Seeking Alpha
  • Friday, October 31, 2014

  • 6:49 PM
    • Tencent's (OTCPK:TCEHY) MyApp Android app store is now seeing 100M daily downloads, up from just 76M in July. The figure covers both apps downloaded directly from the MyApp store, and from Tencent's WeChat and Mobile QQ messaging platforms.
    • Qihoo and Baidu's 91 Wireless unit remain the leaders in China's fragmented Android app store market - 91 Wireless averaged 130M downloads/day in Q2. But the near-ubiquitous reach of WeChat/QQ within China, together with Tencent's mobile gaming clout, is helping Tencent gain ground.
    • Separately, Tencent, which is best known for its consumer offerings, has signed an MOU with IBM to jointly sell cloud apps and related services to Chinese SMBs. Tencent's cloud services unit will host the apps, and IBM will provide consulting and IT services.
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  • 6:17 PM
    • Morgan Stanley's Simon Flannery: "Crown Castle (CCI -6.2%) now offers a ~4% dividend yield, based on [Thursday's] closing price, compared to the REITs, which yield between 3.3% and 3.9%. We continue to see upside, as the stock attracts income oriented investors."
    • Though it just more than doubled its payout following pressure from activist Corvex Management, Crown Castle still expects to grow its dividend at a rate on par with its AFFO growth; the tower owner is aiming for 6%-7% growth on an organic basis.
    • Shares sold off due to disappointment with CCI's 2015 outlook: The company expects AFFO/share of $4.31-$4.37, below a $4.75 consensus. Site rental revenue is expected to rise to $3.047B-$3.067B from a 2014 level of $3.001B-$3.006B.
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  • 5:57 PM
    • BBM has been updated to include several new features: Among them: Support for messages/pictures that automatically erase following a specified amount of time (echoes of Snapchat); the ability to retract messages from a chat; HD photo transfers; and a new music discovery feature.
    • BlackBerry (NASDAQ:BBRY) says timed messages and message retractions - two features that could appeal to privacy-sensitive business users - will be available for free for the next 3 months, but will afterwards be "offered as part of a BBM subscription."
    • BlackBerry has previously announced plans to monetize BBM via mobile ads/sponsored content, virtual goods, and payments. BBM monthly active users (MAUs) totaled 91M at the end of August, up from ~60M at the time Android/iOS apps were released a year ago. Rivals include WhatsApp (600M+ MAUs), Line, Viber, WeChat, and Facebook Messenger.
  • 5:28 PM
    • Sony (SNE +5.8%) sold 3.3M PlayStation 4 units in calendar Q3, up from 2.7M in Q2 and easily outpacing the 2.4M Xboxes sold by Microsoft in Q3. In addition, Sony reported its gaming unit posted a $195M profit, up from $43M in Q2 thanks to rising PS4 game royalties.
    • VG Chartz estimates Sony has cumulatively sold 12.3M PS4 units since last fall, and Microsoft 6.1M Xbox One units. To boost sales, Microsoft recently slashed Xbox One prices by $50 - starting Nov. 2, the One sells for $349 without a Kinect, and $449 with one.
    • Electronic Arts (EA +2.8%), Activision (ATVI +1.9%), and Take-Two (TTWO +4.7%) outperformed again today. All three game developers rallied yesterday after Take-Two posted a big FQ2 beat on the back of strong sales for Grand Theft Auto V, NBA 2K14, and Borderlands 2. EA jumped thanks to an FQ2 beat and strong EPS guidance the day before.
    • GameStop (GME +1.5%) and PS4 CPU/GPU supplier AMD (AMD +1.8%) are likely also happy with Sony's PS4 sales figure.
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  • 4:48 PM
    • Though Castlight (CSLT -3.6%) beat Q3 EPS (and revenue) estimates, its Q4 EPS guidance (-$0.20 to -$0.22) was below a -$0.23 consensus. Revenue guidance of $12.8M-$13.2M was above a $12.6M consensus.
    • The cloud healthcare software provider added 29 clients in Q3 (7 in the Fortune 500), raising its total base to 159.
    • GAAP opex rose 64% Y/Y to $25.5M, with sales/marketing spend rising 70% to $14.8M.
    • Q3 results, PR
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  • 4:22 PM
    • In addition to beating Q3 estimates, Control4 (NASDAQ:CTRL) guided for Q4 revenue of $41M-$43M and EPS of $0.16-$0.22, in-line with a consensus of $41.7M and $0.18. With shares having gone into earnings down 23% YTD, that was well-received.
    • The home automation tech provider saw gross margin rise 120 bps Y/Y to 51.9%. GAAP opex rose 13% to $17.1M.
    • Q3 results, PR
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  • 4:11 PM
    • Mark Mendenhall, head of Trina's (TSL +3.9%) Americas ops, and Haiyan Sun, head of the company's distributed solar generation unit, have left "for personal reasons."
    • Mendenhall is being replaced by Jeff Dorety, formerly a North American exec for JA Solar. Sun is being replaced by Longxing Huang, formerly a VP for ShungFeng Photovoltaic.
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  • 3:50 PM
    • China Sunergy (CSUN +0.4%) states China Electric Equipment Group (CEEG) "failed to perform its payment obligations" under a share transfer agreement calling on it to make RMB39.6M ($6.5M) in additional payments. Thus far, CEEG has paid RMB40M to CSUN.
    • CSUN is "diligently working towards causing CEEG to resolve the issues", and says CEEG has "agreed to the Company that all remaining payment to which the Company is entitled under the Share Transfer Agreement would be paid in full."
    • Shares are largely missing out on a solar rally. CSUN has seen its CEO and CFO resign over the last 6 weeks.
    | 1 Comment
  • 3:42 PM
    • SunPower (SPWR +7.5%) is creating a JV with five Chinese firms to "develop and own at least three gigawatts of photovoltaic power plants."
    • The plants will be based in Sichuan Province, rely on SunPower's LCPV modules, and begin deployment in 2015. SunPower is investing $20M to obtain a 4.6% stake in the JV.
    • SunPower previously struck a Chinese JV deal in Dec. 2012. It has also built a 300MW solar cell receiver facility in the country.
    • Shares are among the biggest gainers on a good day for solar stocks.
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  • 3:31 PM
    • Arista Networks (ANET +9.5%) is blasting off amid a market rally. Q3 results are due on Nov. 6.
    • Last week, Arista updated its lineup of switches meant for leaf-spine network architectures, and also updated its EOS switch OS to simplify networking virtualization (VXLAN) deployments.
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  • 1:58 PM
    • "Management demonstrated this quarter that it could reaccelerate North America local billings, which should be viewed positively by investors," writes William Blair's Ralph Schack following Groupon's (GRPN +24.7%) Q3 beat. He adds the company's Nov. 11 analyst day could serve as a fresh catalyst.
    • Sterne Agee's Arvind Bhatia declares "execution improved and management delivered on all three of its Q4 targets a quarter early." He sees investors who had written off Groupon taking a second look.
    • Brean also notes Groupon's improved North American local performance, and declares its mobile metrics "continue to impress." Credit Suisse is more cautious: It's hiking its long-term gross profit and EBITDA forecasts, but also notes active customers fell by 700K Q/Q and expects "continued marketing and investment to drive Marketplaces awareness" to pressure near-term profits.
    • 22% of the float was shorted as of Oct. 15, providing plenty of fuel for a squeeze.
    • Prior earnings coverage
  • 1:42 PM
    • Expedia (EXPE +5%)  is rallying after beating Q3 estimates on the back of a 29% Y/Y increase in gross bookings (even with Q2's clip) to $13.5B. U.S. bookings rose 35% to $7.9B, and international bookings 22% to $5.6B.
    • Hotel room nights rose 24% Y/Y (down from Q2's 28%), and air tickets 30% (up from Q2's 28%). Revenue per room night fell 2%; revenue per ticket fell 7%.
    • Sales/marketing spend (much of it on Google) rose 30% to $815.8M, and tech/content spend 20% to $172.8M. $130M was spent on buybacks.
    • On the CC (transcript), the company reiterated guidance for 16%-19% full-year adjusted EBITDA growth. CEO Dara Khosrowshahi noted the Travelocity deal is boosting top-line performance, and said the company plans to increase investments in its Chinese eLong (LONG -0.5%) unit, which is facing "challenges and competitive headwinds."
    • With marketing spend remaining high and investments in eLong and Trivago ramping, Benchmark expects "minimal EBITDA margin expansion" in 2015. But it also expects 13%  sales growth after the Travelocity deal reaches its 1-year anniversary.
    • Priceline (PCLN +4.6%) and TripAdvisor (TRIP +2.8%) are getting a lift from Expedia. The Nasdaq is up 1.3%.
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  • 1:18 PM
    • Audience (ADNC -41.2%) has guided for Q4 revenue of $13M-$16M and EPS of -$0.47 to -$0.53, far below a consensus of $25.9M and -$0.30.
    • The voice processor developer says its Q3 sales were hurt by "continued near-term weakness in our core smartphone market, largely due to less than expected market acceptance of certain smartphone models." Leading customer Samsung's high-end Android sales have been weak, as other chipmakers can attest.
    • Pac Crest and Topeka have downgraded. Pac Crest thinks Audience will burn through its cash in 2015, given Samsung weakness and smart audio codec cancellations, and will likely have to do a capital raise.
    • Q3 results, PR
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  • 1:07 PM
    • BofA/Merrill has downgraded (CRCM -5.2%) to Underperform, and cut its target by $4 to $9.
    • Shares of the child/family care service marketplace are near their post-IPO low of $7.87.
  • 12:55 PM
    • LinkedIn's (NYSE:LNKD) Q3 beat more than offsets its light Q4 guidance, thinks FBR, one of several firms to hike its target today.
    • FBR likes LinkedIn's Q3 Talent Solutions customer adds - 2.2K vs. 1.7K a year ago - as well as user engagement trends, 14% Q/Q growth in sponsored news feed update ad sales (now 31% of Marketing Solutions revenue), and ongoing progress for Sales Navigator (now 25% of subscription revenue).
    • SunTrust expects a new Talent Solutions price hike to boost 2015 growth, and (like many others) considers Q4 guidance conservative. RBC takes note of LinkedIn's ARPU growth (5% Y/Y) and strong user metrics - registered members +28% Y/Y to 332M, monthly unique visitors +16% to 90M; member page views +28%.
    • Shares now +66% from a May low of $136.02.
    • Results/guidance, details.
    | Comment!
  • 12:38 PM
    • KLA-Tencor (KLAC +2.9%) is selling $250M worth of 2.375% notes due 2017, $250M of 3.375% notes due 2019, $500M of 4.125% notes due 2021, $1.25B of notes due 2024, and $250M of notes due 2034.
    • The chip equipment maker will use the proceeds, along with $750M in term loans and cash on hand, to finance its $2.75B ($16.50/share) special dividend, and to redeem $750M worth of 6.9% notes due 2018.
    • KLA had $2.9B in cash/marketable securities at the end of September, and $748M in debt. Shares are rallying on a good day for chip industry names.
    | Comment!
  • 12:29 PM
    • In a compromise proposal that could give both ISPs and net neutrality proponents much to complain about, the FCC plans to lightly regulate consumer broadband services - they'd be classified as a "retail" service - but also tightly regulate connections between sites and ISP networks under common carrier (i.e. Title II) rules originally created for phone networks.
    • The back-end rules could go over well with Netflix (NFLX +2.7%), which has reluctantly struck paid peering/interconnection deals with major ISPs to guarantee high streaming speeds. Reed Hastings has been vocally calling for tougher neutrality rules. Cogent's (CCOI +0.8%) shares tumbled after Netflix struck its first paid peering deal (with Comcast).
    • The last-mile rules, however, appear to leave the door open for ISPs to charge Internet companies extra for paid priority/fast-lane access, an idea previously floated by FCC chairman Tom Wheeler. Comcast, Verizon, and AT&T recently declared they have no plans to strike fast-lane deals.
    • Neutrality proponents question the ability of a hybrid proposal to withstand legal challenges. "The FCC would lose in court a third time," says Stanford law prof. Barbara van Schewick.
  • 11:48 AM
    • SouFun (SFUN +3.6%) has added top-5 Chinese home real estate agency Tospur to its list of partners.
    • SouFun will buy a 16% stake in Tospur for $62M, and the companies will respectively invest $9.8M and $6.5M in a JV providing "real estate Internet financing services."
    • Prior investment/partnership deals: Century 21 China, World Union/Hopefluent
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  • 11:31 AM
    • Three weeks after providing a calendar Q3 warning that triggered a massive chip stock rout, Microchip (MCHP +7.3%) has provided Q4 guidance that's in-line with lowered estimates. The microcontroller vendor, which has often seen trends emerge ahead of peers, also said it saw most of its inventory correction in Q3, and expects Q4 sales to be just "slightly below typical seasonal levels."
    • Chip stocks are up strongly (SOXX +4%) on a day the Nasdaq is up 1.4%. Since Microchip's warning, a slew of analog chipmakers and microcontroller firms (e.g. Atmel, Freescale, STMicro, Intersil, Linear) have offered light Q4 guidance, and other firms have reported seeing high-end Android weakness (e.g. Synaptics, Cirrus Logic, Amkor).
    • On the other hand, several mobile chipmakers (Skyworks, RF Micro, TriQuint, Silicon Motion), some of which have decent iPhone exposure, have provided strong results and/or guidance. Other chipmakers, such as Broadcom, Texas Instruments, and Xilinx, have rallied after delivering in-line guidance.
    • Susquehanna's Chris Caso: "By now, we think it’s clear that the weakness MCHP saw in September is not company specific ... The question now is if the full extent of the weakness has been dialed into estimates. If it has, then this would be among the shortest and mildest downturns in many years."
    • Notable gainers: SNDK +3.9%. MU +4.1%. AMAT +3.9%. TXN +4.7%. NXPI +3.9%. NVDA +3.5%. MXIM +4.7%. LLTC +5.1%. FCS +9.6%. FSL +8.8%ADI +6.5%. TQNT +6.8%. RFMD +6.5%. ATML +5.9%. AVGO +5.1%. MRVL +4.7%. AMCC +8.9%. BRCM +3.6%. TSM +4.4%. ARMH +3.3%.
    • Intel (INTC +3.5%) has recovered most of the losses it saw yesterday due to Intesil's (ISIL +3.3%) results and guidance, and related comments about a PC chip inventory correction.
  • 10:44 AM
    • Ellie Mae (NYSE:ELLI) beat Q3 estimates and guided for Q4 revenue of $41M-$42M, above a $39.5M consensus. But EPS guidance of $0.15-$0.18 is well below a $0.29 consensus.
    • On its CC (transcript), the mortgage origination software provider noted it's investing heavily to grow its sales to enterprise lenders. Expenses related to the acquisition of mortgage information provider AllRegs are also expected to ding EPS, as is a higher tax rate.
    • Active users of ELLI's Encompass mortgage origination platform rose 11% Y/Y in Q3 to 104.1K, and revenue per active Encompass user grew 17% to $419. Industry origination volumes are expected to be down 15% Q/Q and 20% Y/Y in Q4.
    • Q3 results, PR
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