Tuesday, August 26, 2014
- Following the release of Windows 9 (codenamed Threshold, expected in spring 2015), Microsoft (NASDAQ:MSFT) plans to do away with its traditional approach of launching major Windows releases every few years in favor of "regular, incremental updates," ZDNet's Mary-Jo Foley reports.
- A similar update schedule will exist for Windows Phone, set to merge with the flatlining Windows RT and act as a joint phone/tablet platform. Among other things, Satya Nadella's July memo promised Microsoft plans to "streamline [its] engineering process and reduce the amount of time and energy it takes to get things done."
- Foley doesn't know if Microsoft will keep charging upgrade fees (perhaps through a subscription), or follow Apple's lead in making its PC OS updates free. Microsoft recently removed license fees for sub-9" Windows hardware.
- The technical preview for Windows 9/Threshold is expected in late September or early October. All signs suggest the OS will feature the return of the Start menu, along with the ability to show Metro-style live tiles in desktop mode.
- Foley's latest scoop comes as Bloomberg reports Apple is working on a 12.9" iPad, a device that could be positioned as more of a laptop replacement than the 9.7" and 7.9" models.
- VMware (VMW -2.8%) investors haven't taken kindly to the company's guidance for mid-teens 2015 revenue growth, and its pulling of long-term guidance for 16%-20% annual growth.
- William Blair (Market Perform) calls the guidance "disappointing," and is worried ongoing "workload migration to the public cloud will be a persistent headwind" to VMware's core vSphere server virtualization sales.
- The firm also thinks several growth initiatives could take longer to play out than expected - it notes the NSX SDN platform is still less than 2% of total bookings, and expects the just-renamed vCloud Air cloud infrastructure platform to have a tough time competing against the likes of Amazon and Rackspace. Blair is more upbeat about vCloud Suite and VSAN sales.
- UBS (Buy) is still positive, arguing R&D investments in newer products are bearing fruit, and that standalone vSphere weakness stems from a shift in sales resources to other products. Cowen (Outperform) thinks it's business as usual. "We have previously expressed much skepticism about the previous forecast, and we believe [management's] action was appropriate."
- Meanwhile, VMworld announcements continue. Today, VMware has: 1) Unveiled the Workspace Suite, which offers combined access to the Horizon PC/app virtualization platform and AirWatch's mobile management platform. 2) Announced a partnership with Nvidia and Google to deliver graphics-rich apps (via PC virtualization) to Chromebooks. 3) Announced a deal with SAP to integrate AirWatch's products with SAP's mobile security offerings.
- Yesterday's VMware announcements: I, II
- The WSJ reports leading VC firm Kleiner Perkins has committed to invest in Snapchat at nearly a $10B valuation. Kleiner reportedly "committed to invest up to $20 million in May," and at least one "strategic investor" is also said to be taking part in the funding round.
- Alibaba was previously reported to be eying an investment in Snapchat at a similar valuation, but talks are believed to have ended without a deal. Facebook was famously rumored to have made a $3B+ offer for the ephemeral messaging service before turning its sights on WhatsApp.
- The WSJ also reports Snapchat now has 100M+ monthly active users (MAUs). That still leaves it behind Instagram's 200M+, Twitter's 271M (at the end of Q2), WeChat's 438M (also at the end of Q2), and WhatsApp's 600M+. Snapchat reportedly plans to monetize its users through an ad service later this year.
- Naver's (OTC:NHNCF) Line unit, looking to go public in NYC and Tokyo at a ~$10B valuation, must be pleased to see the report. Line is closing in on 500M registered users (different from MAUs) for its mobile messaging service.
- TIVO's FQ2 service & technology revenue totaled $86.6M (+13% Y/Y), in-line with guidance of $86M-$88M but slightly below an $87.7M consensus. FQ3 service/tech revenue is expected to be in a range of $86M-$89M, below an $89.5M consensus.
- Net income guidance is at $6M-$9M, which compares with FQ2 net income of $9.3M ($0.08/share).
- Along with its FQ2 results, TiVo has announced a $350M buyback, good for repurchasing over 1/5 of shares at current levels. TiVo plans to use $100M of the buyback during FY15 (ends Jan. '15), and the remainder during the next two fiscal years. TiVo had $782M in cash/short-term investments at the end of July.
- 263K subscribers were added in FQ2, up from 255K in FQ1 and raising the total to 4.8M (+33% Y/Y). 283K MSO subs were added, and 20K TiVo-owned subs lost.
- MSO-related service revenue rose 36% to $10.3M, and TiVo-owned service revenue fell 7% to $22.4M. Other services revenue rose 29% to $4.2M.
- GAAP R&D spend fell 5% Y/Y to $25.1M, and sales/marketing spend rose 13% to $10.3M.
- FQ2 results, PR
5:15 PM| Comment!
- TubeMogul (NASDAQ:TUBE) expects Q3 revenue of $20M-$22M (above an $18.9M consensus), and full-year revenue of $98M-$102M (above a $91.7M consensus).
- Q2 results trounced estimates on the back of a 143% Y/Y increase in total ad spend to $61.1M. Total spend is expected to amount to $46M-$48M in Q3, and $218M-$222M for the whole of 2014.
- 72% of Q2 spend stemmed from TubeMogul's self-serve video ad solution (Platform Direct). Self-serve clients nearly doubled Y/Y to 283.
- Gross margin rose 230 bps Y/Y to 68.3%. GAAP opex rose 70% to $17.3M.
- Shares now +70% from July's conservative $7 IPO price.
- Q2 results, PR
- AT&T (NYSE:T) is merging its Mobility and Business Solutions units into a single business unit that will be headed by current Mobility chief Ralph de la Vega. Glenn Lurie, previously the head of Mobility's emerging enterprises and partnerships business, is Mobility's new CEO.
- AT&T says it's working to integrate marketing and distribution for its enterprise ops with Mobility, and notes business-related clients accounts for over 50% of the company's mobile revenue.
- Much like its peers, AT&T's enterprise wireline ops have been hurt by ongoing voice line disconnections. Business Solutions currently claims 3.5M+ customers.
- The move comes as AT&T's consumer-related mobile sales get pressured by a T-Mobile-driven price war. Verizon and AT&T are counting on their combined dominance of the U.S. enterprise mobile market to help weather the storm.
- Nimble Storage (NYSE:NMBL) is guiding for FQ3 revenue of $56M-$58M and EPS of -$0.16 to -$0.17 vs. a consensus of $55M and -$0.15.
- 663 customers were added in FQ2, up from 450 in FQ1 and raising the total base to 3,756 (+115% Y/Y). A "record number" of $100K+ deals were signed, and "large enterprise" accounts now total 235.
- International bookings still only make up 17% of total bookings. Fibre Channel support (considered crucial to growing high-end/enterprise sales) remains set to arrive by the end of FQ4.
- Gross margin rose to 67.4% from 66% in FQ1 and 64.3% a year ago. GAAP opex rose 115% Y/Y to $61.2M, with sales/marketing spend rising 111% to $36.6M.
- FQ2 results, PR, shareholder letter (.pdf)
- Though the company just posted an FQ4 beat on the back of 33% Y/Y revenue growth, Aruba (NASDAQ:ARUN) is launching a "cost optimization plan that will reduce certain positions, and shift other positions to lower-cost, talent-rich locations."
- Due to the plan, Aruba is setting an FY15 (ends July '15) op. margin target of 21%-22%. FQ4 op. margin was 20%.
- Product revenue +34% Y/Y to $167.6M. Aruba claims "significant market share gains" on the back of strong demand for 802.11ac Wi-Fi access points, as well as the company's Instant (controller-free Wi-Fi) and ClearPass (network policy software) products.
- Ahead of the job cuts, GAAP R&D spend rose 14% Y/Y to $43.4M, and sales/marketing 16% to $72.1M. Cost of revenue rose 38%, exceeding revenue growth.
- CC at 4:30PM ET, guidance should be provided.
- FQ4 results, PR
- Trina Solar (TSL -8.1%) shares are tumbling after the company reported in-line Q2 earnings but lower than expected revenue, dragging down other Chinese solar companies including Yingli Green (YGE -5.8%), ReneSola (SOL -1.3%), but Canadian Solar (CSIQ +0.1%) and Jinko Solar (JKS +0.6%) are slightly higher.
- TSL CEO Jifan Gao said in today's earnings call that the company continues to see "robust" demand for its products in the U.S., prompting research firm Cowen to say that today's decline in TSL's stock was overdone; TSL is suffering from capacity constraints and is adding capacity, according to the firm, which keeps an Outperform rating on the shares.
- With investors having already digested a lot of bad news over the last year, Renren's (RENN +2.4%) Q2 revenue beat is overshadowing its light Q3 guidance: Revenue of $19M-$21M vs. a $22.9M consensus.
- Gaming revenue fell 56.6% Y/Y in Q2 to $9.9M, ad revenue 23.9% to $11.7M, and Internet value-added service revenue 35% to $3.4M. Monthly unique logins fell to 44M in June from 51M in March and 54M a year ago.
- Cost-cutting has been aggressive: Sales/marketing spend -37.3% Y/Y to $11.6M, and R&D -33.9% to $13.4M. G&A +7.6% to $14M.
- Operating loss was $30.4M. An $86M gain on the sale of short-term investments allowed Renren to report a profit. A new $100M buyback has been authorized, following the expiration of a program that was used to repurchase $69.4M worth of shares.
- Q2 results, PR
- It would be Apple's (AAPL -0.4%) largest-ever iPad (current versions are 9.7" and 7.9"), and production is set to start early next year, reports Bloomberg. The move comes as sales for iPads have declined for two straight quarters, and suggests the company is going to go after enterprise customers where the larger device could replace the traditional laptop.
- Apple, of course, has partnered with IBM, and Tim Cook has said part of the rationale behind the deal was to sell to corporations as a "catalyst for future iPad growth."
- Previously: Apple/IBM deal wins praise; hardware impact debated
- Nine months after Western Digital (WDC +0.1%) became the first company to launch a 6TB hard drive, Seagate (STX -0.3%) has become the first to launch an 8TB drive.
- Like Western's offering, Seagate's drive is aimed at the high-capacity enterprise storage segment, which has been growing rapidly (and taking share from high-margin performance-optimized drives) thanks to strong demand from Web/cloud giants. The company promises "the best Watts/GB for enterprise bulk data storage in the industry."
- Unlike Western, Seagate (tight-lipped about technical details for now) isn't making use of helium to achieve high densities and low power draw. The company's shingled magnetic recording (SMR) tech might be leveraged. Seagate has promised SMR will enable 20TB drives by 2020.
- Supply chain sources tell Digitimes Intel (INTC -0.3%) shipped less than 15M tablet CPUs in 1H14, and is now "aggressively cooperating" with Taiwanese and Chinese tablet vendors to hit its full-year target of 40M.
- The site adds new Intel-based low-end tablets from Chinese/Taiwanese firms are expected to enter mass-production in late September or early October. A baseband/app processor meant for low-end tablets is due in 1H15, courtesy of a partnership with China's Rockchip.
- In addition to Apple and Samsung's use of internally-developed app processors, slowing industry growth is acting as a headwind for Intel. IDC estimates global tablet shipments rose 3.9% Y/Y in Q1, and 11% in Q2.
- Thanks in part to major contra revenue (marketing subsidy) payments to OEMs, Intel's mobile chip segment posted a $1.12B op. loss in Q2. Morgan Stanley has estimated the business will need to reach $8B-$10B/year in sales (up from 2013's $1.38B) to break even.
- Meanwhile, Intel has unveiled the XM6255, a 3G baseband modem it declares to be the world's smallest. The chip, which competes with offerings from Qualcomm and MediaTek, is aimed at the embedded/wearables market.
- In a 6-K, Portugal Telecom (PT +7.5%) says it owned €750M ($990M) in short-term debt issued by Espirito Santo International, as of the end of 2013. The figure includes €500M that was settled on Feb. 10, €200M settled on Jan. 29, and €50M settled on Feb. 20.
- PT and Oi (OIBR +9.3%) are up sharply. Shares of both carriers have been hit hard by PT's purchase of €897M in debt issued by Grupo Espirito Santo subsidiary Rioforte. In July, PT and Oi restructured their merger agreement to account for the purchase.
- The Portuguese government announced a bailout for Banco Espirito Santo three weeks ago.
- Google (GOOG -0.5%) was unable to buy Twitch due to concerns about "potential antitrust issues" related to the acquisition, Forbes reports. Due to the antitrust issues (stemming from Google's ownership of YouTube), the companies reportedly couldn't agree on a breakup fee.
- Meanwhile, Amazon (AMZN +2.4%) is rallying amid favorable reviews for the Twitch acquisition. Analyst Jan Dawson sees Twitch expanding Amazon's advertising scale and drawing in new customers, and thinks its streaming tech could strengthen other Amazon services. "Amazon is clearly taking digital media very seriously, and spending heavily to fund it."
- The Verge's Ben Popper observes Twitch will get to make full use of AWS, and will now have Amazon's resources to help with licensing. VC Ethan Kurzweil (a Twitch investor) thinks non-gaming use cases are possible. "We think that Amazon is investing here in Internet infrastructure and something more than gaming media ... What Twitch has really built here is a video-based community around any activity."
- Yesterday: Amazon buying Twitch for $970M in cash
- American Airlines is pulling its fares from Orbitz's (OWW -4.2%) site, and merger partner U.S. Airways will reportedly do the same.
- Orbitz has slumped on the news. The company's standalone air revenue rose 5% Y/Y in Q2 to $71M, and accounted for 29% of total revenue. Priceline and Expedia have both been delivering faster air ticket growth.
- Stifel has launched coverage on Cray (CRAY +6.5%) with a Buy and $33 target. Shares have jumped in response.
- Separately, Cray has launched the CS-Storm, an HPC/analytics accelerator system that supports up to 8 Nvidia (NVDA +0.8%) Tesla GPUs to go with 2 Intel Xeon CPUs. Cray claims the CS-Storm can deliver over 11 teraflops of performance per node, with 22 of them fitting on a standard 48U server rack.
- The Tesla line has turned into a major growth driver for Nvidia, as adoption rates for GPU-based co-processors within HPC systems keep rising. Nvidia declared on its FQ2 CC (transcript) Tesla GPUs "now power the world's 15 most energy-efficient supercomputers as listed in the Green500 list." A solution pairing Tesla with ARM server CPUs was recently shown off.
- Mobileye (MBLY +5.7%) has received 7 bullish ratings from IPO underwriters to go with 2 neutral ones.
- Morgan Stanley (Overweight) forecasts a hockey stick-like adoption curve for advanced driver assistance systems (ADAS), aided by U.S./EU safety mandates. "We see 50% of new cars sold globally having some form of ADAS/autonomous system by 2022, rising to 70% by 2028 vs. 2% today."
- The firm also views Mobileye's vision algorithm as a key enabler for self-driving cars, and notes the company has an ~80% vision system share.
- "The story of Mobileye is one of technological disruption vs. traditional forward-facing ADAS sensors like radars, LIDAR and stereo cameras," says Citi (Buy). Citi notes Mobileye's EyeQ SoC "made it possible for lower-cost/weight monocular cameras to perform ADAS functions better and cheaper than competing sensors," and sees the company's next-gen tri-focal sensor extending its technology lead.
- Baird (Neutral) is more cautious, citing concerns about valuation (previous) and "overly aggressive expectations." Its 2014 and 2015 EPS estimates are respectively at $0.18 and $0.39.
- Citing soft mobile search traffic and competition, Credit Suisse has downgraded Qihoo (QIHU -2.8%) to Neutral a day after the company sold off due to the margin concerns triggered by its Q2 report.
- On the CC (transcript), CEO Hongyi Zhou said is "making [a] strategic shift in focus on resources to mobile search," and is aiming for its mobile search share to match its PC share over the long-term.
- CFO Alex Xu stated mobile now accounts for a "low-teen to mid-teen" percentage of Qihoo's search traffic, up from ~5% at the beginning of 2014, and that the company is aiming to raise this figure to 25% by year's end.
- Reuters reports EU antitrust regulators might launch a Qualcomm (QCOM -0.3%) probe following a complaint from Nvidia's Icera 4G baseband chip unit. One source says a case may be opened after this summer.
- The report arrives amid signs of progress in Qualcomm's ongoing dispute with Chinese regulators. Authorities recently suggested Qualcomm has shown a willingness to improve its pricing (i.e. charge lower royalty rates) to end the dispute.
- Cowen's Timothy Arcuri thinks accepting a lower rate is an acceptable compromise, given Qualcomm's recent Chinese issues. "QCOM would be better off to cede major swaths of royalties in China rather than jeopardize existing cash flows."
- BofA/Merrill thinks First Solar (FSLR -0.1%) will likely decide not to create a YieldCo, a move it argues would remove the company's ability to sell projects at more attractive valuations.
- Needham cited the potential for a YieldCo as a reason for upgrading First Solar following its Q2 report. On the CC (transcript), CEO Jim Hughes remained non-committal. "On the YieldCo, in terms of details, one we haven't reach the decision and two, I don't think we're prepared to discuss details other than to say, we're obviously close observers of the marketplace."
- Following the successful IPO of SunEdison's TerraForm Power unit, a number of solar firms have said they're considering a YieldCo.
- Piper's Mike Ritzenthaler has launched coverage on GT Advanced (NASDAQ:GTAT) with an Overweight and $23 target.
- He expects shares will "likely react sharply" to iPhone 6-related newsflow, in spite of rumors that only 64GB models will have sapphire cover glass. "We believe that Mesa process yields (though perhaps currently suboptimal) are sufficient to cover the initial production of the iPhone 6, and poised to improve over the next 6-9 months."
- Ritzenthaler also thinks GT could be begin recognizing revenue from its Merlin platform as soon as Q4, from HiCz in Q1 2015, and from Hyperion and HVPE/PVD in 2H15. In the meantime, GT is expected to work through the "sizable backlog" of sapphire furnace orders it has accumulated.
- The launch comes a week after CLSA downgraded shares to Underperform, while citing sapphire production yields and margins.
- Trina Solar (NYSE:TSL) -8.8% premarket after reporting disappointing Q2 results, even though net profit of $0.14/share was vastly improved over the $0.47 loss from the year-ago quarter.
- Q2 revenues rose 18% Y/Y to $519M, and module shipments jumped 46% Y/Y and 69% Q/Q to 943.3 MW, of which 148.7 MW were shipped to TSL's own downstream power plants in China and the U.K; in May, TSL had projected shipments of 950-1,010 MW for the period.
- Expects Q3 shipments at 1,060-1,120 MW of PV modules, of which 130-150 MW would be shipped to its own downstream projects; reiterates FY 2014 guidance of 3.6-3.8 GW total PV module shipments, of which 400-500 MW would be shipped to its own downstream projects.
- Telefonica’s (NYSE:TEF) board is discussing plans to raise its bid for Vivendi's (OTCPK:VIVHY) GVT to as much as €8B ($10.6B), Bloomberg reports.
- Previously, Telefonica offered €6.7B for the Brazilian broadband unit.
- The new bid could be announced before Aug. 28 and even before Telecom Italia (NYSE:TI) puts forward its formal rival bid.
- After conducting a number of recent investigations into Microsoft's (NASDAQ:MSFT) Chinese operations, China's State Administration for Industry & Commerce has found that the company's software sales were not fully transparent, but acknowledged that Microsoft was cooperating with the ongoing investigation.
- Chinese regulators have recently clamped down on many foreign firms operating in China over anti-monopoly concerns.