September 15, 2014
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What a bizarre summer. I’m already putting away my summer clothes, given the 40 degree nights, and making plans to store the patio furniture and am taking out the turtlenecks. How could this happen? I’m not complaining about the lack of air conditioning bills, but wait a minute!
Earnings and the Market
[Click on the company name of the story and on the stock symbol for the stock chart]
Lots of muttering about the bears capitulating, though as I’m writing this, the DJIA has gone back below 17,000. But, just barely. We’re nervous when too many people are bullish. But we haven’t seen any extravagance; unemployment is still up there at 6.1 percent, though down from a high of 10.0 percent in October, 2009. Just remember, the market performs better during periods of bearishness.
The bullishness is attributed to improving earnings, a pickup in economic growth and an accommodative Federal Reserve. The Fed is meeting this week, and we will be receiving more smoke signals on Wednesday afternoon.
The Alibaba IPO should be on the road. It’s a hot deal, with the price range being raised, in spite of the two tier stock structure and total control by Jack Ma and some evidence of self-dealing with himself and some of his top executives. The Chinese way, to those of us who are a bit jaundiced with regard to business dealings in China. Mr. Ma claims that Alibaba will be expanding into the U.S. and Europe: Broad-based or targeting people with a Chinese heritage?
On the earnings front, Yum Brands pre announced earnings and revenue shortfall in China due to their food sourcing issues. Ulta (ULTA: Nasdaq) continues to outperform. I should have listened to Peter Lynch and bought the stock. Great idea, good execution. Sales of $734m vs. $601m YoY, and earnings of $60.8m and $0.94 per share vs. $44.9m and $0.70 per share.
Restoration Hardware (RH: NYSE) fell when revenues and forecasts fell below expectations. Revenues were $434m vs. $382m YoY and earnings of $27.2m and $0.69 per share vs. a loss of $17.8m and $0.46 per share.
Lululemon Athletica (LULU: Nasdaq) posted sales of $391m vs. $344m YoY and earnings of $0.33 per share on net income of $48.7m vs. $0.39 per share on net income of $56.5m. The stock traded up due to exceeding expectations.
In mergers, Heineken’s (HEINY: Nasdaq) controlling family rebuffed SABMiller’s bid for the Company. Meanwhile, Minecraft maker Mojang is selling itself to Microsoft for $2.5b. Founder Maukus Persson, known as Notch, never went to college; Minecraft is based in Sweden. Another one of those data points.
FINRA is generating new trading rules to give greater transparency to private trading platforms and heightened oversight. A day late a dollar short? Michael Lewis wrote his best seller, Flash Boys, on the problem, and only now is FINRA beginning to address the problem. Closing the proverbial barn door.
We are an innovative medical device company that is designing, developing and commercializing exoskeletons that allow wheelchair-bound individuals with mobility impairments or other medical conditions the ability to stand and walk once again. We have developed and are continuing to commercialize ReWalk, an exoskeleton that uses our patented tilt-sensor technology and an on-board computer and motion sensors to drive motorized legs that power movement.
We are a clinical-stage biopharmaceutical company focused on discovering and developing highly targeted cancer immunotherapies. Our product candidates are being developed in the field of immuno-oncology, which represents an innovative approach to cancer treatment that seeks to harness the body’s own immune defenses to fight tumor cells.
Mergers & Acquisitions
Click on the highlighted text for more deal information.
Eucalyptus Systems, with open source private cloud software that is compatible with AWS, is being acquired by Hewlett-Packard for $11b.
Mojang,(Minecraft) is being acquired by Microsoft for $2.5b.
UK-based Movirtu, a pioneer of Virtual SIM solutions for mobile operators, is being acquired by Blackberry.
I will admit that DHgate.com has my interest. How do you sell direct to consumer from China, and save money for the buyer, and make money for the seller?
Square, the payments firm run by Twitter founder Jack Dorsey, raised a $100m Series E round. Square runs those credit card swipers attached to the iPad/iPhone.
Ifbyphone, a leader in voice-based automated marketing, raised a $30m Series E round.
FieldAware, which has developed field service management software, raised $24m.
Veracode, which has developed cloud-based application security, raised a $40m Series F round from Wellington Management. They will need the money, as their competition is HP and IBM. They are based in Burlington, MA and founded by former Symantec employees.
Mediamorph, which has developed a SaaS platform for distributing media and entertainment, raised a $10m Series B round
Liquid Light, which is using process technology to convert CO2 to major chemicals, raised a $15m Series B round. Are our pollution and global warming problems solved?
Kinnek, which is trying to disrupt small business purchasing, raised a $10m Series A round. Kinnek is a cross between a directory and a marketplace.
DHgate, a China-to-the-Globe B-to-B and B-to-C marketplace, raised a $16m Series D round.
Scholar Rock is discovering and developing a new class of biologic therapies, raised a $20m Series A round.
Snowball Finance, a finance-focused social media site, raised a $40m Series C round.
Innobuddy, an online learning platform with SmartStudy and SmartPigai websites, raised an $11m Series A round from Baidu. This is Baidu’s third online education investment.
SmartStudy.com, with a mission of helping young people learn, raised an $11m Series A round.
All the best,
Founder & Chairman
SiVal Advisors, LLC
Stevens Capital Advisors
Susan Woods and Vlad Harris
Margaret Johns is the Founder and Chairman of BlueLake Partners, a boutique M&A investment bank based in the Greater Boston Area. Prior to founding BlueLake she was an employee founder and Managing Director at Needham & Company where she worked in Corporate Finance in New York City and headed up its Boston office. She now lives in Londonderry, New Hampshire with her husband, 16 year old step-daughter and three pugs. When she’s not working with clients, FINRA or writing blogs she competes on the Granite State Penguins Masters Swim Team, skis, rides her bike or is out walking her pugs.
Content researched, edited and reviewed on a best efforts basis.
We make no claim to being comprehensive in our review, as the contents are companies and topics we, ourselves, find of interest.
This newsletter is currently being proofed by Dave Henshaw, which is much appreciated. Dave is my USMS swimming lane mate, and Granite State Penguin team-mate. He is retired from MIT, where he used to produce and proof their annual financial report. Exactly what we need.