BLP’s Week of August 19th in Review

Earnings Reports, IPO’s, M&A and Private Placements

 

Earnings Reports

Our paen to summer Eric Calonius, US National Archives
Our paen to summer
Eric Calonius, US National Archives

This was the week of retail.  From the number of promotions in your inbox, and you know it’s not  going well.  American Eagle Outfitters Inc. (AEO:  NYSE) met their downward revised numbers, and the stock is down 35% YTD.  Gap Inc. is the outlier, finally doing better.  Comp stores sales were up 5% for the quarter which is far ahead of their brethren.  Target (TGT:NYSE) got hit by its expansion into Canada and joined their brethren Wal-Mart and Macy’s in their pity party.

Hewlett-Packard’s (HP: NYSE) stock gave back a bit of their rise, YTD, telling investors that the PC and Enterprise divisions remain severely challenged.  Using odd language, the street is saying that its “deceleration in sales and earnings is slowing.”  The stock, from a low of 46 in December, it is now trading at 64.   The Company is attempting to regain turf in the PC division from Lenovo, has introduced an Android tablet, which is reported to be doing ‘OK,’ and is talking, again, about phones!

Best Buy (BBY: NYSE) beat the Street estimates by 20 cents, earning 32 cents.  That’s called a moon shot, in Street parlance.   Apparently retail, even in electronics, is not dead.  Online sales grew, bricks and mortar sales slipped ever so slightly, and the Renew Big Blue cost cutting program was effective.  BBY has seen its stock double YTD.

Intuit (INTU:Nasdaq) missed revenue and earnings projections, as it undergoes its restructuring.  The financial services division was sold to a private equity player (see our notes on private equity as the new “strategic” buyer) for $2b, closing earlier this month.  QuickBooks and its small business customer base remains Intuit’s focus;  Quicken appears to be along for the ride.  Its focus is on small business with businesses such as DemandForce, the Constant Comment look-alike it acquired in 2012

While Bottomline Technologies (EBAY: Nasdaq) had solid results, it announced two dilutive acquisitions, which took the stock down.  Bottomline is a provider of payments and invoice automation software and services to the financial industry.  In other words, they sell your bank the software the bank uses to provide you with online banking solutions.  Here’s one for the home team, based in Portsmouth, NH

Other than that, it was the normal ups and downs at the end of earnings season, especially since most of the bellwethers had reported.

IPO’s of the Week[1]

There was one IPO, Regado Biosciences, (RGDO:  Nasdaq) which is developing an anticoagulant system for heart surgeries, raised $43m for half the Company. Regado originally filed at $14 to 16 per share, and priced at $4 per share.  Oops, says Cowen and BMO, the underwriters.

But hope remains for others in IPO Country, as three companies filed their S-1’s (Street parlance for Red Herrings) this week.

M&A of Interest

3PD was acquired by XPO Logistics  (XPO: NYSE) for $365m.  3PD is a “last-mile” delivery service, and manages delivery to your home of furniture and appliances. XPO offers freight brokerage, transportation and freight forwarding services.  It went public earlier this month with bulge bracket underwriters, Credit Suisse, Morgan Stanley and Deutsche Bank

This is another great example of the growth added to our economy by companies choosing to go public.  XPO now has the currency to plow back into our economy by making acquisitions and funding growth.

Thornton & Ross was acquired by STADA Arzneimittel AG (STDEF:  Nasdaz) for $343m.  STADA is a German company that manufactures generic and OTC drugs.  Thornton & Ross was privately owned and the largest generic drug manufacturer in the UK.  This is a classic example of growth through acquisition of like-businesses, in new geographies.

Medafor was acquired by CR Bard (BCR:  NYSE) for $200m.  Medafor, founded in 1999 and based in Minneapolis, manufactures Arista AH, a substance that accelerates the body’s natural blood clotting process.

Saperion was acquired by Lexmark (LXK:  NYSE) for $72m.  Lexmark is attempting to execute an EMC-type strategy, which has Lexmark looking to transition from selling hardware to selling systems and solutions.  While the odds are not in their favor, EMC shows that it can be done.

Locu was acquired by GoDaddy.com for $70m.  Locu helps small businesses manage the updating and publishing of business information to the internet, on sites such as Foursquare, YP.com, Facebook and Yelp, from a central location.  Now, why any company would want to be acquired by GoDaddy.com is beyond me.  Yes, I do hold a grudge, and I do find their Super Bowl ads incredibly offensive.

StreetEasy was acquired by Zillow (Z:  Nasdaq) for $50m.  StreetEasy is the leading online real estate website in New York City.  Zillow’s stock has been a rocket ship, moving from $28.3 to $86.9 per share year-to-date.  With high priced stock like that, Zillow should be making an acquisition a day.

Access Communications, a provider of metro bandwidth infrastructure services in Minneapolis, was acquired by the privately owned Zayo Group, based in Boulder, for $40m.  The Zayo Group is an international bandwidth and infrastructure provider, as well as colocation services.

Cordys was acquired by OpenText (OTEC:  Nasdaq) for $33m.  Cordys was founded in 2000, by Jan Baan of Baan Company (acquired by Invensys).  OpenText is about Enterprise Information Management (EIM) and has revenues of $1.2b.

Shoe Dazzle acquired by JustFab.  So much for the Kardashians.

Financial messaging companies, Swiss-based Sterci SA and UK-based Simplex GTP,  were acquired by Bottomline Technologies, a local New Hampshire company.  (see earnings release information above)

Private Placements of Interest

Uber raised $361m from Google Ventures and TPG Capital at a valuation of $3.4b.  Enough said.

Powa Technologies, a cloud based mobile, eWallet, eCommerce and retailing solution, raised $76m. If I understand correctly, in plain English, Powa allows you to open an online shop that is instantly international, has several landing pages, and is SEO optimized.  In short, it’s a competitor to Shopify, among others.

Vice Media Group, a global youth media company, raised $70m.  It’s targeted at “young people,” like my nephew living in Shanghai who is teaching ESL.   A quick glimpse at the site tells me that it is definitely edgy.  Rupert Murdock participated with $5m at a $1.4b valuation.

Cleversafe raised a $55m Series D round, bringing the amount raised to $91m.  Cleversafe has a patented object-based storage solution that uses “information dispersal” algorithms along with encryption to store your data across a network of storage nodes.  Sounds complicated, but compelling.

Birst, a business-intelligence-in-the-cloud company raised $38m.  The website says a lot, but nothing.  Gotta see the demo, and use the product to be able to understand the language.

AcutusMedical, which is focused on 3-D, real-time, imaging of the heart chamber as part of a cardiac arrhythmia solution, raised $28m.

MicuRx Pharmaceuticals raised $25m to develop novel antibiotics to combat drug-resistant bacterial infections.

Slice, the shopping ecommerce app, raised $23m from Rakuten, the largest Japanese e-commerce company, Lightspeed and others.  We’re about to download that app, to determine how inclusive the service is.

Jama Software, a cloud based software company focused on product delivery, raised a $13m Series B round from Trinity Ventures and Madrona Venture Group.

Clustrix, the “leading scale-out” SQL database (I understand but don’t understand) raised $10m a Series D round.

Naked Wines raised $10m.  “Buy wines online for next day delivery.”  NW has a novel funding strategy, whereby if you become an angel and commit $40 per month, you “earn” wholesale prices.  Pretty ingenious, yes?

And we’ll see what Back-to-School week has to bring us other than a traffic jam from all the Lake People heading south on I-93.

Margaret S.C. Johns

Founder, BlueLake

About the author:

Margaret Johns has been a voyeur of the technology world for as long as she can remember, starting at her father’s knee when he took her to CalTech’s Palomar Observatory, and had home showings of NASA films of the Project Mercury’s space rocket launches.

She migrated from research and development at Sandia Labs to technology investment banking, where she was an employee founder at Needham  & Company.   Being a tad too independent for New York City’s investment banking world, she subsequently founded her own firm, BlueLake, where she continues to pursue and work with interesting technology companies.

If you find this newsletter of interest, please share it with a friend.

This newsletter does not purport, in any sense, to be comprehensive.  Rather, it contains news that we, at BLP, find of interest.


[1] Certain information sourced from Renaissance Capital