Seeking Alpha
  • Friday, August 22, 2014

  • 7:03 PM
    • Ahead of Qihoo's (NYSE:QIHU) Q2 report (due Monday morning), CNZZ estimates Qihoo now has 30.2% of the Chinese search market in terms of page views. That's up sharply from the 16.3% it had a year ago, and suggests Qihoo may have already reached its 30% year-end target.
    • Baidu's (NASDAQ:BIDU) share is pegged at 54.5%, down from 67.7% a year ago. Sohu's (NASDAQ:SOHU) Sogou unit is assigned a 12.8% share, up from 9.7% a year ago.
    • Two caveats: 1) iResearch has provided higher search share figures for Baidu, and lower ones for Qihoo, than CNZZ. The firm has argued CNZZ's figures paint an incomplete picture due to a heavy reliance on small/medium-sized sites for data. 2) Qihoo's mobile search position is weaker than its PC search position. Baidu, meanwhile, just topped 500M monthly mobile search users.
  • 6:33 PM
    • Down initially in response to its soft FQ3 guidance, Marvell (MRVL +1.7%) finished the day moderately higher. Brean and RBC lowered their targets, but both maintain bullish ratings.
    • On the FQ2 CC (transcript), CEO Sehat Sutardja mentioned both FQ2 and FQ3 sales have been hurt by soft 3G baseband chip demand from a major Asian client (widely believed to be Samsung). At the same time, he noted both Marvell's storage (hard drive/SSD controller) and networking chip sales rose 6% Q/Q.
    • Flat to "modest" Q/Q growth is expected for both storage and networking in FQ3. Sutardja states Marvell maintains a 60%+ hard drive controller share, and remains the top supplier of SSD controllers (no specific number is given).
    • FBR's Chris Rolland thinks some investors will view the 3G weakness as "neutral to positive," given the business carries "significantly below average" margins and profitability. "At some point, we believe investors will look past the 'distraction' that is mobile and recognize the solid storage and networking business underneath, but timing remains uncertain."
    • UBS' Stephen Chin is more cautious: He thinks getting Marvell's baseband ops (heavily dependent on China) to reach breakeven will "remain challenging," given demand is shifting towards 4G phones faster than Marvell can ramp 4G baseband volumes, and that Qualcomm and MediaTek provide tough competition. Broadcom can sympathize.
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  • 4:56 PM
    • Veeva (VEEV +7.9%) closed up sharply after partner Salesforce beat FQ2 estimates on the back of better-than-expected billings growth.
    • Veeva's own FQ2 report arrives on Aug. 28. In March, the company extended its Salesforce alliance, under which Veeva is Salesforce's preferred pharma/biotech industry partner, through 2025.
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  • 4:34 PM
    • ParkerVision (PRKR +18%) has added Samsung to the infringement suit it filed against Qualcomm and HTC in May. The company has also added 4 more patents (they relate to down-converting an electromagnetic signal) to the suit, raising the total to 11.
    • ParkerVision, still stinging from the June ruling it received for its prior Qualcomm suit, closed yesterday near its 52-week low of $1.08. Shares slipped last week following ParkerVision's Q2 report.
  • 4:11 PM
    • Twitter (TWTR +2.1%) will launch an e-commerce/payments platform later in 2014 that allows users to directly make purchases from its site and apps, re/code reports.
    • As previously reported, PayPal rival Stripe will initially handle payments. Much like Facebook, Twitter will allow a "Buy" button (or something with similar wording) to be embedded within posts.
    • As it is, a disclaimer found in Twitter's Q2 10-Q had raised hopes the company will be making an e-commerce push. So had the purchase of offline deals platform CardSpring.
    • Re/code doesn't state whether Twitter will seek a cut of enabled purchases. If it doesn't, Twitter could still profit from the service to the extent it boosts purchase activity, and thus motivates merchants to spend more on Twitter ads.
  • 2:42 PM
    • Gecko Design is an 18-year-old product design/engineering firm that has done work for Dell, H-P, Logitech, and Herman Miller, among others. As usual, Google (GOOG - unchanged) hasn't disclosed an acquisition price.
    • Gecko will be joining Sergey Brin's secretive Google X unit. Google X projects for which Gecko's hardware skills could be of value include Glass (still awaiting a full commercial launch) and Google's self-driving car effort.
    • Google has already been working with eyewear vendors to make Glass more aesthetically pleasing (and less conspicuous). Meanwhile, the company showed off its first internally-designed self-driving car prototypes in May; they have no steering wheels or pedals.
  • 2:16 PM
    • Reuters reports Neustar (NSR +5.8%) has received interest from P-E firms, and is working with JPMorgan to review its options.
    • Sources add a formal sale process might not start until the winner of a major government phone number management contract is awarded. Neustar fell in June after an e-mail suggested Ericsson is close to landing the deal.
    • Shares have jumped above $30 on the report. They remain well below a 52-week high of $53.96.
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  • 2:00 PM
    • Re/code: "Sources with direct knowledge of HP’s (NYSE:HPQ) plans — or in this case, lack of plans — told Re/code on Friday that nothing has changed in its view of Rackspace (RAX +1.5%) since our report in July: It has no interest in acquiring it, not then, not now."
    • Shares have pared the morning gains they saw in response to a UBS note speculating H-P could make a ~$45/share bid. Re/code notes remarks made on H-P's Wednesday earnings CC (transcript) about the existence of "material non-public information" (has affected H-P's buyback activity) had bolstered hopes for a Rackspace deal.
    | 1 Comment
  • 1:44 PM
    • Angie's List (ANGI +0.2%) has "reduced its salesforce by 97 employees as part of its focus on improving salesforce performance and productivity." (8-K)
    • Most sales units will be affected, but the "largest percentage reduction" will be at the BigDeal sales team. Meanwhile, new "performance-based measurements" will be applied to remaining sales workers.
    • Angie's had 1,637 employees as of last December. The job cuts follow a weak Q2 report in which Angie's reported lower-than-expected e-commerce growth and a 13% Y/Y increase in marketing cost per paid membership acquisition.
  • 1:30 PM
    • Volatile/heavily-shorted 3D printing stocks are rallying strongly on a quiet late-August trading day. 3D Systems (DDD +3%), Stratasys (SSYS +4.2%), Voxeljet (VJET +11.8%), ExOne (XONE +5.4%), and Materialise (MTLS +2.9%) are among the gainers.
    • 3D Systems' short-interest was at a 52-week high of 36.1M shares (34% of the float) on July 31. A relatively modest 15% of Stratasys' float was shorted as of July 31. The figure was 26% for Voxeljet, and a whopping 51% for ExOne.
  • 12:59 PM
    • Salesforce's (NYSE:CRM) 33% Y/Y FQ2 billings growth was better than a Street forecast of 28%, says Nomura (Buy). The firm also estimates organic revenue growth was 28% (total growth was 38%), and notes op. cash flow grew 34% to $246M.
    • Nomura sees Salesforce's Microsoft partnership yielding favorable press this fall, and also thinks Salesforce will announce a new cloud service, possibly by leveraging recently-acquired CRM analytics startup RelateIQ.
    • BofA/Merrill (Buy) also talks up Salesforce's billings/cash flow growth, and points out the company's backlog ($7.35B) is now 24% above forward revenue estimates. FBR likes the fact op. margin (a recent concern, given heavy spending) rose 130 bps.
    • Goldman (Conviction Buy) observes FQ3 guidance implies ~25% billings growth, which in turn points to a pickup in organic growth. "We believe CRM continues to be the preeminent SaaS vendor with significant runway ahead."
    • On the CC (transcript), Salesforce mentioned it struck major deals with 3M and Safeway during FQ2, and expanded relationships with GM, P&G, and Yahoo (among others). The company also claimed European deal activity is picking up. Marc Benioff: "Europe tends to be a laggard when it comes to implementing new technology. And that has not escaped our cloud companies."
    • Prior Salesforce earnings coverage
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  • 12:09 PM
    • Imperial Capital has launched coverage on MDM software vendor MobileIron (MOBL +3.2%) with an Outperform and $11 target, and on RFID hardware/software provider SuperCom (SPCB +5.7%) with an Outperform and $14 target.
    • "We believe MobileIron is positioned to capitalize on the network effect of its mobile ecosystem," writes Imperial's Michael Kim. He sees plenty of room for the company to grow sales to existing clients via cross-selling and up-selling, and to add to its customer base via channel partnerships.
    • MobileIron is now slightly above its $9 June IPO price. SuperCom is up 149% YTD.
  • 11:28 AM
    • Rackspace (RAX +3.9%) could receive a ~$45/share bid from H-P, UBS speculates in a morning note. Shares have rallied in response.
    • Last month, TechCrunch reported hearing of an H-P bid for Rackspace, but later backtracked a bit. The following week, re/code stated multiple sources had "categorically denied" the H-P report.
    • Shares are up 20% from their Aug. 12 post-earnings lows, aided by Dan Loeb and Blue Harbour Group's disclosures.
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  • 10:50 AM
    • Reuters reports Apple (AAPL +0.4%) originally wanted the iPhone 6 to use a single LCD backlight film layer instead of the normal two, but changed its mind after finding a single layer wasn't bright enough.
    • The about-face is said to have put screen assembly "on hold for part of June and July." Production is now back on track, and suppliers are "working flat-out to make up for lost time." The WSJ reported in July Apple has placed orders for 70M-80M iPhone 6 units to be produced by Dec. 30.
    • Japan Display, Sharp (OTCPK:SHCAY), and LG Display (LPL -2.6%) are reportedly the iPhone 6's LCD suppliers. Japan Display has previously said shipments for "a large customer" (believed to be Apple) might be delayed in calendar Q3.
    • Apple has shrugged off the report, and is trading near $101.
  • 10:22 AM
    • Morgan Stanley has downgraded (WUBA -5.8%) to Underweight a day after the Chinese online classifieds leader sold off due to its soft Q3 guidance and aggressive spending plans.
    • Much like Credit Suisse, MS is worried's spending will pressure margins. Its target is $37.50.
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  • 10:19 AM
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  • 10:03 AM
    • Vodafone (VOD +1.3%) is paying €72.7M ($97M) to acquire a 72.7% stake in Greek broadband/phone service provider Hellas Online. The deal will bring Vodafone's total stake above 91%, and is expected to close in Q4.
    • Hellas had 519K customers at the end of 2013, good for an estimated 11% local share. It had 2013 revenue of €227.4M, and EBITDA of €68.4M.
    • The deal follows Vodafone's acquisitions of German cable provider Kabel Deutschland and Spanish cable provider ONO, as the carrier pushes ahead with its goal of offering mobile/wireline bundles (both by itself, and via partnerships) throughout Europe.
    • Separately, The Daily Mail has passed on a rumor that AT&T's (NYSE:T) advisers are now "working around the clock on a cash bid worth more than £3 a share" for Vodafone.
    • The rumor should be taken with a heavy dose of salt, given: 1) AT&T is currently preoccupied with closing the DirecTV acquisition. 2) It implies AT&T would be paying a 46% premium to Vodafone's current London trading price, and valuing the company at ~$130B. 3) AT&T, which has a $179B market cap and $84B in debt, would be very hard-pressed to finance a ~$130B deal solely with cash.
    • A 6-month prohibition on an AT&T bid for Vodafone ended in July. However, AT&T CEO Randall Stephenson stated in March "the window may be closing" for his company to acquire European wireless assets, and is reportedly unhappy with Vodafone's wireline expansion efforts.
  • 9:19 AM
    • Japanese passive component/RF module maker Murarta (OTCPK:MRAAF) is acquiring Peregrine Semi (NASDAQ:PSMI) for $12.50/share, or $471M, in cash. The price represents a 63% premium to Peregrine's Thursday close.
    • The companies declare Peregrine's RF front end product line and silicon on insulator (SOI) process expertise complement Murata's mobile RF offerings. The deal is expected to close in late 2014 or early 2015.
    • News of the deal arrives two days after Infineon announced it's buying International Rectifier for $3B. Both moves are part of a larger chip industry consolidation wave.
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  • Thursday, August 21, 2014

  • 7:02 PM
    • Deep Nishar, LinkedIn's (NYSE:LNKD) SVP of products/user experience and a 6-year company vet, is leaving.
    • In a statement, LinkedIn states CEO Jeff Weiner will be "indefinitely" taking over Nishar's responsibilities. The company also observes its user base has grown by over 10x to 313M since Nishar came on board.
    • Nonetheless, LinkedIn has struggled in recent years to boost its historically low engagement rates (relative to other social networking platforms), in spite of a series of product changes meant to address the issue. The company's Q2 numbers suggest it's starting to make some headway.
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  • 6:48 PM
    • Thanks partly to an accounting policy change that will result in PC product revenue being recognized over time rather than entirely up-front, Intuit (NASDAQ:INTU) expects FY15 (ends July '15) revenue of $4.275B-$4.375B and EPS of $2.45-$2.50, well below a consensus of $4.85B and $3.97.
    • Adjusted revenue, which takes the policy change into account, is expected to be in a range of $4.75B-$4.85B.
    • Small business revenue +12% Y/Y in FQ4, with QuickBooks Online subs growing 40% Y/Y to 683K (60K added in the quarter). Consumer tax revenue +22%; ProTax +16%.
    • Costs/expenses +13% Y/Y to $787M. $152.5M was spent on buybacks.
    • FY17 targets: Revenue of $5.8B, EPS of $5, and 2M QuickBooks Online subs.
    • FQ4 results, PR
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