Author Archives: Scalper1

Yahoo Board Nominations Due Soon; Company Prepped For Fire Sale

Yahoo ‘s ( YHOO ) recent writedown of its Tumblr microblog is preparing the company’s core business for sale to private equity firms, possibly at a discount, Rosenblatt Securities said Wednesday. Tumblr revenue did not meet Yahoo’s internal projection for 2015, Rosenblatt analyst Martin Pyykkonen said in a research note. He pointed out that Yahoo’s 2016 guidance for its revenue minus traffic acquisition costs — commissions it pays publishers that run its ads — calls for a nearly 20% decline. “Buyers (with real bids) would have emerged by now if there was strong audience and usage growth to drive advertising demand,” said Pyykkonen, who maintains a sell rating and price target of 30 on Yahoo stock. He said that “Yahoo’s recent writedown of the part of the goodwill on Tumblr is one example of sprucing up the balance sheet for sale of the core business. But we still think it will likely fall short of a premium takeover valuation on Yahoo’s stock.” Yahoo stock was up 0.9% in midday trading in the stock market today , above 33. Yahoo stock has gained 29% since it skidded to a 31-month low of 26.15 last month. But Yahoo stock is down 22% the past 12 months. Yahoo CEO Marissa Mayer is under intensified pressure from major investor Starboard Value, which has urged the exit of Mayer and some directors, as well as the spinoff of Yahoo’s core search business. Yahoo directors are close to offering at least two board seats to the activist hedge fund in order to avert a proxy fight, according to a recent New York Post report. Board member nominations are due by March 26, said Pyykkonen. Dozens of groups are expressing interest in buying the struggling Web portal, say analysts, with Verizon ( VZ ) among those said to be the most likely acquirer. Aside from forming a committee of independent directors to explore possible transactions, Yahoo has announced that it will bring in Goldman Sachs ( GS ), JPMorgan ( JPM ) and PJT Partners ( PJT ) as financial advisors, along with law firm Cravath, Swaine & Moore. Yahoo Faced With Declining Fundamentals Pyykkonen’s report called out the Web company’s “declining fundamentals,” highlighted by drops in users and usage, as well as the Tumblr writedown. Greater revenue concentration from mobile advertising is “benefiting the likes of Facebook ( FB ) and Alphabet ( GOOGL )-owned Google” rather than Yahoo, he said, adding that Netflix ( NFLX ) is also siphoning traffic away from Yahoo. “The fundamental challenge in Yahoo’s core business is the fact that the platform is simply much less relevant to advertisers than it used to be, when it was labeled as a portal, and more recently aggregated content from multiple sources, while producing relatively little of its own unique content,” he said. Comcast ( CMCSA ) is another company rumored to be interested in Yahoo. Verizon has talked up its interest in buying some Yahoo assets “at the right price,” but also said it does not want to “catch a falling knife,” referring to the state of Yahoo’s business. Rumors re-emerged last week that e-commerce giant Alibaba Group ( BABA ) might buy back a 15%  stake that Yahoo now holds in the Chinese company. Yahoo’s Asian assets — comprised of its Alibaba holdings and a 35.5% stake in Yahoo Japan — represent the vast majority of Yahoo’s $31.4 billion market value as of Wednesday. But some observers say such a transaction is unlikely because of high tax implications.

Fitness Band Ownership Up, But Purchase Intent Declines

Fitness band ownership among women, a key demographic for the product, is still rising, but purchase intent has slipped, according to Piper Jaffray’s sixth semiannual women’s survey. Piper Jaffray reported Wednesday that 21% of women surveyed own a fitness band, up from 18% in the fall survey. Meanwhile, 9% of women said they own a smartwatch, up from 8% in the fall. However, the intent to buy a fitness band in the next six months fell to 15% in the spring survey, from 19% in the fall. Intent to buy a smartwatch also dipped, falling to 10% in the spring survey from 13% last fall. “While ownership has improved, we did detect the first downtick in future spending intentions on the (fitness band) category,” Piper Jaffray analyst Erinn Murphy said in a report. “We could be approaching a saturation point with select brands.” Fitbit ( FIT ) remained the No. 1 preferred fitness band, with 77% mindshare, up from 68% six months ago. Garmin ( GRMN ) and Jawbone tied for second place, each with 5% share. Apple ( AAPL ) led the smartwatch category with 49% share, up from 42% six months ago. Fitbit jumped to the No. 2 spot after announcing its Fitbit Blaze smartwatch. It grabbed 20% mindshare, up 9% last fall. Samsung fell to third place with 14% share, down from 19% six months ago. Fitbit overtook Under Armour ( UA ) as the top fitness app provider in the spring survey. Fitbit garnered 29% mindshare in fitness apps, up from 18% last fall. Under Armour dropped to second place with 22% share vs. 27% last fall. Some 30% of women use a fitness app, down from 32% six months ago, the survey showed. For its latest survey, Piper Jaffray interviewed more than 1,000 U.S. women, with an average age of 49 and 73% with a household income of $35,000 to $80,000. RELATED: Apple Watch Shipments Slowed In Holiday Quarter . Fitbit Face-Plants After Giving Weak Q1 Guidance, User Numbers .  

What Now? ServiceNow Confirms BMC Deal Pending; SAP, CRM Rise

Enterprise software developer ServiceNow ( NOW ) advised the Securities and Exchange Commission Wednesday that a federal court in Texas has granted a 30-day stay of all deadlines — notably this Friday’s deadline to start trial — in its defense against patent-violation claim s by BMC Software. ServiceNow and BMC requested the stay “so that the parties may document the agreement and submit appropriate dismissal papers,” ServiceNow said in an 8K filing with the SEC. What now? ServiceNow stock was down 1%, below 60, in early afternoon trade in the stock market today , after rising 3.6% Tuesday as word spread that a legal settlement was in the works. ServiceNow stock still is up for the week and could notch its fourth consecutive week of gains, after shares hit a 22-month low in early February. Shares are still 34% off a record high of 91.28 set Dec. 4. ServiceNow went public in June 2012, priced at 18. More-established rivals Salesforce.com ( CRM ) and SAP ( SAP ) were making their own moves. SAP, the largest in IBD’s Computer Software-Enterprise industry group by market cap, was up a fraction, near 77, Wednesday afternoon, just 5% off a nearly two-year high of 81.21 set Dec. 29. No. 2 player Salesforce.com was up 1.5%, near 71, 14% off a record high of 82.90 set Nov. 19. With a market cap of $9.6 billion, a tenth the size of SAP, ServiceNow is the fifth-largest member of the industry group. Evercore ISI analyst Kirk Materne, in a research note Wednesday, said that the dispute with BMC is “more of a short-term concern … than a wall of worry related to a possible penalty or injunction. “Nevertheless, we believe the (pending) settlement between the two companies does remove a near-term overhang and should allow investors to refocus attention on the longer-term opportunity,” he wrote. “We do not believe that the trial with BMC was impacting sales cycles. … We continue to like the risk/reward longer-term, but as we noted after meeting with the company in early February, NOW is likely to remain in ‘show me’ mode until it reports” its Q1 results. ServiceNow stock crashed 16% on Jan. 28 after the company reported Q4 billings below expectations, though EPS ex items jumped 533% to 19 cents, twice analysts’ expectations, and revenue rose 44% to $285.6 million, also topping Wall Street views. Materne maintained a buy rating on ServiceNow stock, with an 83 price target. Hewlett Packard Enterprise ( HPE ) also has patent infringement claims pending against ServiceNow, filed originally by the former Hewlett-Packard company.