Seeking Alpha
  • Tuesday, May 26, 2015

  • 10:58 PM
    • Needham & Co. has launched coverage on comScore (NASDAQ:SCOR) with a Buy rating and a $66 price target.
    • Shares were flat today as comScore closed at $56.26.
    • Analyst Laura Martin sees the company as a way to play three key trends: "1. the increasingly global nature of content and ad campaigns; 2. a product mix shift toward mobile and video measurement, which aids margins; and 3. upside potential of new products that look priced to rise (uncapped) with online advertising growth."
    • In the three weeks since falling 6% after reporting earnings (and guiding to a GAAP loss for Q2) on May 5, shares have gained 16%.
    • The stock also moved up May 13 as Goldman Sachs reinstated a Buy rating.
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  • 10:46 PM
    • Time Inc. (NYSE:TIME) has acquired the FanSided network, a collection of more than 300 sports-focused website communities with more than 1,500 contributors.
    • For Time, the latest in a set of acquisitions means adding a new dimension to local coverage for Sports Illustrated -- with which FanSided already had a content partnership, and whose group FanSided will be joining under the corporate umbrella.
    • FanSided overall draws 15M unique visitors/month, generating an average 50M page views. FanSided founders Adam and Zach Best and partner Matt Blake will oversee the operation at Time.
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  • 10:31 PM
    • With observer expectations now seeing the Fed hiking interest rates later, rather than sooner, high-yielding REITs like data-center firms Digital Realty Trust (NYSE:DLR) and DuPont Fabros (NYSE:DFT) have stabilized a bit, Scott Stoddard notes.
    • In February, DLR declined 9% and DFT fell 16%; since then, DLR is flat and DFT up 2% as any pressure to get out of high-yield REITs and into riskier assets softened a bit.
    • Both stocks have annualized dividend yields above 5%, doubling up that of 10-year Treasurys while showing continual profit growth.
    • At J.P. Morgan's Global Technology, Media and Telecom Conference, Digital Realty chief Bill Stein suggested the companies were undervalued compared with other REITs, and that the multiples will go up once people understand the business better.
  • 8:37 PM
    • With attention already starting to shift to regulatory approval, Charter Communications (CHTR +2.5%) CEO Tom Rutledge says his company's $55B acquisition of Time Warner Cable (TWC +7.3%) will do better with the FCC than Comcast's: Think small.
    • "If you look at the ecosystem, who we're playing with in terms of other competitors, they're very large, and we'll still be a relatively small company compared to the large phone companies, compared to Comcast, compared to the wireless companies," he told CNBC.
    • Charter's simultaneous deal for Bright House Networks may pump up its own leverage, but it was critical to the TWC bid, says analyst Craig Moffett: Virtually debt-free Bright House and its borrowing capacity likely added as much as $18/share to Charter's $195.71/share offer. Moffett says TWC's handling of Altice's (OTC:ATCEY) counter-play was masterful.
    • About that debt: TWC bondholders are still nervous about the combined load (While the firm's 30-year bonds rose 11.7% today, they're still down about 16% from last month). Moody's is likely to push TWC into junk rating territory as debt-to-EBITDA rises from TWC's 2.97 to about 4.79 for the combination. But again, Bright House's addition and "conservative voice on the board" may be mitigating the effects.
    • And MoneyBeat's deal tally: Aside from big winner TWC, winners include Goldman Sachs (NYSE:GS), (eventually) rewarded for backing Charter, and UBS, working as sole adviser to Bright House; Losers include Comcast backer JPMorgan Chase (NYSE:JPM), and Deutsche Bank (DB -3.4%) -- a Charter backer back when, but unseen in the new deal.
    • Previously: Charter to merge with Time Warner Cable, buy Bright House (May. 26 2015)
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  • 7:34 PM
    • "Today, we’re announcing a Cortana application for Android phones and for iPhones which works as a companion to Cortana on your Windows 10 PC," says Microsoft (NASDAQ:MSFT) exec Joe Belfiore. "The Cortana app can do most of the things Cortana does on your PC or on a Windows phone ... [the app] will help you complete tasks you begin on your PC wherever you are, on your phone."
    • Reuters reported in March iOS/Android Cortana apps were on the way, and also that Microsoft is prepping a more advanced version of its personal assistant (codenamed Einstein) for Windows 10 that can read/analyze e-mail a la Google Now. Today's move is the latest in a long list of iOS/Android app launches to occur over the last two years.
    • Also unveiled: Phone Companion, an app pre-installed with Windows 10 that helps users sync files and content between their PCs and phones; iOS, Android, and Windows Phones are supported.
    • Meanwhile, Microsoft has added Sony, LG, and 18 other Android OEMs to the list of companies pre-installing Office, OneDrive, and Skype apps on their tablets. Pre-install deals with Samsung, Dell, and 9 others were announced in March.
  • 7:34 PM
    • In an effort to make a planned wholesale mobile broadband network more attractive to operators, Mexico is cutting the estimated investment to build the network to $7B, from $10B.
    • The network -- built into the country's constitutional telecom reforms, and having exclusive use of 90 MHz of the 700 MHz band -- is to be built and run by private companies bidding for the rights, and used by companies offering mobile service.
    • The 2013 reforms were designed to cap the dominance of Carlos Slim's America Movil (NYSE:AMX), but the playing field has leveled somewhat since then, particularly with AT&T's (NYSE:T) entry by acquiring Iusacell and Nextel Mexico.
    • The Mexican government now believes that the costs will be lower since it may require closer to 12,000 towers than 20,000, and it's considering whether existing companies like AT&T and Telefonica (NYSE:TEF) could participate not just as clients. The network needs to reach a 20%-25% mobile market share by revenue to become profitable.
    | 1 Comment
  • 6:39 PM
    • Mitek (NASDAQ:MITK) is acquiring IDchecker, a Dutch provider of cloud-based identity document verification and facial recognition tools, for $5.85M in cash, $2.75M in stock, and up to $2M in additional stock payments through Sep. 2016 if certain targets are hit.
    • Mitek states IDchecker's Strong ID solution "authenticates 3,500 different types of passports, driver licenses and identity cards from nearly every country in the world," and complements Mitek's Photo Verify tech and MiSnap mobile image capture SDK. Customers are said to include "a large international money transfer service, a leading worldwide payments company, and a preeminent global information services provider."
    • Shares haven't yet moved in AH trading.
    | 1 Comment
  • 6:22 PM
    • Chinese data-center provider 21Vianet Group (NASDAQ:VNET) is off 9.9% after hours, adding to today's 4.1% decline, after Q1 revenues missed expectations and the firm guided to the low side for Q2 results.
    • EBITDA of about $26.9M was up 47.8% but missed an expected $28.2M (one analyst). Gross profit was up 43.4% to about $37.2M and a gross margin of 26.8%, down from a year-ago 27.4%.
    • The firm had a GAAP net loss of $0.22/share; adjusting for share-based compensation, amortization and other effects, non-GAAP EPS was $0.02, in line.
    • Revenue breakout: Hosting and related services, $613.2M yuan (up 51.6%); Managed network services, 246.88M yuan (up 36%).
    • The company guided to Q2 revenues of 886M-922M yuan ($142.9M-$148.7M, vs. an expected $153.2M) and EBITDA of 152M-172M yuan ($24.5M-$27.7M, up about 23% at midpoint but lower than an expected $30.2M).
    • Conference call at 8 p.m. ET.
    • Press Release
  • 6:08 PM
    • Arguing the company is well-positioned to benefit from rapidly growing demand for big data/analytics software, Oppenheimer has launched coverage on Hortonworks (NASDAQ:HDP) with an Outperform rating and $50 target after the close.
    • HDP +1.9% AH to $26.40. Shares jumped last week following a Barclays upgrade, and are now up 22% since a Q1 beat and strong guidance were provided on May 12.
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  • 5:47 PM
    • PMC-Sierra (NASDAQ:PMCS) has launched a new $75M buyback plan. (8-K filing)
    • In February, the networking/telecom chipmaker upped its buyback authorization by $75M to $102M. During last month's Q1 CC (transcript), CFO Steven Geiser stated PMC spent $57.2M in Q1 to buy back 6.1M shares.
    • He added PMC has spent $385.2M on buybacks since 2011. The company had $220.2M in net cash at the end of Q1.
    | Comment!
  • 5:33 PM
    • With the company having provided above-consensus guidance more often than not since its IPO, Workday (NYSE:WDAY) has sold off after providing an in-line FQ2 outlook (affected by forex headwinds) to go with an FQ1 beat.
    • Also: The cloud HR/financials software leader's unearned revenue balance rose 41% Y/Y in FQ1 to $653.4M, a slower clip than FQ3's 53% and trailing revenue growth of 57%. Subscription revenue rose 63% Y/Y to $201M, and professional services 38% to $50M.
    • Financials: GAAP costs/expenses rose 44% Y/Y to $304.4M - sales/marketing spend totaled $94.9M, R&D $99.3M, G&A $32.2M, and cost of services $77.8M. Workday ended FQ1 with $1.9B in cash/marketable securities, and $496M in convertible debt. Free cash flow for the trailing 12 months is $50.4M.
    • Shares have fallen to $85.12 AH.
    • FQ1 results, PR
  • 5:13 PM
    • Activist hedge fund Eminence Capital has disclosed a 5.1% (3.3M-share) YELP stake. Shares have risen to $46.49 in AH trading.
    • The disclosure comes 3 weeks after multiple reports emerged stating Yelp is working with banks to explore a sale.
    | 1 Comment
  • 5:05 PM
    • 9 months after retiring as CEO following an 11-year run, Mike Smerklo is stepping down as ServiceSource's (NASDAQ:SREV) chairman. He'll now "focus full-time on his venture investments."
    • Smerklo's resignation will be effective following ServiceSource's Thursday annual meeting. No word yet on who his successor will be.
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  • 5:03 PM
    • With one eye on the Internet of Things, Verizon (NYSE:VZ) is offering a promotion to small-business signups featuring FiOS Internet/voice bundles with 50 Mbps upload/download speeds for the 25/25 Mbps price.
    • That applies to businesses in the FiOS fiber markets. With more devices "talking" to the network, Verizon expects upload activity will double by late 2016.
    • The deal follows a similar previous move upgrading businesses on asymmetrical speed tiers to symmetrical ones via its SpeedMatch program (for example, 50/25 customers were upgraded to symmetrical 50 Mbps).
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  • 5:00 PM
    • Along with its FQ1 results, TIVO has announced it's acquiring Cubiware, a Polish developer of low-cost set-top and portal server software for emerging markets pay-TV providers. Terms are undisclosed; presumably, offshore cash is being used.
    • TiVo states Cubiware's offerings will expand its presence in 25 countries, thereby helping it cross-sell its existing offerings overseas. Altogether, Cubiware claims ~40M Latin American and EMEA customers possessing 12M pay-TV subs between them. The deal follows last year's purchase of content discovery service provider Digitalsmiths.
    • Helping shares rally: TiVo has guided for FQ2 service/tech revenue of $94M-$97M, above a $93.6M consensus. Net income guidance is at $7M-$10M.
    • Subscriber data: FQ1 net subscriber adds totaled 285K, down from 332K a year ago and bringing the base to 5.76M. MSO subs rose by 285K to 4.81M; TiVo-owned subs were roughly flat at 944K. TiVo-owned ARPU fell to $7.43 from FQ4's $7.68 and the year-ago period's $7.81.
    • Business performance: Service revenue +11% Y/Y to $39.8M; tech revenue (licensing) +5% to $52.6M; hardware revenue +6% to $22.3M. MSO service revenue rose 41% Y/Y, and Digitalsmiths revenue roughly doubled.
    • Financials: GAAP operating expenses rose by $1M Y/Y to $52.5M. $27.9M was spent on buybacks. TiVo ended FQ1 with $686M in cash, and $354M in convertible debt.
    • TiVo has risen to $10.90 AH. FQ1 results, PR
    | Comment!
  • 4:31 PM
    • FireEye (NASDAQ:FEYE) plans to sell $600M worth of convertible senior notes due 2035 in two tranches. Initial purchasers are expected to have $90M worth of overallotment options. Pricing hasn't been set yet.
    • Proceeds will be use for "general corporate purposes, including capital expenditures, investments, working capital and potential acquisitions and strategic transactions." The company adds it currently has "no commitments with respect to any such acquisitions or investments."
    • FireEye had $398M in cash/short-term investments at the end of Q1, and no debt. Thanks to aggressive spending, the company's free cash flow was -$199M in 2014.
    • FEYE -1.5% AH to $44.49.
  • 4:22 PM
    • In addition to beating FQ1 estimates, Nimble Storage (NYSE:NMBL) is guiding for FQ2 revenue of $77M-$79M, mostly above a $77.1M consensus. EPS guidance of -$0.11 to -$0.12 compares with a -$0.12 consensus.
    • 542 new customers were added in FQ1, down from 650 in seasonally stronger FQ4 but up from 450 a year ago. Nimble, which has been trying to move upmarket with the help of its recently-launched Fibre Channel arrays, also claims to have more than doubled its bookings from enterprise and service provider clients.
    • Financials: Gross margin rose 40 bps Q/Q and 140 bps Y/Y to 67.6%. GAAP operating expenses rose 51% Y/Y to $75.4M (compares with 53% rev. growth) - sales/marketing spend totaled $44.4M, R&D $21.7M, and G&A $9.3M. Nimble ended FQ1 with $201.5M in cash, and no debt.
    • NMBL +1.6% AH to $25.80.
    • FQ1 results, PR
    | Comment!
  • 4:18 PM
    • 21Vianet Group (NASDAQ:VNET): FQ1 EPS of RMB0.12 misses by RMB0.09.
    • Revenue of RMB860.1M (+46.8% Y/Y) misses by RMB39.26M.
    • Press Release
    | Comment!
  • 4:08 PM
    • Thanks in part to a market selloff, (NYSE:WUBA) has closed with moderate losses after posting mixed Q1 results. The decline comes even though the Chinese online classifieds leader is guiding for Q2 revenue of $145M-$150M (+124.6%-132.3% Y/Y), far above a $122M consensus.
    • Hurting Q1 EPS: Operating expenses rose 215% Y/Y to $138.9M (exceeding rev. growth of 80.5%). A 255.9% increase in sales/marketing spend to $114.2M - caused in part by a near-5x increase in ad spend to $61.9M - fueled the growth. R&D spend rose 109.6% to $16.2M, and G&A spend 99.4% to $8.6M. Many are counting on the deal to put a lid on's ad spend.
    • On the bright side, membership rose 52.9% Y/Y to $42.1M, and online marketing (ad) revenue 116% to $44.3M. Paying merchant members rose 10.6% Q/Q and 51.7% Y/Y to 669K.
    • Q1 results, PR
    | Comment!
  • 4:05 PM
    • Workday (NYSE:WDAY): FQ1 EPS of -$0.02 beats by $0.06.
    • Revenue of $251.0M (+57.1% Y/Y) beats by $6M.
    • Expects FQ2 revenue of $270M-$274M (+45%-47% Y/Y) vs. a $272.4M consensus.
    • Shares -5.7% AH.
    • Press Release
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