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IBM Will Add More Color To Painful Transition With Q1 Earnings

IBM ( IBM ) will take a new approach when it reports first-quarter earnings after the market close Monday, in order to give investors a better view of its transformation. Big Blue, at its Investor Briefing in February, said it would revise its financial reporting to reflect the transformation of the business and provide investors with better visibility into its operating model. This includes disclosing additional information on its strategic imperatives by segment. The consensus estimate is for IBM to report revenue of $18.26 billion, down 6.6% year over year. That would mark its 16th straight quarter of a year-over-year sales decline. Analysts polled by Thomson Reuters also expect earnings per share minus items to fall 28%, to $2.09, the fourth quarter in a row of year-over-year declines. IBM reported better-than-expected Q4 earnings on Jan. 19, saying it was making “significant progress” in a major company transition. But the stock fell 5% the following day as the company’s guidance for 2016 fell short of estimates. IBM stock fell to a six-year low of 118 that day, but it’s up nearly 30% since then, above 150, helped by a better foreign-exchange rate and on expectations of a revenue boost from its “Watson” super-computer business, among other things. IBM has long been in transition, shedding hardware units and realigning its workforce to reduce costs as it focuses on growth areas such as cloud computing, Big Data analytics, security, and mobile computing — areas that it refers to as strategic imperatives. IBM has placed a big bet on Watson, known for its heady play on the “Jeopardy” game show but now key to IBM’s Cognitive Solutions business. In a research report on April 13, UBS analyst Steven Milunovich maintained a neutral rating and price target of 132 on IBM stock. Credit Suisse analyst Kulbinder Garcha, meanwhile, has an underperform rating on IBM and price target of just 110. He does not expect IBM revenue to stabilize until 2018. “We see a painful multiyear turnaround from here, which drives underperformance,” wrote Garcha, who has been among the most negative on IBM.

Expedia’s HomeAway Slapped With Lawsuit By Property Owner

A property owner who is also an alternative-accommodations host has filed a lawsuit in federal court against Expedia ( EXPE )-owned HomeAway. The suit seeks class-action status. The suit is centered around a recent change that HomeAway made to its booking fees, which is how the company makes money. Previously only the owner of the rental property charged travelers a booking fee. Now both HomeAway and the property owner charge fees. The change has frustrated some  home owners and property managers , who are struggling with how they convey the changes to travelers. In the complaint filed in the Western District of Texas federal court, the plaintiff claims that HomeAway’s decision to change the fee structure will cause her monetary damages and that it represented a breach of contract. The suit also claims that HomeAway has violated a range of consumer protection statutes. The lawsuit alleges 10 causes for action in all. HomeAway spokesman Jordan Hoefar said that company policy was not to comment on pending litigation. When asked why the company elected to make the fee change, Hoefar wrote via email that the new fee structure will help the company fund fraud protection, “more integrated advertising and promotions” and other things. Competitor Airbnb also charges travelers booking fees. Airbnb and HomeAway let people rent their homes, or rooms in their homes, to travelers. Expedia online travel rival Priceline ( PCLN ) also offers alternative accommodations . Expedia is set to report Q1 earnings on April 27, after the market close.

SunEdison Chapter 11 Looms After Bankruptcy Loan Talks Confirmed

SunEdison ( SUNE ) acknowledged Friday it’s in debtor-in-possession talks with creditors and will need a $310 million loan to dig through a potential bankruptcy. That sent shares plunging, extending losses in late trading after Reuters reported that an actual bankruptcy filing could occur as soon as Sunday. SunEdison stock dived 36.7% to about 37 cents on the stock market today , dropping to 29 cents late Friday on the Reuters report . The company’s first- and second-lien loan holders entered into confidentiality agreements March 17, a day after SunEd missed the second deadline to file its annual 10-K paperwork. But “the negotiations with respect to such potential financing transactions are still ongoing,” SunEdison cautioned in an 8-K filing. “There can be no assurance that any agreement will be reached.” Debtor-in-possession negotiations are often a precursor to a bankruptcy filing. SunEd yieldcos TerraForm Power ( TERP ) and TerraForm Global ( GLBL ) have separately warned of “substantial risk” that SunEd might seek bankruptcy protection. TerraForm Power and TerraForm Global on Friday  hired AlixPartners as a financial adviser, Bloomberg reported, citing sources. As of Sept. 30, SunEdison had wracked up $11.7 billion in debt. In the March 17 presentation — furnished Friday alongside the 8-K — SunEdison said it planned to focus on core North America, India and Latin America regions, while maintaining growth regions on “hot idle” stance until liquidity improves. SunEd aims to monetize its residential and smaller commercial (RSC) unit and reduce operational expenses to below $400 million. The now-failed Vivint Solar ( VSLR ) acquisition was originally intended to be melded into SunEd’s RSC business. In Q1, SunEdison said it plans to use $779 million in cash, with $481 million spent on projects. As of April 2, SunEdison had 3.7 gigawatts in project investments expected to generate $897 million in proceeds. But it still needs $272 million in future project investments to reach that value. Since October, SunEdison has cut its workforce by 40%, and it is angling for a total 50% reduction, along with a $150 million cut from additional non-labor savings. The firm also completely exited Japan. SunEdison stock had soared 58% on Thursday, when the company released an SEC filing disclosing an audit that showed no evidence of fraud by SunEd executives. But the auditor found wrongdoing by a former non-executive employee involved in the bungled Vivint Solar acquisition talks and an “ overly optimistic culture ” related to projected cash flow. SunEdison noted it terminated the employee upon discovery of the wrongdoing. TerraForm Power fell 7.3% to 9 on Friday. TerraForm Global slid 3.1% to 2.48. Both yieldcos drifted lower late on the Reuters report of a possible Sunday bankruptcy filing by their parent company.