MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Thursday, May 24
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10:45 PM Alibaba.com (ALBCF.PK) shareholders approve a plan to take parent Alibaba Group Holding private, in order to free some of the "pressures" of public listing. Alibaba Group would pay HK$13.50/share for the 27% of Alibaba.com it doesn't already own - another step toward autonomy following a buyback deal with Yahoo. ALBCF.PK shares suspended from trading in Hong Kong. Comment!
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7:21 PM 3D Systems (DDD) acquires Bespoke Innovations, a startup based in San Francisco, California that develops proprietary, integrated scan, design and print technology designed to deliver custom fit prosthetics, orthotics and orthopedic devices, for an undisclosed sum. The company also reafirms its forecast, saying the acquisition will not be material to its revenue for the remainder of 2012. Shares -3% AH. Comment!
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7:02 PM Nvidia (NVDA) claims its quad-core Tegra 3 processor has been designed into 30 smartphones. That's twice as many design wins as were claimed last year by the Tegra 2, which saw sales fizzle due to weak demand for high-end Android tablets. It's added 13 of the Tegra 3 smartphones have unsubsidized prices below $300 - that could prove important, given the high-end design wins claimed by Apple and Samsung's in-house chips, and Qualcomm's MSM8960. (earlier) 2 Comments
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6:45 PM The E.U. will make a final ruling on June 27 regarding a $1.1B fine levied on Microsoft (MSFT) in '08 for failing to comply with an order to share information about its server OS products to guarantee networking software interoperability, and release a version of Windows that doesn't feature Windows Media Player. The ruling could have implications for Intel's (INTC) attempts to overturn a $1.33B fine levied in '09. 3 Comments
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6:31 PM H-P's (HPQ) layoffs are being conducted on the basis of salary and aren't weighing factors such as skills and performance, upset employees tell BI. It's also claimed cronyism is playing a big role in the layoff decisions. Deutsche's Chris Whitmore notes past restructurings have done little to improve's H-Ps competitive positioning, or cut its dependence on weak markets. 9K of H-P's 27K job cuts will occur this fiscal year, and result in $400M in cash charges. (more on HPQ) 4 Comments
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6:15 PM Facebook (FB) paid over $80M to buy social gifting app developer Karma, sources tell Bloomberg Businessweek. Karma, whose purchase was announced on IPO day, could help Facebook finally turn e-commerce into a meaningful revenue stream, courtesy of affiliate fees on recommended purchases. Given the challenges Facebook's ad business is dealing with, many are hoping e-commerce turns into major a growth opportunity. Comment!
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6:03 PM Chip contract manufacturer UMC, which has long played second fiddle to larger Taiwanese rival TSMC (TSM), has broken ground on an $8B fab expansion plan that will manufacture chips at cutting-edge process nodes. TSMC has a head start on UMC and other rivals in producing chips using a 28nm process, and is having trouble meeting demand. Chip equipment makers are counting on strong orders from contract manufacturers to offset weak demand elsewhere. 1 Comment
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5:46 PM As Suntech's (STP) CEO warns of the potentially devastating impact of European tariffs, Auriga notes recently-imposed U.S. tariffs had an immediate retroactive impact on Suntech's Q1 results to the tune of $0.11/share. The firm adds Suntech's U.S. module manufacturing ops will limit the future impact of the tariffs, but still doesn't expect the company to turn a profit until 2014 on account of intense price pressure. It has a PT of $3, or just 1x book value. Comment!
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5:27 PM Following the guidance-driven bloodletting seen today, BMO thinks NetApp (NTAP -12.3%) could be a buyout target. The networked storage giant is now worth just ~$6.5B and trades at just ~5x free cash flow after backing out net cash. FBN, which is upgrading NetApp, feels the same way, and believes gross margin improvement and layoffs could result in guidance being conservative. (more on NTAP) (transcript) Comment!
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5:14 PM Starboard Value fires another salvo in its proxy fight against AOL's management and board by posting a 96-page presentation (.pdf) that highlights AOL's massive online media losses, and suggests its efforts to turn a profit on Patch are doomed. The inability of AOL's properties to drive search traffic on AOL.com is also criticized, as are AOL's compensation policies. Starboard's presentation comes a day after the WSJ took a close look at Patch's missteps. Comment!
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4:58 PM More on Semtech (SMTC) Q1 misses across the board on a 4.7% decline in total Y/Y revenue. Net earnings slid 90% as expenses and a purchase accounting adjustment related to its acquisition of Gennum Corp. weighed on margins and bottom-line results. The firm also sets Q2 guidance that straddles current Street estimates, saying it expects to earn between $0.37 - $0.45 per share on revenue of $146 - $154M. Street expectations are for an EPS of $0.41 on revenue of $149M. Shares -3.2.% AH. Comment!
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4:58 PM Comcast's (CMCSA) NBCUniversal subsidiary is in "serious negotiations" to buy Microsoft's (MSFT) stake in MSNBC.com, and could gain full control of the site by this summer, multiple sources tell Adweek. Such a deal could be another example of Microsoft's efforts to reduce the giant losses posted by its Online Services division. 3 Comments
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4:50 PM Bazaarvoice (BV) is acquiring rival PowerReviews for $128M ($31M in cash and $97M in stock) up-front and 1.6M shares worth of options. PowerReviews provides customer review, Q&A, and social media engagement/analytics solutions for 1,100+ retailers. Along with the move, which follows Oracle's purchase of rival Vitrue, Bazaarvoice is guiding for FQ4 revenue of $31M-$31.5M, above a $28.3M consensus. With PowerReviews in tow, it expects FQ1 revenue of $32.5M-$33M and FY13 revenue of $137M-$139M. Comment!
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4:27 PM Having just struck a major partnership with Verifone, PayPal (EBAY) is announcing 15 new retail partners for its offline payment solutions. Prominent names include Abercrombie, American Eagle, Barnes & Noble, Foot Locker, J.C. Penney, Office Depot, and Toys "R" Us. Home Depot has already done a commercial launch of PayPal's solutions. Comment!
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4:09 PM InterDigital (IDCC) issued the following response to the announcement by Huawei that they filed a complaint with the European Commission, claiming abuse of patents essential to the 3G standard: "InterDigital has not seen the complaint that was filed, so we can offer no specific response to whatever issues might be raised in the complaint," said Lawrence Shay, President of InterDigital's patent holding subsidiaries. 1 Comment
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4:06 PM In addition to NetApp's poor guidance and H-P's Autonomy issues, F5 (FFIV -7.9%) has been hit by a downbeat note from Deutsche's Brian Modoff that has implications of other enterprise IT names. Modoff says his checks with IT buyers and resellers indicate macro worries are affecting the spending plans of major enterprises, and stand to affect F5's FQ3 and 2H results. However, he's still bullish on F5's ADC and security businesses, and potential to grow software sales. (Dell) (Cisco) Comment!
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3:48 PM Contributing to today's drop in LinkedIn (LNKD -5.3%) is a cautious note from ITG, which thinks the company's pricing and volume have dipped in Q2. This leads ITG to think LinkedIn, which has beat the guidance set for each of its first 4 post-IPO earnings reports, will only report in-line sales. And that, it thinks, could disappoint investors who have given the company a sky-high valuation. Comment!
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3:37 PM Apple (AAPL) EMEA chief Pascal Cagni has resigned, according Le Figaro. It's claimed Cagni, who was hired in 2000 by Steve Jobs, tendered his resignation yesterday. Apple's European sales totaled $11.3B in FQ2, or 24% of global revenue. 3 Comments
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3:33 PM InterDigital (IDCC -3.6%) slumps after China's Huawei, one of several phone vendors it's suing, files an antitrust complaint with the E.U. accusing InterDigital of refusing to license key patents under FRAND licensing terms. Samsung and Motorola have already come under fire for leveraging FRAND-covered patents in their IP disputes with Apple and/or Microsoft. 1 Comment
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2:49 PM Google's (GOOG) rumored Nexus tablet will ship next month, Digitimes reports. It's added the 7" device, which a past report suggested will sell for $199, is expected to have 2012 shipments of just 2M-2.5M - IDC has estimated the 2012 tablet market will total 106M units. Between competition from the 9.7" iPad, the Kindle Fire, the Nook Tablet, and perhaps also an "iPad Mini," as well as Apple's (AAPL) huge lead in available tablet apps, Google has its work cut out for it. (also) Comment!
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2:36 PM Deutsche Telekom (DTEGY.PK) CEO Rene Obermann says his company is open to merging struggling T-Mobile USA with a rival, but rules out a complete sale. T-Mobile, whose planned sale to AT&T was thwarted by regulators, was recently rumored to have discussed a merger with MetroPCS (PCS). Some think a deal with Sprint (S) is a possibility in spite of 3G network compatibility issues. Comment!
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2:17 PM Microsoft's (MSFT) hit Kinect sensor may be getting some serious competition from Leap Motion, developer of a hands-free motion control solution that can control what's shown on a display with accuracy up to 1/100 of a millimeter. Leap's hardware, which also supports gestures such as pinch-to-zoom, is expected to cost $70, and has received heavy developer interest. Microsoft is reportedly prepping a more advanced Kinect that can read lips and detect emotions. Comment!
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2:06 PM H-P (HPQ +1.8%) has given up most of the gains that followed its FQ1 beat and layoff plans. Concerns the $10B Autonomy purchase may be proving disastrous are probably playing a role. Not only did H-P report Autonomy, which was posting decent growth at the time of the acquisition, see a major Y/Y drop in license revenue, H-P fired founder Mike Lynch in response. The Guardian's sources indicate Lynch and his team didn't mesh well with H-P's "bureaucratic" culture. (transcript) 1 Comment
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1:51 PM Mark Cuban discloses he bought 150K Facebook (FB) shares at $33, but says the purchase is a trade, not an investment. Cuban also provides downbeat commentary about Facebook and its disappointing IPO: he predicts the offering will further discourage retail investors from participating in the market, and joins Jim Cramer in predicting mobile usage is bad news for the company. He also sees mobile's monetization challenges as a problem for Google (GOOG) and other online ad sellers. 10 Comments
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1:43 PM Nvidia (NVDA) announces its first 4G LTE baseband chip, the fruits of its 2011 acquisition of Icera, has been qualified for use on tablets running on AT&T's (T) LTE network. The product faces tough competition from Qualcomm (QCOM), whose baseband chips are used in 4G iPad models. A chip combining an Icera baseband with an Nvidia Tegra app processor is due in 2013. Comment!
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1:33 PM Facebook (FB +1.1%) is set to unveil a standalone photo-sharing app called Facebook Camera. The product of Facebook's photos team, the app doesn't feature any Instagram integration (the acquisition is still being reviewed by the FTC), but it does borrow heavily from the startup, and drives home the extent to which Facebook saw it as a direct rival. Facebook's mobile use is soaring, though this brings with it some monetization challenges. Comment!
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1:15 PM Sigma Designs (SIGM +6.8%) posts a healthy gain after beating FQ1 estimates and guiding on its earnings call for FQ2 revenue of $61M-$67M - boosted by the acquisition of bankrupt Trident's HDTV chip business, and thus not comparable to estimates. The chipmaker says it's seeing strong traction for its home streaming and IPTV processing chips. It adds it has cut the Trident unit's staff by 1/3 since the acquisition. Comment!
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12:59 PM As Research In Motion's (RIMM) smartphone share crumbles, the popularity of BlackBerry Messenger (BBM) is going down with it, even if many continue to swear by its messaging and contact-list features. Former co-CEO Jim Balsillie reportedly wanted to license BBM (along with access to RIM's network) for use on third-party platforms, but new chief Thorsten Heins put an end to those plans. Heins "decided RIM shouldn't pursue licensing deals in general," it's claimed. 3 Comments
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12:44 PM S&P cuts MEMC Electronic Materials' (WFR -3.6%) credit rating two notches to B+ from BB, two levels below investment grade, citing “continued weakening of the solar power sector." MEMC says it is disappointed with S&P's move, "but we are comfortable that our cash and liquidity position is sufficient to meet our current cash need." Comment!
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12:36 PM Millennial Media's (MM) Q1 Mobile Mix Report drives home the disproportionate and growing share of mobile web traffic and ad viewing claimed by tablets. Ad impressions served by Millennial to non-phone devices (primarily tablets) rose 33% Q/Q, and now make up 20% of all impressions. With the iPad dominating tablet web traffic, that's a bit of a problem for Millennial, due to iAd competition, and a bigger problem for Google (GOOG), due to its search revenue-sharing deal with Apple (AAPL). 3 Comments
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12:13 PM Netflix (NFLX) is a "frenemy" of the cable industry, Cox CEO Patrick Esser maintains. While admitting Netflix is a content rival, Esser also notes 40% of Cox's broadband customers streamed Netflix content in March. Netflix content chief Ted Sarandros (previous) admits his company is cannibalizing some cable viewing, while adding Netflix's investments in original programming are due to its inability to license content from the likes of HBO and Showtime. 2 Comments
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11:53 AM Looking to cut costs in the face of plunging revenue and significant cash burn, Nokia (NOK) has broken up its annual Nokia World conference, typically a big gathering, into several smaller events. Moreover, the first event will be invitation-only. VentureBeat's Sean Ludwig isn't pleased. 1 Comment
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11:46 AM Heavily-shorted Pandora (P +16.8%) soars thanks to its FQ1 beat, which was fueled by share gains and better monetization, and strong FY13 guidance. Needham (Buy) sees the results as evidence Internet radio is a "winner-take-most" market, while Maxim Group (Buy) thinks they indicate Pandora's sales investments are paying off. SA's Rocco Pendola is encouraged by Pandora's earnings call commentary, which he sees as more proof of the company's disruptive impact on the radio industry. Comment!
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11:25 AM PayPal's (EBAY) tie-up with payment-processing rival Verifone (PAY) is all about fending off Square, suggests Owen Thomas. PayPal, while expanding its offline partnerships, doesn't have Verifone's retail reach, and Verifone can't match PayPal's low cost structure. While PayPal and Verifone have each released rival offerings (I, II) to Square's credit-card reader, their deal is an attempt to halt Square's efforts to move upmarket and sell retailers on a soup-to-nuts payment solution. 1 Comment
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11:04 AM Corsair Components has postponed its IPO, citing market conditions. The company, which provides computer components with a focus on gaming hardware, had intended to sell 6.9M shares for up to $14 each, but will wait until the environment improves. Corsair follows TVAX Biomedical, Tria Beauty and others in deciding not to list at the moment. Comment!
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11:03 AM Chinese sovereign wealth fund CIC is in "advanced talks" to buy up to a $2B stake in Alibaba (ALBCF.PK), Reuters reports. The e-commerce giant would use the funds to help buy back half of Yahoo's (YHOO) 40% stake in the company for $7.1B, per the terms of Sunday's deal. Alibaba, valued at $35B in the Yahoo deal and eying an IPO, posted 2011 revenue of $2.8B, nearly 2/3 of which came from its Taobao auction site. Comment!
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10:50 AM Adam Lashinksky, author of a recent book on Apple's (AAPL) business culture, provides an inside look at how the Tim Cook era is unfolding. For better and/or worse, Apple is becoming "a more normal company" under Cook, Lashinsky suggests. Some of the changes: Cook engages with investors in a way Jobs didn't; engineers have to share more decision-making authority with managers; and the company now has a dedicated M&A team. 6 Comments
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10:29 AM NetApp's poor guidance is hurting both storage-related names and infrastructure vendors seen as having strong cloud/virtualization exposure, as fears of an IT spending slowdown grow. Also, while the Street is pleased overall with H-P's results, the poor showings from its server business and Autonomy enterprise search unit might not be going over well. EMC -4.1%. STEC -3.8%. BRCD -2.8%. CVLT -4.9%. FFIV -5.5%. VMW -4.5%. CTXS -3.9%. Comment!
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10:09 AM Microsoft (MSFT) has won a German injunction on the sale of Motorola Mobility (GOOG) Android devices, after a court ruled Motorola is infringing a patent related to the brilliant innovation of breaking up and reassembling a text message. The ruling comes after the ITC banned the U.S. import of Motorola devices infringing another Microsoft patent, and suggested (pending a final ruling) the Xbox 360 should face an import ban for violating Motorola patents. 2 Comments
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9:57 AM NetApp (NTAP -12.6%) has pared some of the losses seen due to the poor FQ1 guidance that came with its FQ4 beat, but still remains off sharply. Brean Murray is downgrading shares to Hold, citing concerns about revenue visibility and operating expenses. Needham remains bullish, and notes Asia-Pac and U.S. commercial were strengths, but admits there's weakness within defense, financial services, and some top accounts. (also) (transcript) Comment!
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9:50 AM The $100M trading profit that underwriters are reported to have made by "greenshoe" short positions on Facebook may seem "like a giant conflict of interest," outside of Wall Street writes Fortune's Stephen Gandel, but no rules were broken and the potential trades were even disclosed in Facebook's prospectus." 4 Comments
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9:38 AM Though reiterating a Market Perform on H-P (HPQ +4.7%), BMO sees it as a better play than Dell (DELL -0.6%), following H-P's FQ1 beat and restructuring announcement. Dell's efforts to improve margins "will take too long to play out," BMO argues, whereas H-P will get a boost over the next few quarters from its restructuring. The fact Dell is underperforming a bit this morning suggests the Street takes H-P's results as evidence Dell's problems are partly of its own making. (HPQ transcript) Comment!
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9:15 AM The WSJ details how one of the institutional investors that was notified by an underwriting bank of cuts to Facebook (FB) estimates, Capital Research & Management, decided not to invest in the IPO as a result. It's added that while such selective disclosure is normally illegal, it isn't for IPOs, due to laws that prevent analysts at underwriting banks from issuing research until 40 days after shares begin trading. FB +1.8%. (previous) 1 Comment
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8:21 AM Suntech (STP) CEO Zhengrong Shi says if Europe follows the U.S. in levying punitive tariffs on Chinese solar panel imports, it could deal a "lethal" blow to the industry. Beyond words, China signals it may retaliate against the tariffs, saying U.S. government backing for six clean energy projects in China had violated WTO rules and acted as barriers to trade. 1 Comment
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8:05 AM France's data-protection agency, CNIL, accuses Google (GOOG) of stonewalling in its investigation of the company's new privacy policy, which was implemented despite CNIL asking Google for a delay. The agency says Google's answers to a questionnaire are "are often incomplete or approximate," and has given it a new one to fill in. 1 Comment
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