Seeking Alpha
  • Saturday, September 20, 2014

  • 4:48 PM
    • Though plenty of ink has been spilled over Facebook's (NASDAQ:FB) competitive threats over the last year, eMarketer estimates the average U.S. Facebook user now spends 39 minutes/day on its site and apps - up from 38 in 2013 and 35 in 2012. The figures exclude Instagram, whose user base has a large U.S. component, and also WhatsApp.
    • In spite of the usage growth, Facebook's share of U.S. social media time has fallen to 33.3% from a 2011 peak of 40%. Likewise, its share of U.S. digital time spent has slipped to 6% from 6.5%. On the other hand, with digital continuing to grab media share, Facebook's share of total media time spent has grown to 2.8% from 2.2%.
    • Meanwhile, with Facebook's ad sales having soared over the last two years thanks to an all-out monetization push (especially on mobile), eMarketer estimates the company now has a 9.7% share of U.S. digital ad spend, 370 bps above its digital time share. By contrast, all other social networks claim just a 3.9% share of U.S. digital ad spend, in spite of having an 11.9% share of time spent.
    • Likewise, Pandora (NYSE:P) is estimated to have only a 1.4% digital ad spend share vs. a 7.1% share of time spent. With the company spending aggressively to grow its ad salesforce, that gap could narrow in the coming years.
    • As is the case for many of its peers, the U.S. remains crucial to Facebook's top and bottom lines: North America still accounted for 44% of Q2 revenue, even though it was responsible for only 15% of MAUs.
    • Previous: Pew's U.S. Facebook survey data
  • Friday, September 19, 2014

  • 7:26 PM
    • Seven months after launching the first desktop GPUs based on its 28nm Maxwell architecture (the low-cost GTX 750 and 750 Ti), Nvidia (NASDAQ:NVDA) has rolled out a pair of high-end Maxwell parts: The GTX 980 and 970.
    • The 980 retails for $549, and the 970 $329. For reference, AMD's high-end Radeon R9 290X (launched last fall) retails for $500. The dual-GPU R9 295 X2 goes for $1,000, and Nvidia's dual-GPU Titan Z (based on the older Kepler architecture) goes for an eye-popping $3,000.
    • "The GTX 980 is faster, less power hungry, and quieter than the Radeon R9 290X," says AnandTech in a very positive review. Its benchmarks often show the 980 holding a 15%+ performance edge over the 290X, and a 10%-15% edge in load power consumption. The site also praises the 980's build quality (deemed "impeccable"), and new features such as VXGI.
    • ExtremeTech offers similar comments for the 980, and thinks the 970's pricing will take a toll on AMD. "It’s nearly a match for the R9 290X, but with an ASP that’s nearly $200 less."
    • AnandTech suspects AMD price cuts are likely. "AMD can’t match NVIDIA on performance, but they can sure drive down prices." The chipmaker is believed to be prepping the R9 390X, a new high-end GPU that relies on liquid cooling.
  • 6:30 PM
    • Iliad (OTC:ILIAF) has set a mid-October deadline to either make a new T-Mobile USA (NYSE:TMUS) offer or walk away, Reuters reports. The French carrier is said to be talking with U.S. banks to help finance a higher bid.
    • Reuters adds Iliad "faces resistance" from Deutsche Telekom (OTCQX:DTEGY), which would keep a minority T-Mobile stake under Iliad's proposed deal terms and is skeptical of the company's prospects in a market it currently has no presence in.
    • Bloomberg reported earlier today Iliad was struggling to line up 3rd-party investors, and that DT's board was divided on whether it should "sell its only growing asset." Sources (within Iliad?) tell Reuters Iliad's management has "finished road shows to meet U.S. investors and is waiting to hear back from potential investors."
    | Comment!
  • 6:15 PM
    • With a market cap of $233.9B as of today's close, Alibaba (NYSE:BABA) is the 4th-most valuable tech company on the planet, behind only Apple, Google, and Microsoft. Nonetheless, many on the Street have argued shares are fairly valued or undervalued.
    • Cantor, which started coverage with a Buy and $90 target earlier this week: "We believe that a differentiated pricing model, strong brand, and unmatched scale give Alibaba an unfair competitive advantage relative to peers ... While the stock's not cheap, we believe the company's outsized growth and margin profiles, if sustained, should support higher valuation over time."
    • Wedbush, whose $80 target has already been surpassed, thinks "Chinese e-commerce appears to have room to grow at 30%+ for several years." CRT Capital's $95 target implies a multiple of 26x 2016E EPS, something it considers justified given a 35%+ revenue CAGR is forecast for 2014-2017.
    • On SA, Triton Research observes Alibaba's 2013 marketplace revenue as a % of GMV (3.1%) was a tiny fraction of eBay's (19.3%), leaving plenty of room for growth even if eBay-like monetization isn't feasible in China.
    • Value Record is more cautious, viewing Alibaba's VIE legal structure as a risk and questioning how successful its international expansion plans will be - Baidu and many other Chinese Web names have had a rough time trying to replicate their domestic success.
    • Yahoo (YHOO -2.7%) closed lower, albeit off the day's lows. With shorts having trouble borrowing Alibaba shares, some may have settled for shorting Yahoo instead.
    • Josh Brown thinks Yahoo's pending IPO windfall and large remaining Alibaba stake once more make it a prime target for an activist. "There is absolutely no way, in my opinion, they're going to allow this management team, this board of directors to take $6 billion, do a buyback and then have another free $6 billion in cash to experiment."
  • 5:32 PM
    • SmartEyeglass, Sony's (NYSE:SNE) first stab at creating a pair of smartphone-connected display glasses, have a design that "makes Google Glass look chic," says Engadget.
    • The site declares SmartEyeglass looks like "a bulky pair of 3D glasses that have been modified to include a 3-megapixel camera, accelerometer, gyroscope, compass, brightness sensor, a microphone and a pretty large battery pack." At the same time, it points out the device can "deliver hologram-like visuals through its lenses," and that its use of a monochrome display improves battery life.
    • Unlike Google Glass, apps are hosted on smartphones rather than the device itself. An SDK has been released; Sony promises a full commercial launch by the end of March. Glass (also awaiting a full launch) currently has a decent head-start in developer support.
    • SmartEyeglass is distinct from Sony's gaming-focused Morpheus VR headset, which will face off against the Oculus Rift. A Sony exec claims 85% of Morpheus' development work is now finished, but won't provide an ETA. He does state Sony won't release Morpheus until enough software is available.
  • 4:54 PM
    • Though Oracle's (ORCL -4%) cloud-related sales saw healthy growth in FQ1, its core database business saw negative license growth, notes Deutsche's Karl Keirstead, downgrading shares to Hold. "Coupled with Larry Ellison’s decision to give up the CEO role, our confidence in the core database business is getting tested and we’d prefer to step to the sidelines while Oracle shares are still near their 10-year high."
    • While Oracle blames the database weakness on tough comps and sales execution - the latter is a common excuse among enterprise software firms - Keirstead also sees other factors at work: A mature relational database market; Microsoft's share gains; and a secular shift to new data types (e.g. Hadoop/NoSQL) and cloud apps (often running on non-Oracle databases). He estimates Oracle's FQ2 guidance implies a 3%-4% Y/Y drop in license revenue.
    • D.A. Davidson (Neutral) also isn't thrilled with Oracle's numbers. "ORCL's financial results have now either missed or come in at the low end of management's guidance range in 7 of the last 9 quarters." Ditto Sterne Agee: "Given the current moderate size of the cloud business, the transition will span several years and create both revenue and EPS estimate volatility."
    • On the other hand, Sterne (like many others) isn't concerned about Oracle's CEO change, calling it "more of a change in titles than in functions." On the CC (transcript), new co-CEOs Safra Catz and Mark Hurd insisted there will be no major operational changes.
    • Wedbush, however, sees negative long-term implications. "Mr. Ellison's desire to delegate more responsibility (and credit) to Safra Catz and Mark Hurd is understandable ... but it underlines our view that Oracle's days as an organic grower are rapidly coming to an end."
    • Prior Oracle coverage
    | Comment!
  • 4:18 PM
    • Agilent (NYSE:A) is redeeming $500M of the $600M in 6.5% senior notes due Nov. 2017 it currently has outstanding. The test equipment giant says the move is part of its broader efforts to lower its debt load ahead of the Keysight spinoff.
    • Agilent had $2.2B in debt at the end of July, and $2.4B in cash. In June, the company redeemed $500M worth of 5.5% senior notes due Sep. 2015.
    | 1 Comment
  • 4:03 PM
    • King Digital (KING -1.9%) sold off moderately ahead of its Monday lockup expiration. Shares remain close to a post-IPO low of $12.90, and are down 41%  from a $22.50 March offering price.
    • Last month, the Candy Crush Saga developer announced (along with a Q2 miss and soft guidance) execs, directors, and other investors collectively owning 80% of its shares had agreed to a new lockup that lasts through King's Q4 report.
  • 3:44 PM
    • Dan Van Ostrand, a UniPixel (UNXL -9.2%) co-founder and until now its SVP of R&D, has "resigned to pursue other interests."
    • He's being replaced by Arnold Kholodenko, whose resume includes stints as a director at chip equipment makers Applied Materials and Lam Research. UniPixel states Kholodenko "has been responsible for the granting of 72 patents in the U.S. and 39 internationally, and is the author of 115 scientific articles" over his 45-year career.
    • The management change comes as UniPixel continues with its efforts to start mass-production of its InTouch sensors following multiple delays. The company's market cap is now at $82M.
  • 2:22 PM
    • Iliad's (OTC:ILIAF) talks with KKR and other investment firms to make a joint bid for T-Mobile USA (TMUS -1%) haven't yet borne fruit, Bloomberg reports. The French carrier's $33/share bid for a 56.6% stake was shot down last month.
    • Meanwhile, Deutsche Telekom (OTCQX:DTEGY), recently reported to be open to a $35/share offer for T-Mobile USA, is said to be split on whether it should "sell its only growing asset."
    • Bloomberg adds Iliad has "discussed raising as much as $5 billion in additional debt and equity for a sweetened offer." Likely acting as a hurdle: T-Mobile, which has over $17B in debt, is investing heavily to build out its 4G network and grow its spectrum portfolio, and is sacrificing margins to gain share, isn't a conventional P-E target.
    • Prior T-Mobile/Iliad coverage
    | Comment!
  • 1:59 PM
    • Vodafone (VOD +0.1%) is buying 140 stores from Phones4u, a U.K. phone retailer that was recently taken into administration. 900 former Phones4u employees will be hired along the way.
    • As one would expect, the stores will be re-branded under Vodafone's name. Until this year, Phones4u had a partnership with Vodafone, as well as fellow U.K. carriers EE and O2.
    • Vodafone's U.K. ops saw their service revenue fall 3.2% Y/Y in the June quarter to £1.47B, as enterprise, prepaid, and wireline declines offset postpaid growth.
    | 1 Comment
  • 1:37 PM
    • Bitcoin (COIN, OTCQB:BTCS) prices are down $25 today, and over $70 on the week. Coinbase is currently showing a bid-ask spread of $400.29-$401.90.
    • The Alibaba IPO is viewed as a possible culprit - Bitcoin Magazine observes volume at both major Chinese and European exchanges is well above daily averages, leading it to think investors are unloading Bitcoin positions to buy into Alibaba.
    • Quant trader Raffael Danielli isn't buying the theory. "Selling your Bitcoins yesterday (and during the night) will only put USD into your Bitcoin exchange account. From there you have to still transfer it to your stock broker which usually takes a couple of days."
    • Though the list of high-profile Bitcoin supporters has kept growing in recent months, Bitcoin prices are now down ~40% from their June highs, and ~65% from all-time highs set last fall.
  • 1:15 PM
    • Glu's (GLUU -2.7%) 10M-share shelf filing for Cie Games investors has already been factored into analyst models, says Northland. The firm is reiterating an Outperform and $9.50 target, and sees any weakness caused by the filing as a buying opportunity.
    • Benchmark's Mike Hickey (Buy) has hiked his target by $2.33 to $7.93, and is also unconcerned about the filing. "These shares are not yet freely tradable and will not be freely tradable until the Form S-3 registration statement is declared effective by the SEC."
    • Hickey also points out 2.1M of the shares are being held back by Glu to "satisfy potential indemnification obligations through February 20, 2016."
  • 12:44 PM
    • Whether it's a case of selling on the news, freeing up capital to buy Alibaba shares, or a mixture of the two, a slew of Chinese Internet stocks are selling off as Alibaba (though off its highs) registers a 30%+ post-IPO gain.
    • Baidu (BIDU -2.2%) and (JD -4.5%), both of which rallied yesterday, are among the decliners. Others: QIHU -2.7%. SFUN -3%. EJ -2.7%. YY -2.1%. WB -2.3%. WUBA -6.3%. MOBI -6.4%. CMGE -6.5%.
    | 1 Comment
  • 12:32 PM
    • Down over 9% yesterday after announcing plans to sell $95M in convertible debt due 2019, Violin Memory (VMEM +4.3%) is rebounding after upsizing the offering to $105M (net proceeds are expected to total $100.8M) and setting deal terms.
    • The debt carries an interest rate of 4.25%, and an initial conversion price of $5.62/share - a 22% premium to current levels. The initial purchaser has a $15M overallotment option.
    | 1 Comment
  • 12:10 PM
    • After peaking at $99.70, Alibaba (NYSE:BABA) has reversed course and is now at $92.14, slightly below an opening trade of $92.70. Shares are still 35.5% above their $68 IPO price.
    • Yahoo (YHOO -3.5%) has reversed course as well. 121M Alibaba shares have already changed hands. Yahoo's volume for the day has reached 90M, more than 3x the company's daily average.
    • Prior Alibaba coverage
  • 12:01 PM
    • Alibaba (NYSE:BABA) opened at $92.70 and has quickly jumped to at $99, up 45.6% from a $68 IPO price. Its market cap stands at a whopping $246.6B (66x FY14 EPS), as investors bet the company's strong top-line growth (46% Y/Y in Q2) won't let up.
    • Yahoo (YHOO +1.2%) remains higher. With underwriters expected to exercise a 15% overallotment option, the company will be selling 140M shares through the IPO, good for pre-tax proceeds of $9.5B. Yahoo's remaining stake (261.8M shares) has a current pre-tax value of $25.9B.
    • SoftBank's (OTCPK:SFTBF) 797.7M-share stake has a current pre-tax value of $79B.
    • Prior Alibaba coverage
    • Prospectus, IPO preview
  • 11:47 AM
    • With shares having risen ~50% from their July lows, Avondale Securities has downgraded Sierra Wireless (SWIR -3.7%) to Market Perform.
    • Shares currently go for 1.3x 2015E sales and 29x 2015E EPS exc. cash.
  • 11:23 AM
    • SAP (SAP -3.9%) investors have a case of sticker shock after the company agreed to pay $8.3B (to be financed through a credit facility) to buy cloud travel/expense management software leader Concur Technologies. The acquisition price is equal to 9.6x Concur's estimated FY15 (ends Sep. '15) sales.
    • On the other hand, enterprise cloud software names are rallying on hopes of fresh deal activity. CRM +1.5%. N +2.7%. NOW +2.6%. PAYC +5%. ULTI +2.2%. JIVE +1.8%. DWRE +1.8%. MKTO +1.7%.
    • SAP CEO Bill McDermott proclaims combining Concur's products with Ariba's cloud procurement/B2B marketplace offerings and Fieldglass' cloud labor-management software will help his company redefine "how businesses conduct commerce across goods and services, contingent workforces, travel and entertainment."
    • McDermott also praises Concur's corporate travel ecosystem, which includes Hertz, Delta, Expedia, Sabre, and many others, and sees an opportunity to create real-time travel collaboration tools running on SAP's Hana in-memory database. SAP notes only 30% of Concur customers are currently SAP clients, yielding plenty of cross-selling opportunities.
    | Comment!
  • 10:54 AM
    • At the midpoint of the range, Alibaba (NYSE:BABA) would be worth $218B, more than Facebook and all other Internet companies not named Google.
    • The NYSE says underwriters will likely exercise the IPO's 15% overallotment option. That would increase the offering's total size to $25B, with Alibaba raising $10.1B for itself (existing shareholders would reap the remaining proceeds).
    • Prior Alibaba coverage
    • Update (11:00 AM): Make that $88-$90.
    • Update 2 (11:05 AM): The range is now at $89-$91.
    • Update 3 (11:17 AM): It's now at $90-$91. Trading is expected to start soon.
    • Update 4 (11:24 AM): $91-$92.
    • Update 5 (11:28 AM): $92-$93.
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