage machine data from various embedded devices and sensors, regardless of the OS they use. The service aims to enable Web-connected embedded platforms in verticals such as retail, health, manufacturing, and transportation.
    • IT outsourcing firms Cognizant and Infosys are among Microsoft's service partners. Intel and ARM are already going after this market by via solutions that combine their CPU designs with related software.
    • Microsoft is also unveiling its Analytics Platform System, a hardware appliance (to be sold by OEMs) that allows data handled by SQL Server's data warehousing solution (used to process/analyze structured data) and the Hadoop big data framework (used for giant unstructured datasets) to be integrated and jointly queried.
    • Satya Nadella calls the solution "big data in a box." Teradata (TDC) and Informatica (INFA) are among the companies in Microsoft's crosshairs.
    • SQL Server 2014 has also been launched. As promised, the latest update to Microsoft's database platform (produces $5B+/year in sales) features in-memory capabilities that arguably make it a meaningful rival to SAP's popular Hana in-memory database.
    • While going over the products, Nadella declares Microsoft needs to create a "data culture" to thrive, in part by using its own products. "Think of Office as the canvas, or the surface area, or the scaffolding from which you can access the data."
  • 5:43 PM
    • Linear (LLTC) expects FQ4 revenue to grow 2%-6% Q/Q; the midpoint of that range is below a consensus for 5% growth.  Book-to-bill was above 1, and bookings rose Q/Q for all of the chipmaker's top markets.
    • Gross margin rose 90 bps Y/Y in FQ3 to 75.7%, and opex rose 6% to $102.8M (less than rev. growth of 10.6%). $10.9M was spent on buybacks.
    • LLTC -0.3% AH. FQ3 results, PR.
    | 1 Comment
  • 5:20 PM
    • Intel's (INTC) PC Client Group (PC CPUs + connectivity and living room chips) saw its sales fall 1.5% Y/Y to $7.94B (62% of revenue). The Data Center Group (server/networking/storage chips) saw its sales rise 11% to $3.09B.
    • Internet of Things Group (embedded products) sales rose 32% to $482M. But Mobile & Communications Group (mobile products, inc. Atom CPUs) sales fell 61% to just $156M.
    • Software/service sales rose 6% to $553M, and all other sales (inc. flash memory) rose 18% to $545M.
    • While the PC and data center units respectively had op. income of $2.80B and $1.32B, the mobile unit had a whopping $929M op. loss, and the "Other" unit a $773M op. loss. Internet of Things had a $123M op. profit, and software/services a $7M op. loss.
    • The groups are the product of a new reporting structure.
    • PC and data center unit volumes respectively rose 1% and 3% Y/Y. PC ASPs -1% Q/Q and -3% Y/Y, data center ASPs +1% Q/Q and +8% Y/Y. Desktop ASPs +4%, notebooks -8%.
    • In its CFO commentary (.pdf), Intel attributes it strong Q2 GM forecast to lower 14nm start-up costs, higher volumes, and lower platform write-offs, partly offset by higher tablet volumes and related contra revenue for OEMs.
    • Intel's cash/investment balance fell by $1B Q/Q to $19B ($11B offshore). Inventories fell by $409M to $3.76B, and headcount by 1K to 106K.
    • INTC +2% AH. Q4 results, guidance, PR
  • 5:02 PM
    • Linear Technology (LLTC): FQ3 EPS of $0.48 in-line.
    • Revenue of $348M (+10.6% Y/Y) misses by $2.01M.
    • Press Release
    | Comment!
  • 4:55 PM
    • Chinese Internet stocks, hit hard by March/April's momentum stock selloff, are up in AH trading after Yahoo reported Alibaba's Q4 sales and net income respectively rose 66% and 110% Y/Y.
    • BIDU +3.4% AH. SINA +1.7%. DANG +2.8%. VIPS +3%. QIHU +1%. WUBA +1.1%. YY +1.3%. YOKU +2.2%.
  • 4:34 PM
    • Yahoo (YHOO) discloses in its earnings slides (.pdf) Alibaba (ABABA) had Q4 revenue of $3.06B (+66% Y/Y), and net income of $1.35B (+110%). Revenue growth accelerated from Q3's 51% clip.
    • Yahoo Japan's sales fell 14% Y/Y in Q4 to $1.03B (worse than Q3's 4% drop), and its net income fell 11% to $304M.
    • Yahoo itself is guiding for Q2 revenue of $1.12B-$1.16B, above a $1.08B consensus. Op. income is expected to fall to $130M-$170M from a year-ago level of $224M, and adjusted EBITDA to $290M-$330M from $386M.
    • Yahoo's long-struggling display ad ops staged a turnaround in Q1: Sales (ex-TAC) rose 2% Y/Y to $409M after falling 6% in Q4 and 7% in Q3. Search revenue (ex-TAC) rose 9% to $444M after growing 8% in Q4. All other revenue fell 11% to $234M.
    • Display ads sold +7% vs. +3% in Q4, price per ad -5% vs. -7%. Search paid clicks +6%, down sharply from Q4's +17%. But price per click rose 8% after dropping in each quarter of 2013. Did Henrique de Castro's firing contribute to the display/search improvement?
    • $450M was spent on buybacks, up from $231M in Q4 and boosting EPS. While revenue rose 0.9% Y/Y, opex rose 15.5% to $1.1B.
    • Q1 results, PR
  • 4:15 PM
    • Intel (INTC) expects Q2 revenue of $12.5B-$13.5B vs. a $12.96B consensus. Full-year guidance for flat revenue growth (compares with a consensus for 0.8% growth) and capex of $10.5B-$11.5B is reiterated.
    • Q1 gross margin was 59.7%, -230 bps Q/Q and +350 bps Y/Y, and above a guidance midpoint of 59%. GM is expected to rise to 63% (+/- 2%) in Q2, and full-year GM guidance has been raised 100 bps to 61% (+/- a few percentage points).
    • Full-year R&D/MG&A spending guidance has been raised by $300M to $18.7B-$19.1B. While revenue rose just 1.7% Y/Y in Q1, opex rose 12% to $5.09B.
    • $545M was spent on buybacks, up from $528M in Q4.
    • Q1 results, PR
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