Friday, January 23, 2015
- Though Tableau's (NYSE:DATA) 2015 revenue consensus is only at $554M, and its license revenue currently ~2/3 of total revenue, Cowen's Jesse Hulsing thinks the business intelligence/analytics upstart can deliver $1B/year in license revenue by 2019.
- Hulsing: "We think the business intelligence market is inflecting due to a confluence of cultural infatuation with data, more relevant data, cheaper infrastructure and better tools. We call this Measurement Mania." He sees Tableau as a major beneficiary (so do others), and believes the company can grow its BI license market share to ~30% in four years.
- Nonetheless, Hulsing only assigns the richly-valued software vendor a Market Perform rating, and notes competition is growing. "While we think Tableau still has a lead over its competitors in the market, we think recent competitive responses have closed the gap (e.g., Qlik Sense) and new entrants create some threat of incremental competition (Salesforce.com's analytics cloud)."
- Q4 results arrive on Feb. 4.
- "Similar to the 2012/13 bear raid on FB where the street was over-obsessed with 'declining engagement' only to see shares triple in a single quarter, we think the debate around Twitter’s (NYSE:TWTR) MAU adds should eventually move to the background in favor of new product initiatives the company is working on," says Deutsche's Ross Sandler, reiterating a Buy and steep $60 target for the microblogging platform ahead of its Feb. 5 Q4 report.
- Sandler: "Consumer internet stories that have: 1) improving core products, and 2) are heavily undermonetized, tend to work themselves toward much higher valuations, and the best time to add to positions is when they are most out of favor. Twitter could be one of the best mean-reversion ideas for 2015."
- He does admit the catalyst that propelled Facebook higher (soaring mobile ad sales driven by ad load and advertiser growth) isn't available for Twitter, given its platform is demand-constrained and has less than 5% of Facebook's advertiser density, but sees other possibilities. "The catalyst could be any of: 1) instant timeline (non-curated Twitter-light), 2) international subs, 3) video, 4) logged out experiences, 5) messaging, 6) a partnership with Google, or non-disclosed product innovations."
- Co-founder/ex-CEO Evan Williams recently made a case for why MAUs provide an incomplete view of Twitter's value.
- BOX closed up 65.4% from its $14 IPO price, leaving it with a $2.77B market cap (15% above the valuation for its last funding round). 41.4M shares changed hands, or 3.3x the 12.5M sold through its IPO (before factoring the overallotment option).
- Co-founder/CEO Aaron Levie, best known to some for his Twitter one-liners, made the rounds today, arguing more than once his company's offerings are well-differentiated from the aggressively-priced cloud storage/file-sharing services of tech giants.
- Levie during a talk with Barron's: "What we’ve built really is software to help manage and collaborate and share throughout the business ... ultimately our customers buy our solution because we have built an amazing product to manage all that content. We get compared to more storage-oriented products, but there’s more to it."
- He called Microsoft (NASDAQ:MSFT), whose SharePoint collaboration platform is widely deployed and which is now offering unlimited OneDrive storage to Office 365 subs, Box's biggest competitor, but also one Box can stand out relative to. "I think our real differentiation is we do all the enterprise-oriented delivery, the industry compliance for FINRA, the security, and all that — but the really unique part is we deliver that in a consumer-grade experience, with open APIs, and that works across platforms."
- Levie suggests to Forbes Box will focus going forward on giving clients more tools for using/interpreting data, pointing to its recent acquisition of medical image-sharing platform MedXT as an example. He also notes Box is investing in industry-specific machine learning tools that analyze content to organize, surface, and recommend documents.
- Prior Box coverage
- Prospectus, IPO analysis
- Maguire Asset Management has disclosed a 2.5M-share (5.5% stake) in Novatel (NASDAQ:MIFI). The firm adds managing partner Timothy Maguire has issued a letter to the board "expressing confidence in [Novatel's] management team and offering continued support to help [Novatel] achieve its full potential."
- Maguire plans to continue investing in Novatel as long as its shares "trade at a discount to its most notable peers," and is "interested in being considered for any available position on the Board."
- Novatel has been exceptionally volatile this month: Shares soared from Jan. 2-9, sold off hard from Jan. 13-21, and have now risen 24% over the last two trading days. Forward sales multiples remain well below those of larger rival Sierra Wireless.
- Update: Novatel and theft-recovery service provider LoJack (NASDAQ:LOJN) have announced a partnership after the close. LoJack will rely on Novatel's 2G/3G telematics modems to enable an inventory-monitoring service for car dealers.
- Though 8x8 (NASDAQ:EGHT) met FQ3 estimates, its total business customers only rose by 617 Q/Q to 41,051 - a smaller gain than FQ2's 1,094 and the year-ago period's 2,079.
- On the CC (transcript), CFO Mary Ellen Genovese attributed the slowdown to "the end-of-life reduction of very small iTEL Connect customers which we acquired in 2008 and an emphasis on the part of our SMB team on selling larger deals." She added 8x8 expects this trend to continue as the SMB team keeps focusing on bigger deals and iTEL customers continue declining.
- CEO Vik Verma stated 8x8's SMB sales team, which has historically focused on deals involving less than 50 lines, is now selling deals "that we would have traditionally had sold through our mid-market channel." He also notes 8x8 is facing off against larger service providers as it expands in the mid-market, and argues the company's patents allow it to differentiate its cloud-based telecom services.
- While customer growth slowed, business ARPU rose to $305 from $299 in FQ2 and $274 a year ago. Also, churn was 1%, up slightly from 0.9% in FQ2 but down from 1.5% a year ago. Sales/marketing spend rose 28% Y/Y to $20.6M, and R&D spend 16% to $3.9M.
- FQ3 results, PR
- TheDeal reports Procera (NASDAQ:PKT) has hired advisors to help it explore a sale. Activist Merriman Capital has to be pleased.
- Though having jumped over the last two months in response to new contracts and a Q4 pre-announcement, the deep packet inspection hardware specialist remains far below a 2012 high of $25.99. Procera has nearly $5/share in cash/investments on its books.
- The Firsthand Technology Value Fund (SVVC -6.5%) saw 4.92M shares (57.5% of its outstanding shares) tendered through an offer to buy $20M of them at a price equal to 95% of a Dec. 31 NAV of $24.495/share; that translates to an offer price of $23.27/share, and the purchase of 859K shares.
- With the number of tendered shares well above the number Firsthand has committed to buying, the fund will acquire tendered shares on a pro rata basis.
- Firsthand currently trades 29% below its Dec. 31 NAV. GSV Capital can relate.
- TowerJazz (TSEM +4.4%) is up 13% on the week, making new 52-week highs along the way. Today's gains come on volume of 1.6M shares, soundly above a 3-month daily average of 1M.
- On Wednesday, Chardan Capital hiked its target for the Israeli specialty foundry by $2 to $17. SA Pro author Jaret Wilson provided an upbeat column last week: He thinks government approval of a planned Indian fab could arrive soon, and reports hearing TowerJazz might launch a new MEMS manufacturing JV.
- BMO has launched coverage on ServiceNow (NOW +5%) with an Outperform rating and $77 target ahead of its Jan. 28 Q4 report. Shares are now less than $3 away from an all-time high of $71.80 (set 11 months ago).
- The cloud IT service desk software vendor received bullish coverage from BofA/Merrill last month, as well as an RBC Top Pick call.
- A week after the WSJ reported E2open (NASDAQ:EOPN) is looking for a buyer, the cloud business process software vendor is once more shooting higher. Volume has been moderate - 306K shares vs. a 3-month daily average of 624K.
- Shares are now up 29% from a Jan. 9 low of $5.21. But they're still 77% below a 52-week high of $29.82.
- Hit hard in recent weeks, Enphase (NASDAQ:ENPH) is rebounding strongly today. 630K shares have been traded vs. a 3-month daily average of 741K.
- Friday short-covering could be driving the solar microinverter leader's gains: 4.2M shares (over 17% of the float) were shorted as of Dec. 31.
- Applied Materials (AMAT -1.7%) and ASML (ASML -1.5%) are off moderately after chip equipment peer KLA-Tencor (KLAC -7.1%) offered soft guidance (for the third quarter in a row) to go with an FQ2 beat. The Nasdaq is up 0.3%
- On the CC (transcript), CEO Rick Wallace stated KLA has seen orders from both foundry and logic clients for sub-20nm manufacturing equipment "pushed to later in the calendar year." KLA thinks the delays "reflect yield and process stability issues associated with bringing these advanced device architectures to market."
- In July and October, KLA primarily referenced foundry clients when explaining its light guidance. The logic client reference could be about Intel (by the far the biggest of them), which provided a conservative 2015 capex budget last week.
- Wallace also mentioned some orders related to "trailing-edge" manufacturing processes have been "a bit elusive," and that (notably) KLA thinks this is due to "some competitive dynamics in terms of second source strategies and so on."
- Analysts pressed KLA regarding its foundry-related issues, given TSMC is spending heavily and ASML reported strong Taiwanese foundry bookings (presumably from TSMC) earlier this week. On the other hand, memory was a strong point for both KLA and ASML in calendar Q4, respectively accounting for 44% and 27% of the companies' bookings.
- Revolution Analytics provides software (both free and enterprise versions) for using the open-source R statistical data analysis/modeling programming language. The company notes R is used by millions of statisticians and data scientists, and has "become the most popular language for data science and an essential tool for Finance and analytics-driven companies such as Google, Facebook, and LinkedIn."
- Microsoft (MSFT +0.2%) says it's acquiring Revolution to "help more companies use the power of R and data science to unlock big data insights with advanced analytics." Terms are undisclosed.
- The software giant observes Revolution's software enables the use of R-based analytics across giant datasets (including ones leveraging the popular Hadoop big data framework), and that its customers include major banks, pharma companies, manufacturing firms, and tech companies. It adds Revolution's offerings will be supported via Azure's public cloud services, as well as hybrid clouds and traditional on-premise deployments.
- The deal comes on the heels of Microsoft's purchase of legal/compliance text analysis software firm Equivio, whose technology will be integrated with Office. Microsoft has also launched an Azure predictive analytics service and an analytics hardware appliance (sold by OEM partners) since Satya Nadella became CEO.
- A German court has ruled ZTE and Asus didn't infringe the German parts of Vringo's (NASDAQ:VRNG) '136 and '941 European patents. The first patent covers devices (including hotspot-capable hardware) that provide data services between two networks, and the second is related to navigation systems providing traffic info. (8-K)
- Vringo says it's exploring all possible remedies, including appeal. A German court is also set to rule on the validity of the '136 and '941 patents (the hearing date hasn't yet been set).
- Vringo has been squaring off against ZTE in many different locales. Last month, a U.K. court ordered ZTE to pay Vringo $938K to cover the latter's legal costs for an infringement suit related to the U.K. part of Vringo's '919 European patent.
- After barely moving in AH trading yesterday in response to its FQ1 beat and strong FQ2 guidance, Skyworks (SWKS +2.3%) has risen above $81 today as a flurry of bullish analyst reactions arrive. Rivals/fellow iPhone suppliers Qorvo (QRVO +4.8%) and Avago (AVGO +1.6%) are heading in the same direction.
- Brean's Mike Burton, hiking his Skyworks target by $22 to $92: "The [FQ1] upside was predominantly driven by the Integrated Solutions segment as Apple's iPhone 6/6+ ramped ... we believe LTE growth in China and several new model ramps (Samsung Galaxy S6 amongst others to be unveiled in Barcelona) coupled with Skyworks Solutions less seasonal Broad Markets business is driving the better-than-seasonal guidance."
- Burton also thinks Skyworks is on its way to achieving a 50% gross margin (up from FQ1's 46.7%), and notes inventory days (58) were down by 15 Y/Y.
- Canaccord's Mike Walkley: "We believe Skyworks' diverse analog portfolio is enabling content share gains with its smartphone customers. Further, we anticipate Skyworks' share gains in markets such as WiFi 802.11ac, wireless infrastructure, and the IoT market are also driving strong growth trends." His FY16 (ends Sep. '16) EPS estimate has been hiked by $0.66 to $5.89.
- On the CC (transcript), CEO David Aldrich noted Skyworks' non-mobile design wins include a GM telematics platform, Cisco home gateways, ZigBee connectivity modules for Philips/LG smart light bulbs, Amazon's Echo and Fire TV devices, and a DirecTV set-top. China's Xiaomi has joined Apple and Samsung as a major mobile client.
- Qorvo reports on Jan. 28.
- Baidu's (BIDU +1.1%) Q4 report will arrive after the close on Wednesday, Feb. 11. CC at 8PM ET.
- Consensus is for revenue of RMB14.14B ($2.27B, +48.5% Y/Y) and EPS of RMB9.89 ($1.59). Shares +3% since the Chinese search giant provided mixed Q3 results, slightly soft guidance, and strong mobile metrics on Oct. 29.
- Deutsche recently offered positive pre-earnings commentary, and Brean did the same a few days later.
- An OTR Global survey of 17 U.S. ad agencies found the agencies plan to significantly boost their Pandora (NYSE:P) ad spend this year, and are generally pleased with the performance of Pandora ads. OTR also reports Pandora local ad spend rose 90% Y/Y in Q4.
- Pandora, which closed yesterday less than a dollar removed from its 52-week low of $15.26, has surged above $17 on OTR's report. The data comes four months after eMarketer observed Pandora's share of U.S. digital ad spend (an estimated 1.4%) remains far below its digital time share (7.1%), leaving plenty of room for growth. The Web radio leader has been investing heavily in growing its local ad salesforce.
- Q4 results are due on Feb. 5. Shares go for 3x 2015E sales. This year's revenue growth consensus is at 31.9%.
- Zillow (Z +11.6%) and Trulia (TRLA +13.2%) have skyrocketed in morning trading. The FTC staff has reportedly recommended approving the companies' all-stock merger.
- Zillow/Trulia agreed last year not to close their deal before Feb. 1, to give the FTC time to thoroughly review. Earlier this month, industry insider Brad Inman reported hearing the FTC would sign off on the deal (as has been generally expected). The combined company's share of online agent advertising has been in focus.
- Separately, Zillow has announced Zillow Pro for Brokers (a free program for real estate brokers that aims to improve listings and grow leads) now has over 5K nationwide partners, up over 2x since last July.
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