By Thomas Rasmussen

Success Factors, Inc (SFSF), a SAAS (Software as a Service) provider of workforce performance management solutions is discovering that cloud services can also lose steam in a weak economic environment. While on the face of it, a 30% revenue growth rate is impressive, investors will not be pleased with another quarter of operating losses.

Revenue Growth Is Slowing Down Pushing Operating Break-Even Further Down The Road

ByThomas Rasmussen

When Adobe Systems (ADBE) and Omniture (OMTR) announced the details and rationale behind their $1.8bn tie-up in mid-September, some interesting items emerged. Highlighted was the obvious benefit from a combination of Adobe’s popular Flash video platform and Omniture’s analytics capabilities. As the Web analytics market has become more saturated, Omniture has recently been expanding into higher-margin niches such as online video analytics. Combining online video content management with analytics is an area in which some early startups have carved out a profitable niche over the past few years as video has finally started to move to the Web.

Monday, Adobe (ADBE) launched its new Flash Distribution Service Platform at the IAB MIXX Conference and Expo. The Flash Distribution Service is hosted, managed and maintained by Adobe and its partners on a pay-per-use basis.

The platform consists of a number of facilities available online that enable advertisers, publishers, game developers and other flash content providers to develop applications that can be easily shared and transmitted between desktops, Mobile Internet Devices (MIDs) and across social networks.

by Brenon Daly

It wasn’t quite shouting ‘fire’ in a crowded theater, but an early Tuesday afternoon development at an investment conference concerning Omniture (OMTR) certainly sparked a firestorm of speculation. During the luncheon at ThinkEquity’s 6th Annual Growth Conference in San Francisco, word came out that Omniture had scrapped its presentation, which had been scheduled for 1:30 p.m. PST. Chief executive Josh James was slated to speak.

4:13 PM, Sep 16, 2009 --

-NYSE up 121.05 (1.8%) to 7,038.12.

-DJIA up 108.1 (1.1%) to 9,791.

Adobe (ADBE) made a big splash with its $1.8 billion acquisition of Web analytics company Omniture (OMTR). However, the logic behind the deal isn’t exactly obvious.

On Adobe’s fiscal third quarter conference call, analysts were pressing Adobe on its rationale for buying Omniture (Techmeme). The logic, according to CEO Shantanu Narayen goes like this:

• Bernanke: Bye, bye recession. Answering questions after a rehashed speech at the Brookings Institute, Bernanke noted that "from a technical perspective the recession is very likely over at this point." It was his most explicit comment to date that the contraction is over, though he acknowledged the economy would continue to feel weak for some time, and that unemployment will likely be slow to come down.
• Adobe closes 'game-changing' deal. Along with reporting earnings yesterday (see details below), Adobe (ADBE) announced it will acquire web-measurement firm Omniture (OMTR) for $1.8B in cash, a 45% premium to Omniture's 30-day average price. Adobe CEO Shantanu Narayen called the deal a 'game-changer' that will let the company create an "end to end platform to transform digital media and advertising." More modestly, Adobe is hoping the deal will help it turn around declining sales. In after hours trading, ADBE -4.15%, OMTR +25.1%. (Read Omniture's press release)
• BNY Mellon settles Russian lawsuit. Bank of New York Mellon (BK) reached an out-of-court settlement with Russia over the government's $22.5B lawsuit. As part of the settlement over a decade-old tax revenue scandal, Russia will receive $14M for trial expenses and get a $4B discounted loan from the bank as an 'act of goodwill.'
• Lawmakers ready to pare gov't stakes. As Citigroup (C) reportedly works towards lowering the government's 34% stake in the bank and raises $5B in government-guaranteed bonds, Republican lawmakers appear equally eager to part ways with the financial albatross. The lawmakers are drafting legislation that would create an independent trust to sell off U.S. ownership in firms where the government holds more than a 15% stake, including in Citigroup, AIG (AIG), General Motors and Chrysler. C +4.4%, AIG +1.9% premarket (7:00 ET).
• SEC takes aim at ratings agencies. Moody's (MCO), Standard & Poor's (MHP) and Fitch Ratings may have to provide increased disclosures and greater accountability for debt analyses following their performances with troubled mortgage securities. In a meeting tomorrow, the SEC is reportedly planning to propose that companies disclose the grades they received on bonds while shopping among ratings agencies, while the agencies may be required to disclose revenue from their biggest clients and could face increased lawsuits from investors.
• Treasury takes steps to avoid debt ceiling. The Treasury is expected to start winding down its temporary Supplementary Financing Program, which sold special short-term securities and placed the proceeds in an account at the Federal Reserve. The program ballooned to $560B last year before falling to $200B for much of 2009, and the Treasury may reduce that to as little as $15B, largely to avoid hitting the $12.1T debt ceiling. As a result, the Fed may have to inject more money into the economy which could make it harder to raise interest rates later.
• IMF plays ref on unwinding gov't support. Reinforcing its role as a referee in the global recovery, the IMF released a paper laying out guidelines for how governments should wind down support of the financial sector. Among its recommendations, the IMF said central banks should be reimbursed by governments for losses on any crisis-related interventions. The paper also suggests the global costs of financial bailouts may be lower than expected because governments announced larger support packages than they actually implemented. (Read the IMF's overview and report (.pdf))
• Lehman feels cheated. In court papers filed yesterday, Lehman Brothers Holdings said Barclays Capital (BCS) received an $8.2B 'windfall profit' in the fire sale of Lehman's U.S. brokerage because 'critical changes' were made to the deal between the time the sale order was signed and the deal actually closed. Lehman is asking the court to amend the deal and a hearing is scheduled for next month.
• Air travel forecasts lose altitude. The International Air Transport Association revised its projections of 2009 industry losses and now expects the total global loss to reach $11B, $2B worse than its previous estimate. 2010 losses are expected to reach $3.8B. The IATA also revised its 2008 loss estimate to $16.8B from $10.4B on changes in goodwill valuation and fuel hedges. "The bottom line of this crisis," said the group, "is larger than the impact of 9/11."
• MBA apps fall. Mortgage applications fell 8.6% from the previous week, MBA reported. The average interest rate on 30-year fixed-rate mortgages rose to 5.08% from 5.02%.
• PPI climbs. The Producer Price Index rose 1.7% in August vs. consensus of +0.8%, with core PPI inching up 0.2% vs. +0.1% consensus. Headline inflation was down 4.3% from the previous year, although core PPI was up 2.3%. Energy prices were up 7.1% from July.
• Retail sales jump on auto purchases. August's retail sales were up 2.7% to $351.4B, better than the expected +1.9%. Ex-auto, sales rose 1.1% vs. +0.4% consensus. A massive increase in auto sales fueled the spike in the headline number, but sales remain 5.3% below August 2008 levels.
• Empire State Mfg improves. The Empire State Manufacturing Survey registered +18.9 in August, better than the consensus of +15, up from +12.1 the month before and the highest since late 2007. The average workweek index, which is considered a strong indicator of future employment trends, rose strongly for a second straight month, climbing 12 points to +6 and marking the first positive reading in a year.
• Inventories fall. Business inventories decreased 1% in July to $1.332T vs. consensus of -0.9%. June's inventories were revised to -1.4% from -1.1%. Inventories are down 11.8% compared to the previous year. Sales were up 0.1% to $978B. The inventories/sales ratio rose to 1.36 from 1.27.
• Consumer confidence dips again. ABC's Consumer Confidence Poll came in at -49, down from -48 for its second straight weekly decline. This week, 43% of Americans feel the economy is getting worse, up 12 points from last month. Only 44% rate their personal finances positively and only 24% think it's a good time to buy things.

Earnings: Tuesday After Close

• Adobe (ADBE): FQ3 EPS of $0.35 beats by $0.01. Revenue of $698M (-21%) vs. $686M. To offer $1.8B for Web consultant Omniture (OMTR). Shares -4.15% AH. (PR)

Today's Markets

Asia closed mostly positive, and markets elsewhere are trading up.

Late Tuesday afternoon Adobe announced it had reached a deal to acquire Omniture (OMTR) for $1.8 billion, with Adobe (ADBE) expecting the deal to close in the fourth quarter. While on the surface it may seem odd that Adobe would buy a company and get into the Web analytics space, if integrated correctly, Adobe has the potential to provide a crucial missing piece to content creators.

Right now, everyone in the industry is saying that delivering higher quality video allows for better monetization since the average viewing time with higher quality video is so much longer. The idea is that content owners can provide a more engaging branding experience for advertisers and as a result, charge more for that campaign and deliver more of them. While no one has yet to prove this theory in the market, the biggest hurdle to doing so has been in the analytics. Most of the solutions on the market provide details on reporting, not analytics, and trying to pull together the data from the website, the video and the ad campaign has not been easy.

By Robin Wauters

Adobe Systems (ADBE) has announced that it has entered into a definitive agreement with Omniture (OMTR) for the former to acquire the latter in a transaction valued at approximately $1.8 billion on a fully diluted equity-value basis. Under the terms of the agreement, Adobe will commence a tender offer to acquire all of the outstanding common stock of Omniture for $21.50 per share in cash. The proposed offer represents a premium of 45% over Omniture’s average closing price for the last 30 trading days through yesterday’s close.

by Brenon Daly

Since the Wall Street crisis erupted last fall, the M&A advice most companies have gotten has been not to sell unless they absolutely have to. That sentiment has quieted overall dealmaking activity, as well as pressured valuations across the board. It turns out that not even promising startups could escape the malaise. Yesterday afternoon, Tim Miller,our head of financial markets, presented our findings on the status of the AlwaysOn Global 250 to the seventh annual Summit at Stanford University. One key finding about the AO 250 startups: only 12 companies sold in the year since the previous conference, which is just half the number in each of the three previous years. Tech giants that have picked up AO 250 startups since the last conference include CA Inc (CA), Omniture (OMTR), Nokia (NOK) and Hewlett-Packard (HPQ).

• Goldman is TARP-free at last. Goldman Sachs (GS) became the first major bank to completely shed its bailout ties, paying $1.1B to redeem the government's TARP warrants and calling the Treasury's valuation 'full and fair' given the government's support of the financial system. With the warrant redemption and the $318M Goldman paid in dividends on its $10B TARP aid, taxpayers received a 23% annualized return for the nine-month transaction.
• S&P flip-flops on ratings. Standard & Poor's unexpectedly switched its rating of some bonds backed by commercial mortgages, upgrading the bonds to AAA just days after the same bonds had been sharply downgraded. The unusual move further damaged S&P's credibility and unsettled investors in the $700B market for commercial mortgage-backed securities [CMBS]. The reversal came after S&P realized bonds with a shorter lifespan were less risky than similarly structured bonds with a longer lifespan, a mistake that could reflect a basic misunderstanding of the way cash flows are distributed across CMBS.
• Bristol-Myers buys biotech firm. Bristol-Myers Squibb (BMY) agreed to acquire Medarex (MEDX), the biotech firm it already owns a 2% stake in, for $2.4B in cash. Bristol-Myers said the $16/share deal, which marks a 90% premium to Medarex's closing price on Wednesday, buys it proven antibody discovery technology and rights to an immunotherapy the companies developed. MEDX +89% premarket (7:00 ET).
• Intel fights antitrust fine. Intel (INTC) is fighting back against a record €1.06B ($1.45B) fine levied by EU antitrust regulators in May, saying the fine violates protections granted by European human rights law. Since the EU antitrust body handles both the investigation and judgment of a given case, companies don't have the opportunity to fully defend themselves as they would in a court. However, the appeal is a bit of a long shot as no EU antitrust appeal has ever won on this argument.
• Amazon's shoe-in to online apparel. Amazon (AMZN) will buy online shoe retailer Zappos.com for around $928M, an aggressive expansion into online apparel after Amazon's solo attempts at selling footwear were unsuccessful. Zappos is known for its fiercely loyal customer base, good customer service and free shipping/free returns policy. AMZN +0.6% premarket (7:00 ET).
• Bair wants large firms to pay. FDIC's Sheila Bair is scheduled to testify before the Senate Banking Committee this morning, and will ask lawmakers to impose fees on the country's biggest financial firms. Bair wants Congress to create an industry-supported Financial Company Resolution Fund which will provide working capital and cover unanticipated losses if the government has to wind down a failed firm. In addition to minimizing government outlays, this would also "provide an economic incentive for an institution not to grow too large."
• SEC targets pay-to-play. The SEC voted unanimously to propose rules preventing investment advisers from managing public programs for two years if they make political contributions. The proposal is an attempt to curb pay-to-play practices, in which public contracts are awarded to those who make political contributions.
• Chrysler warns on dealership legislation. Chrysler warned it could face liquidation for a second time if lawmakers move forward with a plan to reinstate terminated dealership agreements. The House of Representatives has already approved a measure to restore contracts with 789 dealerships, but the bill's future in the Senate is less certain.
• Moody's rebuffed in Berkshire sale. Moody's (MCO) fell 10.3% in after-hours trading following a disclosure by Berkshire Hathaway (BRK.A) that it sold 7.99M shares of the ratings company this week. Though Berkshire remains Moody's largest shareholder, the sale reduced its stake by 17%. Moody's has reported a profit decline for seven consecutive quarters.
• Porsche CEO, CFO resign. Porsche's CEO Wendelin Wiedeking and CFO Holger Haerter both resigned from the company with immediate effect, after coming to "the conclusion that the further strategic development of Porsche... is better off, if they are not on board as acting persons," said a company spokesman. The move is expected to facilitate a merger agreement with Volkswagen (VLKAY.PK).
• eBay beats as Paypal, marketplace show signs of life. eBay (EBAY) managed to beat quarterly earnings expectations (see details below), even as profit fell 29% and revenue fell 4%. The company's PayPal online-payments unit continued to grow strongly and a decline in eBay's core marketplace leveled off.
• ING may sell private banking unit. ING Group (ING) reportedly hired JPMorgan Chase (JPM) to advise it on the possible sale of its private banking business in Europe and Asia. A deal could be worth over $1B.
• House prices rise. The FHFA House Price Index was up 0.9% in May vs. -0.2% consensus, after falling 0.3% in April (revised). Nationwide prices are down 5.6% from a year earlier, and 10.7% from the April 2007 peak.

Earnings: Thursday Before Open

• 3M (MMM): Q2 EPS of $1.20 beats by $0.26. Revenue of $5.7B (-15%) vs. $5.4B. Adjusts guidance for FY '09 - sees EPS of $4.10-4.30 vs. prior guidance of $3.90-4.30. Shares +1.3% premarket (7:40 ET). (PR)
• Alexion Pharmaceuticals (ALXN): Q2 EPS of $0.20 beats by $0.04. Revenue of $92M (+55%) vs. $89M. Shares +1.9% premarket (8:00 ET). (PR)
• AT&T (T): Q2 EPS of $0.54 beats by $0.03. Revenue of $30.7B (-0.4%) in-line. Shares +2.9% premarket (7:45 ET). (PR)
• Bristol-Myers Squibb (BMY): Q2 EPS of $0.56 beats by $0.09. Revenue of $5.4B (+3.5%) vs. $5.3B. Issues upside EPS guidance for FY '09 of $1.95-2.05 vs. prior guidance of $1.85-2.00. (PR)
• Bunge (BG): Q2 EPS of $2.28 beats by $1.57. Revenue of $11B (-23.5%) vs. $12B. (PR)
• Celestica (CLS): Q2 EPS of $0.11 beats by $0.01. Revenue of $1.4B (-25%) in-line. (PR)
• Celgene (CELG): Q2 EPS of $0.46 in-line. Revenue of $629M (+10%) vs. $621M. Shares +8.9% premarket (7:45 ET). (PR)
• CME Group (CME): Q2 EPS of $3.37 beats by $0.14. Revenue of $648M (+15%) vs. $652M. (PR)
• Danaher (DHR): Q2 EPS of $0.89 beats by $0.01. Revenue of $2.7B (-19%) vs. $2.8B. (PR)
• Diamond Offshore Drilling (DO): Q2 EPS of $2.79 beats by $0.15. Revenue of $946M (-0.8%) vs. $942M. (PR)
• EMC (EMC): Q2 EPS of $0.18 beats by $0.01. Revenue of $3.3B (-11%) vs. $3.2B. Sees FY '09 EPS of $0.82 vs. &0.78 consensus. Shares +4.8% premarket (7:30 ET). (PR)
• EnCana (ECA): Q2 EPS of $1.22 beats by $0.25. Revenue of $3.8B (-49%) vs. $4.4B. (EnCana news release (.pdf))
• Fifth Third Bancorp (FITB): Q2 EPS of $1.15 vs. consensus of -$0.34 (may not be comparable). Tier 1 ratio of 12.9%. Shares +7% premarket (7:30 ET). (PR)
• FLIR Systems (FLIR): Q2 EPS of $0.35 in-line. Revenue of $278M (+6.5%) vs. $297M. Shares +1.9% premarket (7:50 ET). (PR)
• Ford Motor (F): Q2 EPS of -$0.21 beats by $0.27. Revenue of $27.2B (-34%) vs. $24.8B. (PR)
• Goodrich (GR): Q2 EPS of $1.15 beats by $0.04. Revenue of $1.7B (-8%) in-line. (PR)
• Hershey (HSY): Q2 EPS of $0.43 beats by $0.08. Revenue of $1.2B (+6%) vs. $1.1B. (PR)
• Huntington Bancshares (HBAN): Q2 EPS of -$0.40 misses by $0.22. Increased provision for credit losses 42% from Q1 to $413.7M. Tier 1 capital ratio of 11.86%. Shares -3.1% premarket (7:50 ET). (PR)
• ITT Educational Services (ESI): Q2 EPS of $1.87 beats by $0.14. Revenue of $317M (+29%) vs. $307M. (PR)
• JetBlue Airways (JBLU): Q2 EPS of $0.05 beats by $0.03. Revenue of $807M (-6%) vs. $800M. (PR)
• Kimberly-Clark (KMB): Q2 EPS of $1.16 beats by $0.22. Revenue of $4.7B (-5.6%) vs. $4.6B. Issues upside FY '09 EPS guidance of $4.10-4.25 vs. $4.12 consensus. (PR)
• Newmont Mining (NEM): Q2 EPS of $0.43 misses by $0.04. Revenue of $1.6B (+7%) in-line. (PR)
• NII Holdings (NIHD): Q2 EPS of $0.79 beats by $0.23. Revenue of $1.1B (-4%) vs. $1B. (PR)
• Omnicom Group (OMC): Q2 EPS of $0.75 beats by $0.01. Revenue of $2.9B (-17%) in-line. (PR)
• PNC Financial Services Group (PNC): Q2 EPS of $0.14 vs. consensus of $0.45 (may not be comparable). Revenue of $4B (+95.5%) vs. $3.65B. (PR)
• Potash Corp. (POT): Q2 EPS of $0.62 misses by $0.07. Revenue of $856M (-67%) vs. $981M. Issues downside Q3 EPS guidance of $0.80-1.20 vs. $1.56 consensus. Issues downside FY '09 EPS guidance of $4.00-5.00 vs. $5.24 consensus. Shares -2.3% premarket (6:50 ET). (PR)
• Raytheon (RTN): Q2 EPS of $1.24 beats by $0.11. Revenue of $6.1B (+4%) vs. $6.2B. (PR)
• Starwood Hotels & Resorts Worldwide (HOT): Q2 EPS of $0.22 beats by $0.05. Revenue of $1.2B (-23%) in-line. Issues downside guidance: sees Q3 EPS of $0.06-0.10 vs. $0.21 consensus, FY '09 EPS of $0.65 vs. $0.76 consensus. (PR)
• Terra Industries (TRA): Q2 EPS of $0.81 misses by $0.10. Revenue of $453.5M (-46%) vs. $568M. (PR)
• Thermo Fisher Scientific (TMO): Q2 EPS of $0.74 beats by $0.08. Revenue of $2.5B (-8%) vs. $2.4B. (PR)
• Wyeth (WYE): Q2 EPS of $0.94 beats by $0.09. Revenue of $5.7B (-4%) vs. $5.6B. Issues upside FY '09 EPS guidance of $3.48-3.58 vs. prior guidance of $3.33-3.53. (PR)
• Xerox (XRX): Q2 EPS of $0.16 beats by $0.05. Revenue of $3.7B (-18%) in-line. (PR)

Earnings: Wednesday After Close

• Alliance Data Systems (ADS): Q2 EPS of $0.95 misses by $0.07. Revenue of $460M (-9%) vs. $481M. Sees Q3 EPS of $1.34 in-line. Maintains 2009 EPS guidance of $5.15 vs. $5.00. (PR)
• Amdocs (DOX): Q3 EPS of $0.53 beats by $0.05. Revenue of $690M (-16%) vs. $679M. Sees Q4 EPS of $0.47-0.51 vs. $0.48. Sees Q4 revenue of $670M-690M vs. $668M. (PR)
• Citrix Systems (CTXS): Q2 EPS of $0.39 beats by $0.01. Revenue of $393M (+0%) vs. $387M. Sees Q3, FY09 revenues flat vs. 2008. (PR)
• Covanta Holding Corp. (CVA): Q2 EPS of $0.21 beats by $0.01. Revenue of $376M (-11%) vs. $391M. Reaffirms 2009 EPS $0.65-0.80 vs. $0.71 and adjusted EBITDA of $500M-540M. (PR)
• C.R. Bard (BCR): Q2 EPS of $1.23 beats by $0.02. Revenue of $625M (+1%) vs. $634M. (PR)
• eBay (EBAY): Q2 EPS of $0.37 beats by $0.01. Revenue of $2.1B (-4%) vs. $2B. Sees Q3 EPS of $0.34-0.36 vs. $0.35. Sees Q3 revenue of $2.05B-2.15B vs. $2B. (PR)
• Equifax (EFX): Q2 EPS of $0.57 in-line. Revenue of $455M (-9%) vs. $453M. Sees Q3 EPS of $0.52-0.57 vs. $0.59. (PR)
• Equinix (EQIX): Q2 EPS of $0.44 beats by $0.11. Revenue of $213M (+7%) vs. $209M. Sees Q3 revenue of $221M-225M vs. $220M. Sees FY09 revenue of $860M-$875M vs. $861M. (PR)

• E*TRADE Financial (ETFC): Q2 EPS of -$0.22 beats by $0.09. Total loan loss allowance was flat at $1.2B, or 5% of gross loans receivable. (PR)

Q2 2009 Earnings Call

July 22, 2009 5:00 pm ET

At the end of each trading week, Hillbent scans the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our Market Condition Summary to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

TWST: What are you telling investors to do at this juncture?

Q1 2009 Earnings Call

April 23, 2009 8:00 am ET

by Thomas Rasmussen

When we checked in with Omniture (OMTR) last month, we noted that it was likely to do a bit of shopping. My colleague Kathleen Reidy expanded on that recently with an in-depth report on the possible M&A moves by the analytics giant. Omniture has already shown itself ready to shop, having picked up five companies since its IPO in 2006. Those acquisitions, along with a solid organic growth rate, have helped to push up Omniture’s revenue seven-fold in the past three years. The company finished 2008 with $296m in sales. First-quarter results are due Thursday before the opening bell.

Everyone wants to know.. how long can the rally last. It’s the same question that was being asked on the other side just one month ago. How low can we go and for how long? The market always seems to remain irrational longer than you think it will and that has certainly played out over the first quarter here in 2009.

To help answer these questions, I always turn to the charts to gauge areas of support/resistance as well institutional demand. Admittedly, technical analysis has been considerably difficult in an environment of rumors, manipulation, intervention and extreme levels of fear and greed, but what it does and will always do well is provide an x-ray into the health or weakness of the market. In general, slices through support and weakness at resistance indicates a deteriorating market while surges above resistance and at support indicate good market strength.