Seeking Alpha
  • Saturday, January 31, 2015

  • 2:56 PM
    • IBM has approved a 2015 compensation package for CEO Ginni Rometty that includes a $1.6M base salary (up from 2014's $1.5M), $13.3M in restricted stock units (up from 2014's $12.75M), and a potential $5M bonus (up from 2014's $4M, of which $3.6M was earned). The stock units, whose granting is tied to hitting EPS and cash flow targets, will be distributed in 2018. (8-K)
    • The pay hike follows a 2014 in which IBM's dividend-adjusted stock price fell 12%, and its EPS and free cash flow respectively declined 1% and 18% amid top-line pressures that cut across hardware, software, and services. The year also saw Big Blue pull its $20 2015 EPS target.
    • After factoring dividends, IBM's shares are down 11% since Rometty became CEO at the beginning of 2012.
  • 2:17 PM
    • While Dish Network had the most strategically interesting outcome in the FCC's wireless spectrum auction, AT&T (NYSE:T) dropped the biggest bomb, with its $18.2B bid package surpassing the auction's reserve price all by itself.
    • The high bid for a single license: about $2.8B for a primary New York license, won by AT&T.
    • AT&T's challenge now: With about $4.5B in the bank, and $18.2B due to go to the FCC by March 2, the telecom giant will need to scramble a bit for funds.
    • The company displayed confidence via a statement about its bid: It "expects that with this spectrum investment and other pending acquisitions, in the near term it may go above its 1.8x net-debt-to-EBITDA target. The company will use excess cash — after paying its dividend — over the next three years to pay down debt, and expects to return to historical debt ratios."
    • It's not just the auction bid that's changing AT&T from a low-leverage investment to a high-leverage one; a $49B acquisition of DirecTV (NASDAQ:DTV) and its purchases of Mexico's Iusacell and Nextel are putting pressure on its purse (and possibly its single-A rating). AT&T recently entered into $11B in credit pacts.
  • 1:47 PM
    • After learning which way AT&T (NYSE:T) went (high) and which way Verizon Wireless (NYSE:VZ) went (low) in the 11-week FCC wireless spectrum auction, most attention focused on Dish Network (NASDAQ:DISH): What are they up to?
    • The satellite firm took just short of half of the available licenses (and saved over $3B by cannily working through small-business partners) but doesn't offer mobile service -- yet.
    • Dish's fortunes in this auction were linked to those of Verizon, which is widely considered a potential buyer or lessee of Dish's spectrum assets. But Dish's Charlie Ergen has pursued wireless firms before (MetroPCS and Sprint (NYSE:S)) and may see wireless mobile as the next path forward from a slower-growing business.
    • “I think [Ergen's] strategy is built around a confidence that spectrum will only become more valuable going forward,” says former FCC commissioner Robert McDowell.
    • DISH closed the day out down 4.3%, slightly below where it was sitting before the auction results were released.
  • Friday, January 30, 2015

  • 7:01 PM
    • Constant Contact (CTCT -3.5%) was caught in the market's downdraft despite a solid earnings beat Thursday and some positive takes from analysts Friday.
    • National Securities initiated coverage of the stock at Buy, with a price target of $50, based on the belief that Constant Contact should trade at a 50% discount to comparable firms' estimated average enterprise value/EBITDA ratio of 23x, as compared to the current 60% discount.
    • Meanwhile, Oppenheimer reiterated their Outperform on the shares with a price target of $43.
    • CTCT closed Friday at $37.82.
    • Previously: Constant Contact operating numbers gain for Q4 (Jan. 29 2015)
    • Previously: Constant Contact up 1.9% on Credit Suisse upgrade (Jan. 27 2015)
    | Comment!
  • 7:00 PM
    • Twitter (NYSE:TWTR) chairman Jack Dorsey and fellow co-founder Evan Williams let employees know at a recent meeting they and the board are "super supportive" of embattled CEO Dick Costolo, Kara Swisher reports. Dorsey also recently defended Costolo on (drumroll...) Twitter.
    • Sources state this show of support comes amid "growing worries about potential attacks from activist shareholders." The WSJ ran a column in November highlighting shareholder discontent with Costolo, and Twitter's shares spiked on Dec. 22 thanks to speculation Costolo could be on his way out.
    • Swisher reports "a number of former employees are getting pinged by hedge funds about Costolo, who appear to be doing extensive research on him." Stephen Mandel's Lone Pine Capital is said to be among the firms.
    • Working against would-be activists: Twitter can issue preferred shares with special voting rights (i.e. a poison pill) without shareholder approval, and shareholders can't call a special meeting to make changes. Working in their favor: Twitter (unlike Google or Facebook) doesn't have a dual-class share structure.
    • Twitter's Q4 numbers (due in six days) could either ease the pressure facing Costolo or heighten it.
  • 6:41 PM
    • Dex Media (NASDAQ:DXM) fell 7% in trading today, hitting levels last seen in April. Shares fell 24% over the whole of January.
    • Earlier today, Dex filed a Q4 report for one-time merger partner SuperMedia, done to comply with the reporting requirements of the Delaware court that handled Dex/SuperMedia's 2013 Chap. 11 filing. The report states SuperMedia had cash/equivalents of $64.7M at the end of December, $270.4M in cash available, and $2.49B in notes receivable.
  • 6:27 PM
    • InvenSense (NYSE:INVN) pared the steep AH losses it saw yesterday due to the margin concerns that accompanied its FQ3 results and FQ4 guidance, but nonetheless closed down 6.6%.
    • Rosenblatt's Brian Blair (Neutral) spells out the margin concerns weighing on shares:  "The lack of EPS upside and the gross margin softness speaks to the aggressive pricing that we believe has been necessary for InvenSense to win/maintain designs with Apple and creates a continued overhang for the stock." He also believes more FQ3 upside was expected given Apple's strong calendar Q4 iPhone sales.
    • Canaccord's Matt Ramsay (Buy) expects gross margin to remain "well-below the low-50s target range" in the near-term. However, he thinks 4th-gen 6-axis motion sensors and integrated DSP/microcontroller sensors can lift margins in 2016, and sees plenty of room for growth. "Long term, wearables and the IoT present a diverse set of opportunities, where growth will likely ramp more slowly but with more attractive ASP and margin profiles versus mobile."
    • Ascendiant's Cody Acree (Buy): "[W]e expect a likely conservative 21% revenue growth next year (FY16), with 57% earnings growth ... As the company continues to improve product and customer diversification, expand its sensor portfolio and system footprint to include more processing and software content, and participate as sensors become more pervasive outside of mobile applications, we expect INVN’s gross margins to move sustainably above its 50% target."
    | 1 Comment
  • 6:09 PM
    • After having risen sharply over the prior four trading days, Mitek (NASDAQ:MITK) sold off in the wake of its FQ1 beat. Shares still finished the week up 14%.
    • On the CC (transcript), CFO Russ Clark guided for FQ2 operating expenses of $5.25M-$5.75M, and litigation spend of $200K-$300K. Mitek's total FQ1 costs/expenses amounted to $5.26M (-12% Y/Y). The company suggests R&D and (to a lesser extent) sales spending growth is mostly responsible for the guidance.
    • CEO Jim DeBello states 33M U.S. consumers used Mobile Deposit last year, and sees the user base rising to 47M by the end of 2015. The U.K. and Brazil, each of whom are expected to sign off on image check deposit legislation, are seen as growth opportunities, as is broader usage of the MiSnap automatic image capture platform and risk mitigation solutions that allow banks to raise check deposit size limits.
    • FQ1 results, details
  • 5:42 PM
    • Priceline's (NASDAQ:PCLN) Q4 report will arrive at 7AM ET on Thursday, Feb. 19. CC at 7:30AM.
    • Consensus is for revenue of $1.8B (+16.6% Y/Y) and EPS of $10.07 (+14%). With forex concerns looming large, shares have fallen 16% since the online travel giant provided light Q4 guidance to go with a Q3 EPS beat on Nov. 4.
    | Comment!
  • 5:30 PM
    • Though it had previously struck a deal to use TubeMogul's (NASDAQ:TUBE) video ad-buying platform, snack food giant Mondelez partly opted to use Google's (NASDAQ:GOOG) rival DoubleClick Bid Manager platform to run YouTube campaigns following "contentious behind-the-scenes negotiations," TheStreetSweeper reports. Google is believed to have used YouTube's TrueView ad system as leverage.
    • An analyst talking with TheStreetSweeper: "It’s clear Tube’s technology is nothing special, since Google did this. And besides Google, there’s a lot of other companies that could do the same."
    • TubeMogul CEO Brett Wilson has argued the Google/Mondelez deal is a positive for the online video ad industry at-large, and stated TubeMogul still thinks it "will continue to be used as Mondelez's software for brand advertising and will be the pipes, if you will, to facilitate any of their publisher buys Google or otherwise."
    • In addition to the Mondelez deal, TheStreetSweeper cites strong insider selling from CTO Adam Rose (through an automatic trading plan) and steep multiples relative to peers Rocket Fuel and YuMe as reasons to be bearish on TubeMogul. Worth noting: TubeMogul's Y/Y sales growth (112% in Q3) is much stronger than that of either of the cited peers.
    • Shares fell 4.5% in regular trading. Q4 results arrive on Feb. 26.
  • 4:51 PM
    • OmniVision (NASDAQ:OVTI) will report FQ3 results after the close on Thursday, February 26th. The conference call will begin at 5.00pm ET.
    • Consensus views are for EPS of $0.29 and revenue of $292.1M (-17% Y/Y).
    | Comment!
  • 4:51 PM
    • Cray (NASDAQ:CRAY) will report Q4 and full-year results after the close on Wednesday, February 11th. The conference call will begin at 4.30pm ET.
    • Consensus views for Q4 and 2014 are for EPS of $0.82 and $0.41 and revenue of $260.33M (-15.3% Y/Y) and $560M (+6.5%), respectively.
    | Comment!
  • 4:50 PM
    • NetApp (NASDAQ:NTAP) will report FQ3 results after the close on Wednesday, February 11th. The conference call will begin at 5.30pm ET.
    • Consensus views are for EPS of $0.77 and revenue of $1.61B (flat Y/Y).
    | Comment!
  • 4:50 PM
    • Applied Materials (AMAT) will report  FQ1 results after the close on Wednesday, February 11. The conference call will begin at 4.30 pm ET.
    • Consensus views are for EPS of $0.27 and revenue of $2.34B (+6.7% Y/Y).
    | Comment!
  • 4:49 PM
    • Lexmark (NYSE:LXK) will buy back $30M worth of shares (1.2% of shares outstanding) through an accelerated repurchase agreement (ASR) with Citi. (8-K)
    • The deal requires Citi to "deliver 624,235 shares to [Lexmark] on January 30, 2015, equal to 85 percent of the shares that would be repurchased at a price of $40.85, the closing price of [Lexmark's] Class A Common Stock on January 27, 2015."
    • Lexmark spent $80M on buybacks in 2014. News of the ASR comes with Lexmark less than $3 away from a 52-week low of $37.37.
    | 1 Comment
  • 4:41 PM
    • Though Aviat (NASDAQ:AVNW) beat FQ2 estimates, it's guiding for FQ3 revenue of $75M-$80M, well below a three-analyst $92.2M consensus. That led shares to drop 7.9% today to $1.28.
    • The RF backhaul hardware vendor says it expects "lower revenue in North America following higher than anticipated revenue contribution in the second quarter of fiscal 2015," and doesn't expect an African recovery until later in FY15.
    • North American revenue rose 31% Y/Y in FQ2 to $44.2M; international revenue fell 7% to $48.3M. Aviat's cash balance fell by $3.7M Q/Q to $38.7M.
    • Peers followed Aviat lower: DragonWave (NASDAQ:DRWI) fell 4.7% to $0.80 and Ceragon (NASDAQ:CRNT) fell 5.1% to $0.88. Both companies made new 52-week lows.
    | Comment!
  • 4:23 PM
    • Quantum's (NYSE:QTM) FQ4 revenue guidance of $130M-$135M is mostly above a three-analyst $130.2M consensus. However, EPS guidance is only at $0.01-$0.02 vs. a $0.02 consensus. A culprit: Gross margin is expected to drop to 43%-45% from FQ3's 46.2% (+270 bps Y/Y).
    • Though FQ3 revenue ($142.1M) officially missed consensus, it was in-line with the guidance provided in the company's Jan. 13 warning, as was EPS.
    • On the CC (transcript), CEO John Gacek stated FQ3 sales guidance "reflects momentum we have in scale-out storage and DXi, offset by uncertainty around OEM tape [storage] and foreign currency risks." He added Quantum has "multiple large deals and new partnerships that are difficult to forecast at this point."
    • The company has also announced it's buying back $50M worth of convertible senior notes due 2015 using cash. Quantum ended 2014 with $107M worth of cash/equivalents, and $204M in convertible debt.
    • FQ3 results, PR
    | Comment!
  • 4:06 PM
    • Acacia (NASDAQ:ACTG) sold off hard to end what was already a rough month. Shares have closed less than $0.50 away from the IP licensing services firm's 52-week low of $12.11, set on Jan. 21 following news of adverse summary judgments in a suit against Apple, AT&T, Verizon, and HTC.
    • This morning Acacia disclosed its In-Depth Test subsidiary had reached a settlement/licensing deal with analog chipmaker Intersil, thereby ending a patent suit against the latter.
    | Comment!
  • 2:56 PM
    • Optical networking/carrier Ethernet hardware vendor Ciena (CIEN -4%), optical component suppliers Finisar (FNSR -2.4%) and Oclaro (OCLR -2%), and telecom chipmakers AppliedMicro (AMCC -5.9%) and Cavium (CAVM -4.4%) are all off after component vendor JDS Uniphase (JDSU -7.4%) missed FQ2 estimates and provided soft FQ3 guidance.
    • On its CC (transcript), JDS observed its FQ2 network enablement (test equipment) and service enablement (telecom software/services) revenue fell a combined 8% Y/Y due to "weaker carrier spending and no budget flush in historically stronger December quarter." Network enablement is expected to remain soft in seasonally weak FQ3 as customers weigh their 2015 spending plans. Service enablement is expected to grow ~24%, after growing 16.6% in FQ2.
    • AppliedMicro is down 10% since providing a soft FQ4 EPS guidance (-$0.09 vs. a -$0.07 pre-earnings consensus) on Tuesday afternoon to go with an FQ3 beat.  Cavium is giving back the gains it saw yesterday after beating Q4 estimates and providing strong Q1 guidance.
    | Comment!
  • 2:24 PM
    • Amazon's (AMZN +14.8%) Q4 North American op. margin of 5.4% was its highest in three years, notes SunTrust's Robert Peck, reiterating a Buy and upping his target to $370. Peck is also pleased gross margin rose Q/Q in spite of seasonality, even if one backs out Other (i.e. AWS) revenue. Third-party seller and fulfillment service growth drove the gains, as did improved efficiency.
    • Topeka's Victor Anthony likes the fact Prime memberships rose 53% in 2014 (no precise subscriber number has been given, as usual) in spite of Amazon's $20 price hike. Benchmark's Daniel Kurnos observes the bulk of Amazon's Q4 revenue miss was due to its international ops, where the company took an $895M forex hit.
    • B. Riley's Scott Tilghman (Neutral) is more cautious. "We aren’t convinced the company has the same leverage opportunity in non-holiday quarters, and this seems to be captured in its 1Q guidance, which assumes bigger FX headwinds and lower Y/Y profit." On SA, Paulo Santos is as bearish as ever, citing (among other things) the top-line miss and a 4% drop in Media revenue.
    • During the CC (transcript), CFO Tom Szkutak stated Amazon would begin breaking out AWS revenue for the first time in Q1. He also mentioned (giving encouragement to bulls) Amazon is "putting even more energy and attention on driving what we would call fixed expense and variable expense productivity as well as other efficiency projects."
    • Also disclosed: Third-party seller units made up 43% of Q4 unit sales, up from Q3's 42%. Annual paid unit growth slipped to 20% from Q3's 21%.
    • Prior Amazon earnings coverage
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