BLP’s Rearview Mirror: Week Ending December 15th–Earnings, IPO’s, M&A and Private Placements

What’s Happenin’?

Week Ending December 15th

Black pug lost in the snow trails
Black pug lost in the snow trails

There was a slight pause in the creation of this week’s newsletter in the form of a massive snow storm.  We received at least twelve inches, which will literally bury a pug or two.

This week’s activity more than made up for the slow pace of the last few weeks.  You name it:  Earnings, IPO’s, M&A, Private Placements, everyone’s trying to tie it up before Christmas and year end.

Earnings

Adobe Systems (ADBE:  Nasdaq)  The Creative Cloud rolls on:  Adobe reported revenues of $1.04b and earnings of $0.32 vs. expectations of $0.28.  Adobe is going through a dramatic transition from a sales to a subscription model.  Instead of buying Photoshop for $600-plus, you can now rent the program for $9.99 per month; better yet $49.99 (student/teacher price of $29.99 per month) for the entire Creative Cloud.

Anyone who’s gone through that sales to subscription transition knows that it’s painful, but it also creates an incredibly stable, strong business.  Adobe’s was up 10 percent for the week.

Lululemon (LULU:  Nasdaq) had earnings of $0.45 per share, vs. expectations of $0.41.  Sales were $380 million.  The Company lowered expectations for the next year, which sent the stock spiraling downward.  Lululemon’s controversial founder, Dennis “Chip” Wilson is stepping down as Chairman.  Wilson made some colorful comments about his customer and non-customer base. He was taken to task on Stephen Colbert’s Colbert Report where Wilson was named “Alpha Dog of the Week.”

Ciena (CIEN:  Nasdaq) announced earnings of $0.16 per share, which was below estimates.  However, the Company’s revenues of $583m, were up 25.3 percent YOY.   Ciena is in the strong part of its product cycle.  The Company’s products help customers speed up their network infrastructure to manage the significant increases of volume from data-analytics exercises and other applications.

Analogic (ALOG:  Nasdaq) had a blooper of a quarter.  Revenue was down eight percent to  $110.1m and earnings plunged 89 percent to $0.06 per share.  The poor results were due to its medical imaging segment being hit by purchasing delays. That segment accounts for more than a third of Analogic’s sales.

Other companies of interest, which announced earnings last week were Vera Bradley, Coldwater Creek, Costco, Nordstrom, Autozone, Burlington Stores and Toll Brothers.

IPOs[1]

A torrent of Companies went public this week.  Nimble, Autohome, and Kindred Bioscieinces were among the hot ones:

Technology

Nimble Storage (NMBL:  Nasdaq) sold 8.0 million shares at $21 per share for a total of $168m at a valuation of $1.48b.  The Company, which designs, manufactures and sells flash-optimized hybrid storage systems, had an incredibly hot IPO.  Says a lot for storage, and the demand for fast access of large amounts of data.  The stock closed the week at $33.93, up 61 percent for the week.

Internet/Consumer

Autohome (ATHM:  NYSE) sold 7.8 million ADSs at $17 per share, raising $133 million at a valuation of $727 million.  Autohome’s stock closed the week at $29.26 per share.  Autohome is “the leading online destination for automobile consumers in China.  Through our two websites, autohome.cn and che168.com, we deliver comprehensive independent and interactive content to automobile buyers and owners.[2]“  You will notice that any Chinese company IPO has very high multiples due to the huge addressable market.

Biotechnology

Kindred Biosciences (KIN:  Nasdaq) sold 7.5 million shares at $7.00 per share, up from the originally offered 5.8 million, raising $53 million at a valuation of $105 million.  The Company closed the week at $12.20 per share.  Kindred is a development stage biopharmaceutical company focused on developing therapies for pets.  Its current product candidates are for the treatment of osteoarthritis pain and inflammation, atopic dermatitis, and post-operative pain in dogs.

TetraLogic (TLOG:  Nasdaq)  sold  7.2 million shares at $7 per share, raising $50 million at a valuation of  $143 million.  The stock closed the week at $7.02 per share.  The original range was $13 to $15 per share, offering 6.4 million shares. TetraLogic is a “clinical-stage biopharmaceutical company focused on discovering and developing novel small molecule therapeutics that mimic Second Mitochondrial Activator of Caspases, or SMAC-mimetics, and are designed to cause or enable abnormal cells that are resistant to the body’s immune system to self-destruct.”[3]  How’s that for a run on sentence?

Other

Hilton Worldwide (HLT:  NYSE) sold 118 million shares at $20 per share, raising $2.35b at a valuation of $19.7b.   The Blackstone Group was the principal and selling shareholder, selling a minimum of 48.7 million shares.  The stock closed the week at $22.10 per share.  Another fine example of financial engineering.

Scorpio Bulkers (SALT:  Nasdaq) sold 31.3 million shares at $9.75 per share, raising $305 million at a valuation of $1.24 billion.  The stock closed the week at $9.50 per share.  Scorpio Bulkers is a “an international shipping company that was recently incorporated in the Republic of the Marshall Islands on March 20, 2013 for the purpose of acquiring and operating the latest generation of new building dry bulk carriers with fuel-efficient specifications and carrying capacities of greater than 30,000 dwt.”[4]  And you thought you had to be a tech company to pursue an IPO.  No, you simply have to find the right underwriter who has institutional clients that are interested in your type of company.

A significant portion of IPOs are now foreign-based companies.  This week we had two:  one with executive offices in Monaco and operations in the Republic of the Marshall Islands and the Republic of Malta, and the other based in Beijing and focused on Chinese consumers.  The good news and the bad news is that a significant portion of the growth in the world’s economy is outside of the United States.  As investors continue to chase growth, and companies are based outside of the United States, those countries’ exchanges will become increasingly competitive.

Mergers & Acquisitions[5]

Technology

Network Instruments acquired by JDS Uniphase for $200m.  Network Instruments is a leading developer of enterprise network and application-performance management solutions for global 2000 companies.

EdgeCast Networks acquired by Verizon Communications for $350m.  EdgeCast is an industry leader in content delivery networks.

Geomerics, the leader in lighting technology for gaming and entertainment industries, was acquired by ARM

Software

Qumas, an Irish quality and compliance management firm, was acquired by Accelrys, a provider of scientific innovation lifecycle management solutions, for $50m.

Phoenix-based Tell Me More, a leading international language company, was acquired by Rosetta Stone for $28m.

Quik.io, the “FedEx of video files” was acquired by Yahoo!

Internet

Newsy, a Columbia, Missouri based provider of multi-source, multi-platform approach to storytelling, was acquired by E.W. Scripps for $35m

EvntLive, which enables fans to engage with live music online by creating an interactive, virtual venue, was acquired by Yahoo!  EVNTLIVE launched their beta service in April 2013.

Apps

Lemon, a mobile wallet innovator, was acquired by LifeLock for $43m

Evenly, a peer-to-peer payments app, was acquired by Square.  Square presents the deal as an acqui-hire, meaning the Evenly was acquired for its talent, rather than its product.

Retail

Dealguru (Singapore and Malaysia) was acquired by London-based iBuy for $34m.  iBuy simultaneously pursued an IPO on the Australian Stock Exchange.  Dealguru is an amalgamator, and has the look of a type of Craigslist.

Education

New York City-based education app store, Chalkable was acquired by STI for $10m.  STI is a Mobile, Alabama-based provider of education technology solutions and services for K-12 schools.

Marketing

Israeli startup, Insightera was acquired by Marketo, for $20m.  Insightera provides a real-time personalization platform for websites and mobile applications.  Marketo provides a cloud-based marketing software platform.

Content marketing agency, FullQuota, was acquired by Square 2 Marketing, an inbound marketing agency.

Private Placements[6]

Technology

Ooyala, which offers cross-device video analytics and monetization solutions, raised a $43m Series F round.

VIPtela, which is a developer of software-defined networks, raised a $33m venture round.

Formerly known as Opscode, Chef raised a $32m Series D round.  Chef is in “devops,” and is open-source and commercially supported.  The product enables companies to manage and automate loads of hardware that they depend on to deploy applications.

Enterprise file sharing company, Egnyte raised a $30m Series D round.

JAMF Software, which provides enterprises with multi device management tools for the Apple ecosystem, raised a $30m venture round.

Zenverge, a semiconductor company that designs, manufactures and markets semiconductor devices that attempt to bridges broadcast content to IP enabled devises, raised an $11m Series E round.

Consumer/Internet/Web Commerce

An on-line shopping mall, the Lazada Group, that covers Indonesia, Vietnam, Thailand, the Philippines and Malaysia, raised a $250m Series E round.

Shopify raised a $100m Series C.  Shopify is based in Ottawa, Canada and provides a web-based store platform for businesses who desire an ecommerce presence.

Oculus VR, which designs, markets and sells a virtual reality headset for 3D gaming, raised a $75m Series B.

New and used car buying site, TRUECar raised a $30m venture round.

Flash sales of designer fashion site, Moda Operandi raised a $20m Series D round.

Marketing

Simulmedia raised a $25m Series E round.  Simulmedia sells TV advertising, and delivers incremental ad dollars to TV partners by monetizing “under-appreciated” inventory.

Simpli.fi, an advertising technology company that simplifies digital advertising through the use of unstructured data, raised a $16m Series B round.

PaeDae, which transforms ads into targeted and engaging rewards for a company’s customers, raised a $12m venture round.

Mobile analytics firm Flurry raised a $12m Series E round.

Bluenose Analytics, which provides a “customer success platform” for Saas businesses, using predictive analytics, raised a $10m Series A round.

Apps

Snapchat, the app that you hope your teenager uses when sending selfies, raised a $50m Series C round.

Personalized magazine site, Flipboard raised a $50m Series C round at a valuation of $800m.

App security leader Mocana raised a $15m venture round.

Beijing-based Yodo1, which mobilizes games for the Chinese market, raised an $11m Series B round.

Magzter, a digital newsstand with a dizzying array of content, raised a $10m Series B round.Max snow

Medical

HealthLoop, a cloud-based platform that automates follow-up care, keeping doctors, patients and care-givers connected, raised a $10m Series A round.

We hope you had a great weekend, and if you were digging out of all the snow, have been able to enjoy a nice, hot steam bath to soothe those aching muscles.

All the best,

Margaret Johns

Founder & Chairman

 

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.  

 


[1] Certain information provided by Renaissance Capital, in addition to the SEC and numerous business publications

[2] Company Prospectus

[3] Company prospectus.

[4] Company prospectus

[5] Certain information from TechCrunch, SEC documents, company websites and other news sources.

[6] Certain information from TechCrunch, SEC documents, company websites and other news sources.