Seeking Alpha
  • Sunday, October 19, 2014

  • 5:59 PM
    • IBM has a "major business announcement" set for tomorrow at 7 a.m. Eastern.
    • The company also moved its earnings release time to premarket Monday, from its previous postmarket plan.
    | 46 Comments
  • Saturday, October 18, 2014

  • 4:00 PM
    • Sony (NYSE:SNE) has 40% upside if management shrinks its electronics exposure and steps up profits from its healthy movies, music, insurance, games and imaging chips businesses.
    • Bad news is already priced into shares, Jefferies analyst Atul Goyal says.
    • Sony has scheduled a Nov. 25 investor event during which it’s likely to give more details on restructuring plans.
    • Source: Barron's
    | 18 Comments
  • 3:36 PM
    • Samsung (OTC:SSNLF) has developed technology that could increase the data capacity of NAND flash memory chips by as much 50%.
    • Single-layer chips improve memory capacity and lower costs by narrowing circuit width. But many believe there is a physical limit to how narrow a circuit can be made. Multi-level chips can raise memory capacity without narrowing circuit width. Multi-level NAND chips are made by vertically stacking memory cells.
    • The purported 50% increase can be achieved by combining 3-bit cells (vs. conventional 2-bit) with multi-layering.
    • Source: Nikkei
    | 5 Comments
  • Friday, October 17, 2014

  • 6:59 PM
    • Zulily (NASDAQ:ZU) is "early with its unique value proposition to the affluent but value-conscious mom," writes Canaccord's Michael Graham, arguing the online women's/children's apparel retailer has differentiated itself in a very competitive market.
    • Graham, who launched coverage with a Buy rating and $45 target, even goes as far as to say Zulily has "turned shopping into a daily, serendipitous experience beginning promptly at 9:01 a.m., offering moms entertainment and shopping for non-mainstream fashion bargains."
    • He adds Zulily's suppliers "get valuable exposure to their target customers with economics that are competitive with those from a conventional retailer," and that his cohort analysis suggests "potential revenue upside."
    • The note arrives with shares down 49% from a February high of $73.50.
    | Comment!
  • 6:39 PM
    • Qihoo (NYSE:QIHU) is shooting for a 10% Chinese mobile search share by the end of 2014, and a 30% share within 2 years, says president Qi Xiangdong.
    • While Qihoo has been estimated to have a 30%+ PC search share, its mobile search share is much smaller. Baidu is believed to have over half the market, and Alibaba-owned UCWeb has also grown into a major player.
    • In August, Qihoo said mobile had grown to account for a "low-teen to mid-teen" % of its search traffic from just 5% at the beginning of the year, and was aiming for 25% by year's end.
    | Comment!
  • 6:17 PM
    • Thanks to its relatively strong October performance, Facebook's (FB +4.6%) market cap ($188.8B) is bigger than IBM's ($179.4B). The 10-year-old company now has the 5th-highest market cap in the tech universe, behind only Apple, Google, Microsoft, and Alibaba.
    • Meanwhile, Facebook partner Nanigans (provides software for managing Facebook ad campaigns) reports (.pdf) its clients saw their ad click rates rise 56% Q/Q and 195% Y/Y to 0.56%. Y/Y growth improved from 146% in Q2.
    • The average prices for 1K ads sold on a CPM basis rose 80% Q/Q and 298% Y/Y to $2.98, while the average price for individual ads sold on a CPC basis fell 4% Q/Q and rose 30% Y/Y to $0.53. Mobile made up 62% of spending, up from 56% in Q2.
    • Nanigans attributes the huge CPM growth to strong demand for news feed ads - their CPM rose 153% Y/Y to $5.62 - declining interest in cheaper right-hand column ads, larger right-hand column ad units, and (perhaps more interestingly) a 38% Q/Q increase in the use Facebook's Optimized CPM platform, which gives advertisers more control over campaigns and delivers better targeting.
    • Facebook, of course, has made many other efforts to improve targeting. Q3 results arrive on Oct. 28.
    | 9 Comments
  • 5:01 PM
    • Netlist (NASDAQ:NLST) has filed to sell up to $40M worth of securities through future offerings.
    • The filing comes 4 days after shares plunged on news two board members who disagreed with Netlist's "strategic and financing plans" had resigned.
    | 1 Comment
  • 4:05 PM
    • John Chen, discussing widespread reports of BlackBerry Passport (BBRY +2.1%) shortages: "I’m glad to have inventory issues. It shows that people want the phone ... We took a very conservative approach and didn’t order too many."
    • Chen previously disclosed 200K Passports had been sold in the two days after the phone, replete with a physical keyboard and 4.5" square display, officially launched. AT&T, which has a U.S. exclusive, hasn't begun selling the Passport on its site.
    • Separately, Chen declared BlackBerry "needs to and should be" in China, but added he doesn't yet have a strategy for entering the Middle Kingdom. He hopes to get some ideas while attending Beijing conference next month.
    • The BlackBerry CEO also reiterates his company is focused on users who need their phones to be productivity tools (he estimates it's 30% of the market), and isn't going after those who solely view them as entertainment devices. "That is not a space that we can afford to be in now. Being sexy and being a workhorse are two different things."
    | 48 Comments
  • 2:24 PM
    • The White House has nominated Michelle Lee, once Google's lead patent counsel, to head the USPTO. Lee is currently the USPTO's deputy director.
    • Google, like several other tech giants, has been a strong proponent of overhauling the U.S. patent system, with an eye towards limiting software patents and making it easier for defendants to recover legal fees from perceived patent trolls in the event that they win.
    • In June 2013, the White House unveiled a slew of executive actions and legal actions meant to curtail patent system abuses. This year, the Supreme Court upheld the patentability of software concepts, but also set limits. That ruling has been followed by a string of adverse decisions levied by lower federal courts against companies pursuing infringement claims.
    • IP licensing firms: ACTG, VHC, WILN, VRNG, CRDS, DSS, FNJN, MARA
    | 22 Comments
  • 1:55 PM
    • With last year's Grand Theft Auto V (TTWO +0.3%) launch skewing comps, NPD estimates U.S. physical retail video game sales fell 36% Y/Y in September to $481.2M, a worse decline than August's 21% drop.
    • The ongoing spending shift towards digital channels naturally contributed to the drop as well: SuperData Research estimates digital game spend rose 8.6% Y/Y in September to $873M.
    • Hardware spend rose 136% Y/Y (up from August's 116%) thanks to next-gen console demand: NPD thinks PS4 sales nearly tripled from August levels with the help of Sony's (SNE +1.8%) Destiny bundle, and outpaced Xbox One sales yet again. GameStop (GME +2.7%) investors approve of the numbers.
    • Electronic Arts (EA +4.5%) is rallying after Madden NFL 15, FIFA 15, NHL 15, and The Sims 4 respectively came in at #2, #3, #6, and #8 on NPD's top-10 list. Of the four games, only Madden was on the August list (#1 in its launch month). Battlefield 4 (#9 in August) fell out of the top-10.
    • As expected, Activision's (ATVI -0.5%) Destiny was #1. But Diablo III: Reaper of Souls fell to #10 from #2, and Call of Duty: Ghosts (#5 in August) dropped out of the top-10. Activision, like Take-Two, is sitting out a market rally.
    • EA reports on Oct. 28, Take-Two on Oct. 29, Sony on Oct. 31, and Activision on Nov. 4.
    | Comment!
  • 1:31 PM
    • "We see SunEdison as a solid play on U.S. and global solar growth and believe the company has done all of the right things to unlock shareholder value," writes Cowen's Jeffrey Osborne, upgrading SunEdison (NYSE:SUNE) to Outperform and hiking his target by $4 to $24.
    • Osborne also likes SunEdison's heavy reliance on U.S. solar projects, which limits the forex damage done by a strong dollar.
    • Shares are up strongly following the upgrade, and news SunEdison is thinking of building a $2B Chinese polysilicon plant with a local partner.
    | Comment!
  • 1:09 PM
    • "We expect to be in supply allocation and this will constrain our growth in some areas in Q4," said SanDisk (NASDAQ:SNDK) CFO Judy Bruner on the Q3 CC (transcript), discussing her company's light Q4 revenue outlook.
    • While SanDisk expects 2014 NAND industry bit supply growth of nearly 40%, its own captive bit supply is expected to grow slightly less than 25%. In 2015, SanDisk expects both industry supply and its own capacity to grow 30%-40%, but the company's "revenue bit growth" is forecast to be at the lower end of that range due to inventory-building.
    • Credit Suisse's John Pitzer isn't pleased with SanDisk's reluctance to increase its leverage to better support strategic customers (such as Apple). "While it is difficult to fault SNDK's absolute financial model relative to peers, relative to potential it is deficient." He maintains an Outperform rating, but cuts his target by $20 to $105.
    • Morgan Stanley's Joseph Moore thinks SanDisk's cautious approach will eventually pay off. "We would have liked to see upside, but we think these tight conditions are indicative of the broader supply growth challenge that set us up for an improved NAND environment in 2015 wherein gross margins can gradually climb." Likewise, Piper calls SanDisk's supply problem a good one to have.
    • SSD segment revenue (boosted by Fusion-io) grew 48% Y/Y in Q3, while embedded revenue (though up 30% Q/Q thanks to Apple) fell 16% Y/Y. Removal product revenue (memory cards, flash drives, etc.) was flat. Embedded sales are expected to be strong in Q4.
    • Though above yesterday's AH lows, shares are lower on a day the Nasdaq is up 1.6%.
    | Comment!
  • 12:15 PM
    • Much as Vringo just did for the unfavorable federal appeals court ruling it received for its Google suit, VirnetX (VHC -2.3%) has filed to request an en banc review of the adverse September appeals court ruling it received for its Apple suit.
    • VirnetX argues the September ruling is "contrary to the patent statute and Supreme Court precedent," and is asking the court to "rehear its decision with respect to damages and affirm the district court's damages award against Apple in full."
    • It's also asking for the court to "reinstate the jury's award that Apple infringed the '504 and '211 patents on the basis that the district court correctly construed the claim term 'secure communication link'."
    • Shares are down 68% from where they traded the day before news of the Apple ruling broke.
    | Comment!
  • 12:01 PM
    • The Cookeville, TN police department has placed an order for Digital Ally's (NASDAQ:DGLY) wearable cameras, in-car video systems, motorcycle video systems, and VuLink connectivity devices.
    • DGLY says Cookeville "engaged in extensive testing and evaluation of our systems, relative to the competition," and asserts VuLink "continues to pay healthy dividends in terms of the introduction of hands-free and simultaneous activation of officer-worn body cameras and in-car video systems." Cookeville had previously bought older DGLY hardware.
    • Shares have spiked on the news. They remain well below a September high of $33.59, but also well above early-August levels (before Ferguson came into the national spotlight).
    | 1 Comment
  • 11:49 AM
    • Mark Cuban on Twitter: "I'm buying NFLX stock. At half of YHOO, 10B<Twitter and small pct of major media companies, Someone will try to buy them."
    • Netflix (NFLX -3.8%), which has a current market cap of $20.9B, ticked slightly higher on Cuban's remarks, but continues to sell off for the second day in a row after reporting soft Q3 subscriber adds.
    • The outspoken Dallas Mavericks owner has plenty of industry experience: He once sold Broadcast.com to Yahoo for $5.7B, and now controls multiple studios and TV network AXS TV. He was less positive on Netflix back in 2010, predicting (not too accurately) the company would struggle to land deals for high-profile Hollywood content.
    | 26 Comments
  • 11:23 AM
    • Citing oil industry trends and a belief seismic product sales will remain weak, Cowen has downgraded Geospace (NASDAQ:GEOS) to Market Perform, and cut its target by $30 to $40.
    • Fellow oil/gas seismic equipment provider Ion Geophysical (IO -0.7%) is ticking lower on a day the Nasdaq is up 1.6%. Both Geospace and Ion have had rough years.
    | Comment!
  • 11:04 AM
    • Much as it took Google's (GOOG -1.4%) Q1 miss in stride (previous), the sell-side generally isn't too worried by the company's below-consensus Q3 results.
    • Several firms have cut their targets, but that might have as much to do with Google's YTD performance as anything else. Shares have pared their losses amid a Nasdaq rally.
    • Needham: "While Paid Clicks slowed, particularly in mobile, we believe Google is well positioned for the transition to mobile ...  We also expect Google to benefit from its strengthening relationship with brands. Google's efforts to prove that its online advertising attribution drives offline conversions should translate into larger ad budget allocations."
    • BGC: "The CPC decline abated. That’s a big positive. If CPCs flatline that’s going to help the core meaningfully." SunTrust: "Google continues to dominate search share and be a leader in display, video, mobile, and software applications. The network effects created powerful product extensions to provide a prolonged period of growth."
    • BofA is also staying bullish, but has cut its target by $70 to $600, and voices some concerns. "While some of the slowdown in growth is due to tougher comps, results suggest a slowing environment for Online traffic and advertising, or a competitive shift to social sites." It was only a few days ago that Eric Schmidt highlighted the threat posed by mobile apps to Google search.
    • Jordan Rohan (formerly with Stifel) notes that for all of the company's far-flung investments, Google's fortunes are still heavily tied to its original product. "Google’s core search business is the best Internet business model ever created. Every other business Google is in looks pedestrian by comparison."
    • Prior Google earnings coverage
    | 3 Comments
  • 10:37 AM
    • With its $11B acquisition of German rival E-Plus on the books, Telefonica (TEF +0.5%) plans to cut 1,600 of its 9,100 full-time positions in Europe's largest economy by 2018.
    • Telefonica Deutschland (OTC:TELDF +1.6% in Frankfurt) is aiming for $7B in revenue and cost synergies related to the E-Plus deal, in spite of the various concessions made to get EU approval. A source tells Bloomberg execs have also detailed plans to lower the post-merger company's tax payments.
    | Comment!
  • 10:19 AM
    • After pricing its 21M-share IPO at $19 (below a $21-$24 range), ZAYO opened at $21.51 and is now at $22.10, up 16.3%.
    • The fiber network owner is worth $5.2B - 4.6x trailing sales and 25x trailing levered free cash flow.
    • Zayo had $3.3B in debt as of June 30, to go with $297M in cash. Its revenue rose 12% Y/Y in FY14 to $1.12B.
    • Prospectus, IPO preview, analysis
    | Comment!
  • 10:00 AM
    • Barclays has upgraded CA (CA +1.6%) to Overweight ahead of its Oct. 22 FQ2 report.
    • The upgrade comes a day after the systems management software vendor (dealing with tough competition from upstarts such as SolarWinds and ServiceNow) made a fresh 52-week low of $25.25, before bouncing a little. Shares -20% YTD.
    | Comment!
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