Seeking Alpha
  • Wednesday, April 16, 2014

  • 9:46 PM
    • Weibo (WB) has priced a 16.8M-share IPO at $17 each.
    • At the low end of its range, the pricing means a raise of some $285.6M, less than it was signaling earlier this month.
    • The total also suggests a total valuation of $3.6B. The offering is being led by Goldman Sachs and Credit Suisse.
    | 2 Comments
  • 4:31 PM
    • IBM is reiterating full-year guidance for EPS of at least $18 (consensus is at $17.84).
    • Big Blue spent an eye-popping $8.2B on buybacks in Q1, up from $5.8B in Q4. That allowed EPS to nearly meet estimates in spite of a $450M revenue miss. On the other hand, IBM's tax rate (the subject of recent scrutiny) rose to 20% from Q4's 11% and Q3's 16%. A 90 bps Y/Y increase in gross margin to 47.6% also boosted EPS.
    • Hardware/chip sales remain bleak: They fell 23% Y/Y vs. 26% in Q4.  Software +2% vs. +3%, global technology services -3% vs. -4%, global business services flat vs. +1%, global financing +3% vs. flat. The services backlog stood at $138B at quarter's end, down $5B Q/Q and $3B Y/Y.
    • Asia-Pac remains a weak spot: Sales fell 12% Y/Y. Americas were down 4%, and EMEA up 4%. "Growth markets" and BRIC sales each fell 11%.
    • Q1 free cash flow was just $0.6B, well below net income of $2.6B. Cash on hand fell to $9.7B from $11.1B at the end of Q4, and non-global financing debt rose to $15.7B from $12.2B.
    • Q1 results, PR
    | 7 Comments
  • 4:20 PM
     
    • Stocks racked up broad gains and closed at session highs, benefiting from upbeat earnings reports from Yahoo and Intel and an encouraging reading on U.S. industrial production; Nasdaq led the way with a 1.3% gain, though the index is still down 2.7% for April and 2.2% for 2014.
    • The session began on an optimistic note as China's Q1 GDP slipped to 7.4% growth, largely in-line with expectations and raising some hopes of more stimulus from the Chinese government.
    • The rally picked up steam in the afternoon, led by momentum names in the recently volatile biotech and social media sectors; while many of the earlier sharp moves were driven by trading in ETFs, traders say they saw "real buyers" come in today and buy shares of individual companies.
    • Stocks held gains as Janet Yellen spoke about monetary policy and the Fed's Beige Book report said economic activity in most of the U.S. rebounded after unusually bad winter weather.
    • Treasury settled slightly lower in a range-bound session, with the benchmark 10-year yield ticking up one basis point to 2.64%.
    | Comment!
  • 4:15 PM
    • After falling 2% Q/Q in Q4 and 8% in Q3 thanks to mobile softness, Google's (GOOG) cost per click (ad prices) was flat Q/Q in Q1. On a Y/Y basis, it fell 9%.
    • Paid clicks (boosted by mobile and product listing ads) grew 26% Y/Y, a slower clip than Q4's 31% but even with Q3. Traffic acquisition costs fell to 23% of revenue from 24% in Q4 and 25% a year ago.
    • Google sites revenue (68% of total) +21% Y/Y vs. +22% in Q4. Ad network revenue (22% of total, pressured by policy changes) +4% vs. +3%. Other revenue (10% of total, includes Nexus hardware and search appliances) grew 48%, down from Q4's 99%.
    • Google spent aggressively: Opex rose to 35% of revenue from 33% in Q4 and 31% a year ago. Capex was $2.35B (15% of revenue), up from $2.26B in Q4. Free cash flow was $2.05B, well below net income of $4.3B. Headcount (exc. Motorola) rose to 46.2K from 43.8K at the end of Q4.
    • Google had $59.4B in cash at the end of Q4, +$700M Q/Q. Its Q1 tax rate was just 18%.
    • Q1 results, PR
    | 6 Comments
  • 1:10 PM
    • Intel (INTC - unchanged) has received 11 PT hikes after beating Q1 EPS estimates by a penny, offering healthy Q2 gross margin guidance, and reporting mixed numbers for its new reporting units.
    • At the same time, B. Riley has cut shares to Neutral. The firm, which upgraded Intel in October (shares have risen 17% since), sees a rising tablet CPU mix pressuring 2H margins and is worried about "a tough 2H14 catalyst profile at a time when [PC CPU division] Q/Q growth risks escalate."
    • Pac Crest, 9 days removed from an upgrade, remains bullish on improving corporate PC demand, the potential for foundry share gains, and a "high likelihood" Intel's Grantley server CPU platform will boost 2015 IT spend.
    • Deutsche calls Intel's 2H outlook "prudently conservative," given it assumes little PC seasonality, and sees growth initiatives and cost cuts unlocking EPS/FCF growth.
    • On the CC (transcript), Intel attributed a 61% Y/Y drop in mobile division revenue to weaker baseband chip sales - the business faces tough competition from Qualcomm and MediaTek - and contra revenue payments to OEMs adopting its tablet CPUs.
    • Intel expects contra payments to decline, if not end, in 2015, and is still aiming for 40M 2014 tablet CPU shipments after shipping 5M in Q1. IDC expects 2014 industry shipments of 260.9M.
    • Barclays' Blaine Curtis pressed management on the fact the mobile unit appears to be losing $3B-$3.5B/year. CEO Brian Krzanich insisted Intel "has a roadmap to get to profitability," and that its upcoming SoFIA (low-end baseband/app processor) and Broxton (high-end app processor) platforms will help.
    • Yesterday's Intel earnings coverage
    | Comment!
  • 12:40 PM
     
    • The three big questions for the FOMC, says Janet Yellen are 1) Is there still significant slack in the labor market 2) Is inflation moving back toward 2% 3) What factors may push the recovery off track?
    • Full speech
    • As for labor, the Fed's baseline projection is more than another two years until full employment (defined as headline UE of 5.2-5.6%) is reached. She notes wage pressures are a good signal of a tightening labor market and signs of acceleration are difficult to find.
    • Addressing the FOMC's dropping of guidance being steered by the headline UE rate, Yellen says it may have changed, but the goal of guidance - that the FOMC will maintain ZIRP for some time - hasn't. "Decisions about liftoff (in the Fed Funds rate) should not be based on any one indicator, but that it will take into account a wide range of information on the labor market, inflation, and financial developments."
    | 11 Comments
  • 9:16 AM
     
    • Mar. Industrial Production: +0.7% vs. +0.4% consensus, +1.2% prior (revised).
    • Capacity utilization 79.2% vs. 78.7% consensus; 78.8% prior (unrevised).
    | Comment!
  • 8:30 AM
     
    • Mar. Housing Starts: 946K vs. 965K expected and 920K (revised) in Feb.
    • Permits 990K vs. 1.01M expected and 1.01M (revised) in Feb.
    | 6 Comments
  • 8:23 AM
    • Johnson Controls (JCI) has agreed to acquire Air Distribution Technologies from Canada Pension Plan Investment Board for $1.6B.
    • Johnson Controls says the deal complements its existing heating, ventilation and air conditioning offerings. It also reflects the company's "commitment to invest in the buildings business as a growth platform."
    • Shares are +1.1% premarket. (PR)
    | Comment!
  • 7:04 AM
    • Stock futures are poised to open higher amid a sizable global rally, with the Nikkei's 3% advance and Italy's 2% gain leading the way. Shanghai was marginally higher overnight amid a faster-than-expected GDP report, and the rest of the European indexes are ahead about 1%.
    • The 10-year Treasury yield is up by 2 basis points to 2.65% and gold is up a couple of dollars at $1,303 per ounce.
    • Later this morning we get housing starts, and this afternoon Janet Yellen speaks.
    • ETFs: SPY, QQQ, SH, DIA, SSO, SDS, PSQ, VOO, IVV, SPXU, UPRO, TQQQ, SPXL, QID, RSP, DOG, SQQQ, QLD, DXD, RWL, EPS, UDOW, SDOW, DDM, BXUB, QQEW, QQQE, TRND, SFLA, BXUC, QQXT, SPLX, BXDB, TNDQ
    | 5 Comments
  • 5:21 AM
     
    • Global equities are mainly higher on relief that the slowdown in China's economy in Q1 wasn't as bad as expected, with GDP of +7.4% topping consensus of +7.3%. The data helped offset nervousness about the continuing escalation in eastern Ukraine.
    • The Nikkei experienced yet another sharp move, this time jumping 3% following recent heavy selling. "Japanese shares are rebounding from recent declines because of the yen and U.S. share gains, while Alibaba is supporting technology companies," says market strategist Ayako Sera. Yesterday, Yahoo reported that Alibaba's Q4 net profit surged 110% to $1.35B. That helped boost shares in major Alibaba shareholder Softbank by 8.5%.
    • Elsewhere in Asia, Hong Kong +0.1%, China +0.2%, India -0.5%.
    • Euro Stoxx 50 +1.1%, London +0.3%, Paris +1.1%, Frankfurt +1%, Milan +2%, Madrid +1.3%.
    • U.S. stock futures: Dow +0.5%. S&P +0.5%. Nasdaq +0.6%
    | Comment!
  • 5:05 AM
     
    • Eurozone CPI accelerated to +0.9% in March from +0.3% in February, but missed consensus of +1%.
    • On year, inflation fell to 0.5% (flash 0.5%) from 0.7%.
    • Core CPI moderated to +0.7% from +1% and vs forecasts of +0.8%.
    • The euro is +0.2% to $1.3845. (PR)
    | Comment!
  • 4:49 AM
    • Moelis' (MC) shares are due to debut on the NYSE today after the boutique investment bank raised $163M in its IPO by selling 6.5M Class A shares at $25 each, giving it a market cap of $1.36B.
    • The listing is the first for an investment bank since FBR & Co in 2007, but was smaller than expected, with Moelis previously offering 7.3M shares at $26-29.
    • The firm plans to use 80% of the proceeds for one-time payments to founder Ken Moelis and his partners; via B shares, which are given 10 votes each, Moelis has retained 97% of the voting power in the bank.
    • ETF: IPO
    | Comment!
  • 4:40 AM
    • U.K. unemployment for the three months to February fell to 6.9% from 7.1% previously and came in under forecasts that were also 7.1%.
    • Average earnings including bonuses accelerated to +1.7% from +1.4% but missed expectations of +1.8%. Still, the figure brings wage growth in line with inflation of 1.7% after a long period in which salary rises remained well below CPI growth.
    • The pound spikes and is +0.2% at $1.6802, while the FTSE is +0.4%. (PR)
    • ETFs: FXB, EWU, GBB, FKU, EWUS, DXPS, DBUK
    | Comment!
  • 4:25 AM
    • ASML's (ASML) Q1 net profit almost halved to €249.1M ($344M) from €481M in Q4 but exceeded expectations of €230M. Profit in Q1 a year earlier was €96M.
    • Sales slumped 24% on quarter to €1.4B, as expected. On year, revenue rose 57% from  €892M.
    • ASML downgraded its H1 sales forecast due to slowing revenues in Q2, saying it expects turnover of €3B including extreme ultraviolet (EUV) systems for producing smaller chips. The company's prior guidance was €3B excluding EUV products.
    • "That ASML is now including EUV in its sales guidance means a difference on a yearly basis of around €500-600M, which is about 10% of sales," says ING analyst Robin van den Broek.
    • Shares are -3.6% in Amsterdam. (PR)
    | Comment!
  • 4:08 AM
    • Alibaba Group (ABABA) could file the prospectus for its U.S. IPO on Monday, Reuters reports, adding that the listing could be worth over $16B.
    • The report comes after major shareholder Yahoo (YHOO) disclosed that Alibaba's Q4 net income surged 110% to $1.35B as revenue jumped 66% to $3.06B.
    • Alibaba's results helped Yahoo's shares climb 6.8% in AH trading. In Tokyo, shares in SoftBank (SFTBF), which owns 37% in Alibaba, jumped 8.5%.
    | 6 Comments
  • 3:57 AM
    • Ukraine retook an airfield in the eastern Donetsk region yesterday after fighting with pro-Russian militias.
    • Ukrainian forces have also apparently surrounded the town of Slaviansk, which had been seized by the militias. In total, the separatists have taken over government and police buildings in up to 10 towns and cities in eastern Ukraine.
    • Ukraine's action has prompted Vladimir Putin to describe the country as being on the "brink of civil war;" it has also come ahead of talks tomorrow between senior diplomats from Russia, the EU, the U.S. and Ukraine.
    • Russia's Micex is -0.1%, while the USD-RUB is -0.4% at 36.095.
    • More on Ukraine
    • ETFs: RSX, RUSL, ERUS, RUSS, RSXJ, RBL, GUR, ESR, RUDR
    | 7 Comments
  • 3:38 AM
     
    • Japanese industrial output fell 2.3% on month in February, as expected, after rising 3.8% in January.
    • On year, production +7% vs +10.3%.
    • The Nikkei is +3% and the USD-JPY is +0.3% at 102.26. (PR)
    | Comment!
  • 3:29 AM
    • Credit Suisse (CS) Q1 net profit dropped 34% to 859M Swiss francs ($976M) and missed consensus of 1.09B francs.
    • Net revenues declined 8% to 6.47B francs.
    • Total assets -7% to 878B francs.
    • Investment bank pretax profit -36% to 827M francs, undershooting forecasts of 1.02B. Revenue from debt trading -25% to 1.49B francs, hurt by a lower contribution from rates and emerging markets businesses. Equities revenue -7.4% to 1.2B francs.
    • Earnings at Credit Suisse's private banking and wealth management unit, increased 15% to 1.01B, topping estimates of 941M francs.
    • Basel III common equity ratio 10%.  (PR)
    | Comment!
  • 2:56 AM
    • China's GDP growth slowed to its lowest level in 18 months in Q1, moderating to 7.4% on year from 7.7% in Q4 but topping forecasts for 7.3%. The figure is below the government's target of 7.5%, although the country's leaders have indicated that the goal is flexible as they try to implement reform.
    • Falling momentum in investment and consumption, struggling real estate, and weak external demand were among the main factors that caused the slower expansion.
    • On quarter, GDP +1.4%, as expected, vs +1.8%.
    • The value of home sales fell 7.7% in Q1 to 1.1T yuan ($177B); new property construction -25% to 291M square meters (3.1B square feet).
    • Industrial production +8.8% in March +8.6% in previously and consensus of +9%.
    • Retail sales +12.2% vs +11.8% and +12.1%.
    • Urban fixed-asset investment +17.6% in Q1 vs +17.9% previously and forecasts of +18.1%.
    • MNI Business Sentiment Indicator 51.1 in March vs 50.2 in February.
    • "All the forward-looking indicators are weak - growth is going to continue to slow," says Standard Chartered's Stephen Green. "We expect a mix of moderate monetary easing over the next few months and more aggressive reform measures."
    • However, Credit Agricole economist Dariusz Kowalczyk expresses a bit of optimism. "The silver lining is that retail sales and industrial output both rebounded in March, suggesting that growth is bottoming out."
    • The Shanghai Composite is flat.
    • ETFs: FXI, PGJ, GXC, FXP, YINN, KWEB, CYB, HAO, CNY, ASHR, CHIQ, TAO, CHIX, YANG, CQQQ, MCHI, QQQC, PEK, XPP, YAO, CHXX, YXI, CHXF, FXCH, CHII, ECNS, CHIM, CHIE, FCA, KFYP, TCHI, CHNA, KBA
    | 1 Comment
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