Seeking Alpha
  • Today - Thursday, December 18, 2014

  • 2:37 PM
    • As expected, Zillow (Z -3.3%) and Trulia (TRLA -3.6%) shareholders have signed off on the companies' all-stock merger by overwhelming margins.
    • Regulators still need to sign off on the deal, which the companies expect will close in 1H15. Zillow previously agreed not to close the merger before Feb. 1, to give the FTC more time to review.
    • Trulia shareholders will receive 0.44 shares of the combined company for each Trulia share they own. Trulia shares currently trade at a 0.43x ratio to Zillow shares (implies a slight discount to the merger price).
    • Shares of both companies are selling off in spite of a strong market rally.
    | 1 Comment
  • 2:04 PM
    • With the help of stronger-than-expected hardware sales, Oracle (ORCL +9.2%) beat FQ2 estimates in spite of a 400 bps forex headwind (twice what was originally expected). FQ3 guidance was conservative after taking forex pressures into account.
    • The numbers have been good enough for Oracle to surge to new highs and receive a slew of target hikes, and to lead many enterprise tech names to outperform amid a big market rally. The Nasdaq is up 1.9%.
    • Microsoft (MSFT +3.2%), Cisco (CSCO +2.3%), EMC (EMC +3.7%), VMware (VMW +5.1%), and beaten-down IBM (IBM +2.8%) are among the enterprise tech names outperforming today. Others: SPLK +4.6%. CA +3.5%. RHT +3.4%. VRNS +6.3%. PCTY +5.8%. JIVE +4.6%. VMEM +5.2%. SAAS +4.7%. BRCD +3.8%.
    • Oracle's healthy cloud software numbers are drawing attention: While traditional software license revenue fell 4% Y/Y, its SaaS/PaaS revenue rose 41%. SaaS/PaaS bookings totaled $170M, and are expected to be "well over" $1B in FY16 (ends May '16). Fusion cloud app bookings rose over 100%.
    • On the CC (transcript), Oracle performed its customary trash-talking of cloud app rivals. "We are clearly growing faster than Salesforce (CRM +4%) and were more than three times the size of Workday (WDAY +3.2%)." Both firms are posting solid gains.
    • Oracle's numbers come as Bloomberg reports the Chinese government is looking to "purge most foreign technology from banks, the military, state-owned enterprises and key government agencies by 2020." IBM, Cisco, and other U.S. firms have already seen their Chinese sales fall sharply following last year's NSA spying uproar.
    | Comment!
  • 1:14 PM
    • In addition to beating FQ1 estimates, Accenture (ACN +4.3%) has hiked its guidance for FY15 (ends Aug. '15) local currency revenue growth to 5%-8% from 4%-7%. On the other hand, forex is now expected to have 500 bps impact on revenue, up from a prior 200 bps.
    • As a result, FY15 EPS guidance has been lowered to $4.66-$4.80 from $4.74-$4.88 - consensus is at $4.81 - and FQ2 revenue guidance of $7.25B-$7.5B is mostly below a $7.46B consensus. The market appears to have discounted forex pressures in advance.
    • FQ1 new bookings totaled $7.7B, down from $8.7B a year ago. Consulting bookings fell to $3.9B from $4.3B, and outsourcing bookings to $3.8B from $4.4B.
    • Gross margin fell 110 bps Y/Y to 32.2%, but cost controls helped SG&A spend fall to 17.1% of revenue from 18.7%. As a result, op. margin rose 20 bps to 15%. $670M was spent on buybacks.
    • North America revenue +11% to $3.44B; Europe +5% to $2.91B; "Growth Markets" +3% to $1.55B. Forex respectively had 400 bps and 600 bps impacts on Europe and Growth Markets revenue growth.
    • Accenture has made new highs. Outsourcing rivals Infosys (INFY +3%), Wipro (WIT +4.9%), and Cognizant (CTSH +4.3%) are also outperforming on a good day for equities.
    • FQ1 results, PR
    | Comment!
  • 12:54 PM
    • Russian carrier MTS (MBT +24.7%) has soared on a day Russia's MICEX index rose 4.5%. Rival VimpelCom (VIP +5.7%) and online payments firm Qiwi (QIWI +5%) are also outperforming.
    • The ruble has seen relatively modest price swings today after plunging on Monday and Tuesday, and rebounding on Wednesday. The dollar/ruble exchange rate is currently at 61.04.
    • Yesterday: Russian tech/telecom stocks rebound
    | Comment!
  • 12:37 PM
    • Groupon (NASDAQ:GRPN) is among the tech sector's top performers on a day the Nasdaq is up 1.5%. 21.3M shares (well above a 3-month daily average of 15.9M) have already changed hands.
    • The gains come a day after Leon Cooperman declared on CNBC Groupon is worth 40%-50% more than what it's trading for. 89.3M shares (21% of the float) were shorted as of Nov. 28.
    | Comment!
  • 12:18 PM
    • While the Guggenheim Solar ETF is only modestly outperforming the Nasdaq (+2% vs. +1.6%), First Solar (FSLR +6.2%) and SolarCity (SCTY +6.9%) are posting big gains.
    • Both names had tumbled in late November and early December, in tandem with plunging crude oil prices. More than a few bulls had argued the link between crude prices and solar demand is limited.
    • Recent SA Pro articles on First Solar and SolarCity: I, II
  • 12:02 PM
    • Pac Crest has upgraded Infoblox (NYSE:BLOX) to Outperform. Shares of the DNS/IP address hardware vendor have risen to their highest levels since May.
    • The upgrade comes three weeks after Infoblox beat FQ1 estimates and named a new CEO.
    | Comment!
  • 11:43 AM
    • Majesco (COOL +42.7%) has obtained $6M in financing from "certain accredited investors." $1M has been released to the company; the rest will be "subsequently released in one or more tranches, pending certain conditions being met."
    • The funds were raised through the sale (at $0.68 apiece) of units consisting of one share of 0% convertible preferred stock and one 5-year warrant to buy a share of common stock at $0.68. Shareholder approval for converting the preferred shares and exercising the warrants is one of the conditions for releasing the full $6M.
    • Allan Grafman has resigned as chairman. Jesse Sutton will remain CEO, but has resigned from the board.
    • Paulson Investment CEO Trent D. Davis is the struggling game developer's new chairman. Mohit Bhansali will also be joining the board.
    | 1 Comment
  • 11:30 AM
    • Wells Fargo has launched coverage on LinkedIn (NYSE:LNKD) with an Outperform rating and $260-$270 valuation range.
    • The firm forecasts LinkedIn will post a 31% revenue CAGR from 2014-2016, and see its adjusted EBITDA margin rise to 28.4% in 2016 from 26.3% in 2014.
    • The professional social networking leader is up 68% from a May low of $136.02. Shares go for 9.6x 2015E sales.
  • 11:13 AM
    • FireEye (FEYE +4.9%), recently hired by Sony to probe its massive hacking incident, is rallying strongly on an up day for equities after Sony cancelled The Interview's release in response to the hack and subsequent threats on movie theater chains.
    • Other security tech names are also outperforming: PANW +3.2%. KEYW +3.9%. FTNT +2.6%. PFPT +3.2%. Imperva (IMPV +2.6%) is adding to the Wednesday gains it saw following a Deutsche upgrade.
    | Comment!
  • 10:58 AM
    • Windstream (WIN -1.9%) plans to retain a 19.9% stake in its network asset REIT spinoff (set for 1H15), and distribute the other 80.1% to shareholders. The retained shares "will be sold opportunistically during a 12-month period following the spinoff, subject to market conditions, with the net proceeds used to retire debt."
    • In tandem with the spinoff, Windstream plans to carry out 1:6 reverse split, and (to avoid a $600M-$800M tax liability) convert into an LLC. Shareholders will vote on the split at a Feb. 20 meeting.
    • Windstream expects to cut its debt load by $4B through the spinoff. As previously announced, the telco's total dividend (covering both Windstream proper and the REIT) will be cut by $0.30 to $0.70/share (8% yield at current levels).
    • The announcement follows last week's surprise resignation of CEO Jeff Gardner, and his replacement by REIT spinoff chief Tony Thomas. There has been speculation Gardner's resignation stemmed from REIT plan disagreements.
    • Shares are lower on a day the S&P is up 1.3%.
    | 1 Comment
  • 10:43 AM
    • Citing "a reduction in mobile design wins at one of its largest customers," Silicon Image (SIMG -25.4%) expects 2015 revenue to be down 10% Y/Y; consensus is for 6.4% growth.
    • The customer in question might be Samsung, with whom SIMG has scored a number of MHL video transmitter IC design wins for high-volume phones.
    • Consumer electronics chip sales are expected to remain strong next year, thanks to further MHL penetration within the TV market and growing sales of 4K sets featuring the company's HDMI 2.0/MHL 3.0 ICs.
    | Comment!
  • 10:34 AM
    • Citi has added Applied Materials (AMAT +1.5%) its Focus List, and hiked its target all the way to $36. Meanwhile, Applied rival/David Einhorn favorite Lam Research (LRCX +2.1%) has been upgraded to Buy, and chip test equipment maker Teradyne (TER -0.1%) to downgraded to Neutral.
    • Citi thinks Applied could deliver over $2.50/year in EPS once the Tokyo Electron (OTCPK:TOELF) merger closes - well above the $1.80 forecast in October by BofA. Regulators are still vetting the deal.
    • Meanwhile, Japan's semi equipment trade association (SEAJ) has reported (.pdf) a November rolling 3-month book-to-bill of 1.33 for local equipment makers. That's well above October's 1.11 and September's 0.93.
    • AMAT and LRCX are following markets higher - the Nasdaq is up 1.5% - while Teradyne is underperforming.
    • Previous: Berenberg bullish on Applied and Lam, cautious on KLA and ASML
    | Comment!
  • 9:59 AM
    • Germany's Manager Magazin reports Alcatel-Lucent (ALU +4.8%) and Nokia (NOK +0.6%) have revived M&A talks this fall, and could agree to a merger or close partnership.
    • Reuters reported a year ago Nokia was "discussing internally" whether it should pursue a tie-up with Alcatel-Lucent, after reaching a deal to sell its phone unit to Microsoft. The WSJ later reported Nokia had decided not to pursue an Alcatel deal for the time being.
    • Nokia and Alcatel have considerable mobile infrastructure overlap, but a relatively limited amount of wireline equipment overlap. Alcatel's carrier IP networking (router/switch) ops are often seen as the company's most valuable asset.
    • Nokia is currently worth $30B, and Alcatel $9.8B. The latter has been aggressively cutting costs.
  • 9:43 AM
    • Kandi's (NASDAQ:KNDI) EV JV has delivered 700 EVs to an auto distributor in the city of Guangzhou. The sale will produce revenue of RMB90.2M ($14.5M); that implies an ASP of $21.4K. Buyers will have access to matching national and local government subsidies.
    • Yesterday, Kandi announced the delivery of 1K EVs to Chengdu. For reference, the EV JV sold 1,950 "EV products" in Q3, and had 4,114 EV sales in Q2. A 10% purchase tax exemption went into effect in September.
    | Comment!
  • 9:24 AM
    • ChinaCache's (NASDAQ:CCIH) buyback is good for repurchasing 4% of shares at current levels.
    • The Chinese CDN owner had $76.4M in cash at the end of Q3 to fund repurchases with. Shares are up slightly YTD, but have lost over 2/3 of their value from their March highs.
    | Comment!
  • 9:20 AM
    • Believing TV demand will be strong in the coming years as consumers upgrade their first flat-panel sets, Citi has upgraded Corning (NYSE:GLW) to Buy and hiked its target by $4 to $25.
    • Last week, Corning hiked its Q4 LCD glass volume and pricing guidance, while citing stronger-than-expected LCD TV market demand. Both larger screen sizes and the adoption of 4K sets has been boosting demand.
    • NPD recently observed 32" and smaller TV sets accounted for the less than half of Thanksgiving week sales for the first time. Demand for larger sets rose sharply, with 50-64" sets seeing more sales than 33-49" sets. 65" and larger sets managed to account for over 5% of volume.
    • Stronger demand for larger sets also benefits LCD panel suppliers AU Optronics (NYSE:AUO) and LG Display (NYSE:LPL).
    • Yesterday: Dow Corning shuttering plant
    | 1 Comment
  • 8:14 AM
    • Amazon (NASDAQ:AMZN) confirms it has rolled out Prime Now in Manhattan.
    • The delivery service promises one-hour delivery for qualifying products at a price of $7.99.
    • The company has set up a base of operations and fleet of bikes at a building on 34th street in the middle of the island.
    • Customers of Prime Now must pay the $99 per year Prime membership fee to qualify for the service.
    • Amazon expects to roll out the service to other cities next year.
    • Previously: Amazon testing bike messengers to enable 1-hour delivery
  • 8:07 AM
    • Optical Cable (NASDAQ:OCC): FQ4 EPS of $0.14.
    • Revenue of $25.25M (+31.2% Y/Y).
    • Press Release
    | Comment!
  • 8:01 AM
    • The hacking incident at Sony (NYSE:SNE) could cost the company at least $200M, according to some early estimates.
    • The laundry list of expenses include new software and hardware, investigative costs, legal fees, and lost productivity across the company. The $80M production budget for The Interview also appears to be a washout with the company canceling all screenings and putting VOD plans on hold.
    • There's also the potential that future Sony movies will perform poorly at the box office after being released early by the hackers.
    • Insurance could cover part of the Sony losses, although not without a battle.
    • Previously: Legal quicksand for Sony after breach (Dec. 10 2014)
    • SNE +3.0% premarket to $21.00 to take back some ground over the last week.
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