Today - Tuesday, May 5, 2015
- Netflix (NASDAQ:NFLX) is pressing the FCC to reject the $48B merger of AT&T (NYSE:T) and DirecTV (NASDAQ:DTV), according to regulatory filings revealed today, on complaints about market power -- as the merger could "lead to its becoming the largest (Internet service provider) in the country as well" as becoming the biggest MVPD.
- The remarks came as Netflix officials met with more than 20 FCC staff last week.
- "Such market power creates new incentives and abilities to harm entities that AT&T perceives as competitive threats," Netflix reps said, "and will exacerbate the anticompetitive behavior in which AT&T has already engaged."
- Netflix shares are up 3.8% today in the wake of BofA/Merrill Lynch's heavy upgrade; AT&T is down 1.2% and DirecTV is down 0.5%.
- The 170% rally delivered by InterCloud (NASDAQ:ICLD) since last Friday's backlog announcement is wholly unjustified, argues White Diamond Research. "In time, the share price will return to below $2 per share, because the company hasn't improved to any degree to merit a higher share price."
- White Diamond notes InterCloud merely stated its backlog had risen by $4M since December to $36M. It also considers yesterday's announcement regarding the launch of its NFVGrid network functions virtualization (NFV) orchestration software platform (helps telecom systems run on commodity hardware) old news. "ICLD has already been selling its NFV to its customers. NFVGrid is an upgrade to its NFV, but isn't a big development change."
- The firm dismisses comparisons between InterCloud and Voltari; the latter skyrocketed after Carl Icahn disclosed a 52.3% stake on March 31. "VLTC was a wild card, a misunderstood company that legendary investor Carl Icahn increased his stake in ... Whereas ICLD is a well known IT network company that has been pumped and dumped many times before, and doesn't have the backing of a great investor."
- InterCloud rose 78% on Friday, and another 54% on Monday. Shares still remain well below a 52-week high of $7.89.
- MicroVision (NASDAQ:MVIS) has entered into a $6M at-the-market stock offering agreement with boutique i-bank Meyers Associates. The agreement gives MicroVision the right to "offer and sell shares of its common stock having an aggregate value of up to $6 million" through Meyers subsidiary BP Capital.
- The deal comes a month after MicroVision received $2.5M through a warrant exercise. The pico-projector module developer had $16.7M in cash at the end of Q1, and no debt.
- Last week: MicroVision falls post-earnings; backlog at $18.7M
- Though Qualys (QLYS -28.8%) beat Q1 EPS estimates and only slightly missed on revenue, it's guiding for Q2 revenue of $39.5M-$40M and EPS of $0.09-$0.11, below a consensus of $40.7M and $0.13. Full-year guidance is for revenue of $165M-$166.5M and EPS of $0.50-$0.55 vs. a consensus of $168.4M and $0.53.
- Security tech peers are underperforming (HACK -2.9%) amid a 0.8% drop for the Nasdaq. Decliners include CyberArk (CYBR -3.6%), FireEye (FEYE -2.5%), Palo Alto Networks (PANW -2.9%), Proofpoint (PFPT -3.8%), and AVG (AVG -2.3%).
- Discussing its light full-year outlook, Qualys says it now expects "a lower growth rate for our Vulnerability Management business than we did at the beginning of 2015" The growth rate for other products is said to be unchanged.
- On the CC (transcript), Qualys noted Vulnerability Management (provides cloud-based tools for detecting and fixing IT vulnerabilities) still accounts for nearly 80% of revenue, and that business' Y/Y sales growth slipped to 19% in Q1 from 20% in Q4 thanks to "the timing of a few large enterprise deals." With shares up over 3x from their 52-week lows going into earnings, there was little margin for error.
- Baird has gone contrarian and upgraded Qualys to Outperform following the rout. Baird, which maintains a $50 target, sees new products/services will boost growth. Qualys launched a cloud-based IT asset monitoring service last month, as well as a service for securing Web apps.
- FireEye and CyberArk are giving back some of the big Friday gains seen following FireEye's Q1 beat and full-year guidance hike.
- RetailMeNot (NASDAQ:SALE) charged out of the market open, now up 15.6%, following its Q1 beat on top and bottom lines.
- Revenues slipped slightly from the prior year but came in ahead of expectations. EBITDA of $18.7M beat an expected $15.4M.
- Mobile online transaction net revenues (9% of total) were up 137% to $5.6M and advertising and in-store revenues (13% of total) were up 100% to $7.7M, partly making up for desktop online transactions (78% of total), which slipped 14% to $47.1M.
- Monthly mobile unique visitors grew 55% to 18.4M. Total visits were up 16% to 179.9M.
- The company's Q2 guidance is on the light side of expectations (net revenues of $55M-$58M vs. $58.6M expected, and EBITDA of $12M-$14M vs. $15.4M expected) and it reiterates full-year guidance of revenues of $275M-$285M and EBITDA of $92M-$100M, both in line with expectations.
- Press Release
- Believing restructuring efforts and an industry shift towards programmatic (automated) ad buys are pressuring near-term sales, Goldman's Debra Schwartz has downgraded AOL to Sell ahead of Friday's Q1 report, and cut her target by $6 to $38.
- Schwartz also notes a "monetization gap" exists between AOL's mobile and PC traffic - about half of the company's Q4 traffic came from mobile - and thinks AOL's ad ops could underperform long-term as firms such as Facebook expand their off-platform ad offerings.
- The downgrade comes after Yahoo, Yelp, and LinkedIn reported soft Q1 sales that were blamed in part on programmatic. AOL has been investing heavily in its programmatic ad tech offerings - the company's ONE platform, which aims to provide an integrated programmatic ad-buying solution across various media channels and data sources, launched last month.
- Last year: Programmatic ads pose challenge for Web publishers
- Believing mobile monetization growth is set to slow and that company is facing "intense competition," JPMorgan has downgraded Baidu to Neutral in the wake of last week's mixed Q1 results and subdued Q2 guidance, and cut its target by $25 to $215.
- JPMorgan estimates Baidu's mobile ad monetization rate is now at 80%-90% of PC level, and that mobile monetization growth will be near PC levels going forward. It doubts revenue growth will "surprise on the upside" until online-to-offline (O2O) initiatives or unique mobile products take off, and notes Alibaba and Tencent have their own O2O ambitions.
- BIDU -1.2% premarket to $201.30. Yesterday, T.H. Capital upgraded Baidu to Buy, arguing mobile/local search ad initiatives (including Baidu's efforts to let advertisers target based on geography) will act as a growth driver.
- Last week: Baidu falls post-earnings; bulls pleased with mobile, offline growth
- Discovery Communications (NASDAQ:DISCA) moved 2.6% higher premarket as aggressive international growth is paying off, and Q1 earnings beat expectations on solid revenue growth.
- EBITDA of $568M beat an expected $529M.
- Revenues by segment: U.S. Networks, $749M (up 6%); International Networks, $735M (up 10%); Education and Other, $54M (up 35%).
- At networks ad revenues were mostly flat overall while distribution revenues drove the solid gains.
- For the full year, excluding currency effects, Discovery's expecting total revenue to grow in high single to low double digits, EPS to grown in high single to low double digits, and adjusted OIBDA to grow in low to mid-single digits.
- Press Release
- Ernie Maddock, formerly the CFO of networking hardware vendor Riverbed Technology (was just taken private) and before that the CFO of chip equipment vendor Lam Research, has been named Micron's (NASDAQ:MU) new CFO, effective June 1.
- The announcement comes 6 months after Micron stated Ronald C. Foster would be retiring as CFO. President Mark W. Adams has been serving as interim CFO since March.
- MU -1.1% premarket to $28.36. Nasdaq futures are down 0.5%.
- Sprint (NYSE:S) was up 0.8% premarket as it posted a wider loss for its fiscal Q4 and lost core postpaid phone subscribers, but held off hard-charging T-Mobile in overall customers, 57.1M to 56.8M.
- Losses of $0.06 (A $0.05 adjusted loss) were expected, but revenue that dropped nearly 7% to $8.3B missed expectations by about $200M.
- The company posted 1.2M net adds to its platform -- including 211K postpaid net adds and 546 prepaid net adds -- but postpaid phone subscribers lost 201K on a net basis. Net platform adds were boosted by an increase of 349K tablet subscribers. Platform postpaid churn of 1.84% improved from 2.3% last quarter.
- Revenue breakout: Service revenue, $7.14B (down 9.4%); Equipment revenue, $1.14B (up 14.5%).
- Adjusted EBITDA of $1.74B beat an expected $1.67B.
- Press release
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