Market Currents by Seeking Alpha

Real-time news and commentary for investors

Today - Wednesday, May 27, 2015

  • 7:21 PM  
    • Publisher Vox Media has announced it's acquiring Re/code, the tech news site led by Wall Street Journal veterans Walt Mossberg and Kara Swisher, in an all-stock deal -- though Quartz has reignited speculation from earlier this spring that Comcast (CMCSA), an investor in both, could end up owning it all.
    • Comcast had been in talks to acquire Vox Media (the publisher of sports blog network SB Nation, tech site The Verge, food network Eater and an eponymous news/analysis site, among others), though the sticking point seems to have been Vox's wish for a near-$1B valuation. Vox has raised about $110M in the past six years, and its last funding round valued it around $380M.
    • The cable giant gave its blessing to Vox's Re/code acquisition months ago, Quartz reports. But Re/code is smaller and easier to swallow; Vox may need a big buyer like Comcast, or to go the IPO route.
    • Elsewhere at Comcast, NBCUniversal is putting together a sports documentary film group -- a move that puts it into the territory of HBO's longer-form sports reporting, as well as ESPN, though NBC will draw more from in-house film talent. It'll lean on its award-winning Olympics unit and, unsurprisingly, feature a strong Olympics focus.
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  • 7:17 PM  
    • Tutor Perini (TPC) again fails to gain majority shareholder support on its executive pay packages, becoming the first company to fail the advisory vote five years in a row.
    • Only 35% of shareholders supported TPC’s pay packages this year, down from 44% last year.
    • Executive pay packages for CEO Ronald Tutor have come under fire as investors questioned such practices as Tutor’s pledging millions of shares for a collateral line of credit, and a compensation package that included $800K of personal use on the company’s jet; Tutor owns 19.6% of TPC’s shares.
    • Also, Michael Klein, lead independent director and head of the audit committee and corporate governance committee, was re-elected to the board with a bare majority of votes cast by shareholders.
    • Oil driller Nabors Industries (NBR), the only other company to fail the vote four years running, holds its shareholder meeting next week.
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  • 7:12 PM  
    • Though the Nasdaq rose 1.5% today, Sierra Wireless (SWIR) fell 4% to $29.58, hitting levels last seen in November. The selloff came on volume of 1.2M shares, well above a 3-month daily average of 503K.
    • No news that would explain the move has hit the wires. Sierra, which held its annual meeting on May 21, has fallen during its last 9 trading days, and is now down 20% from where its traded before the company provided soft Q2 guidance with its Q1 beat on May 7.
    • Earlier today, Sierra announced it had updated its InMotion oMG2000 4G gateway to support the FirstNet LTE band (meant for public safety agencies and other first responders). AT&T, Verizon, and Sprint's 4G networks are already supported.
    • Shares now respectively trade for 27x estimated 2015 EPS and 1.3x EV/sales, and 19x estimated 2016 EPS and 1.1x EV/sales.
  • 6:57 PM  
    • Analysts appear to appreciate Crescent Point Energy's (CPG) C$1.53B takeover of Legacy Oil + Gas (LEGPF) more than investors; analysts say the deal makes a lot of sense, but investors nevertheless sent CPG shares 5% lower in today's trade.
    • Roughly two-thirds of Legacy’s production folding into CPG's core areas, the land being acquired provides an attractive entry into an area of Saskatchewan where Legacy has been posting strong results, and the deal may have a positive impact on the prospects for CPG’s dividend.
    • Raymond James analyst Chris Cox thinks the deal provides investors with greater visibility around the sustainability of CPG’s dividend beyond 2015; he believes CPG will be able to fully fund its capital program and current dividend at $70-$75 oil prices in 2016.
    • Brian Kristjansen at Dundee Capital upgrades CPG to Buy from Hold, noting that Legacy’s overlevered position and resulting share price weakness allowed it to be bought at an attractive level.
    • Analysts say debt-burdened Canadian companies including Lightstream Resources (LSTMF), Penn West Petroleum (PWE) and Connacher Oil and Gas (CLLZF) could become targets as larger buyers become active.
  • 6:48 PM  
    • Pac Crest's Brad Erickson, discussing his most recent GoPro (GPRO) channel checks : "Days of inventory declined m/m, and we believe [camera] sales run rates have increased recently, likely driven by incremental bundling with gift cards/memory cards, as well as a strong seasonal rebound associated with dads & grads." GoPro is a month removed from providing strong Q2 guidance.
    • Erickson, who also reported positive checks in early April, has hiked his target for video processor supplier Ambarella (AMBA) by $18 to $96, and his FY16 (ends Jan. '16) and FY17 EPS estimates to $2.39 and $3.29 (above a consensus of $2.24 and $2.77).
    • He also speculates Qualcomm (QCOM) could bid for Ambarella on account of Ambarella's low-power video-processing IP, and even suggests Qualcomm's recent $10B capital raise (will help pay for buybacks) has sparked broader speculation about a deal. "While we hadn't expected such substantive acquisition speculation this soon since going public, we believe such a deal could make both technology and financial sense in line with our views on the stock."
    • Erickson does caution Ambarella's big run-up suggests "expectations are very high" going into next Tuesday's FQ1 report. "As such, we'd be opportunistic buyers on any pullback in the name."
    • Thanks in part to a big chip stock rally fueled by Broadcom/Avago M&A reports, Ambarella rose 3.1% today, making new highs along the way. GoPro fell 0.2%.
  • 6:39 PM  
    • Chevron (CVX) shareholders vote to give large investors the power to nominate directors to the company’s board, with 55% of votes cast favoring a proposal to give shareholders proxy access rights.
    • The vote is not binding and CVX had opposed the proposal, warning it could create “significant risk" for investors, but CEO John Watson says the board will “consider the final voting results carefully, including the vote on proxy access and the thoughtful stockholder discussions on that issue."
    • Supporters of the proposal think it would encourage CVX’s directors to address the long-term risks to the company’s business posed by climate change.
    • The rule would allow investors who have owned 3% or more of CVX’s shares for at least three years to nominate directors for up to a quarter of the current board’s seats.
    • A similar resolution came close to passing today at Exxon Mobil's (XOM) annual meeting, where a proxy access proposal was supported by 49.4% of the shares voted.
  • 6:32 PM  
    • Copart (CPRT): FQ3 EPS of $0.44 misses by $0.05.
    • Revenue of $297.14M (-4.1% Y/Y) misses by $14.55M.
    • Press Release
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  • 6:23 PM  
    • Canadian Natural Resources (CNQ) says it is delaying setting out detailed future spending plans due to uncertainty about the energy policies of Alberta’s newly elected government.
    • Canada's top independent oil producer had planned to hold an institutional investor open house on June 17 but says it will be deferred until greater clarity on government policies allows the company to finalize spending plans.
    • The new premier, Rachel Notley, says she has no plans to force her government to speed up work on new policies despite CNQ's decision.
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  • 6:13 PM  
    • DNB Financial (DNBF) declares $0.07/share quarterly dividend, in line with previous.
    • Forward yield 1.1%
    • Payable June 22; for shareholders of record June 10; ex-div June 8.
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  • 6:11 PM  
    • Blue Square-Israel Ltd ADR (BSI): FQ1 EPS of -NIS0.77 vs. -NIS0.47 in 1Q14
    • Revenue of NIS2.5B (-7.4% Y/Y)
    • Press Release
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