BLP’s Rearview Mirror: Week of December 8th

Earnings, IPOs, M&A, and Private Placements

What’s Happenin’?

Week Ending December 8th

Earnings

Baby Flirt with her first Snowman
Baby Flirt with her first Snowman

The stock market may be hitting new highs, but earnings reports are less vibrant.  This week’s earnings announcements were all about retail, with earnings down and forecasts reduced.  It wasn’t happy, in large part because teenage grrls [sic] were not spending their money (or–even worse–did not have any money):

Big Lots  (BIG:  NYSE) also fell short of consensus estimates for both revenue and earnings.  Sales were $1.15b vs. $1.113b YOY, with earnings of a loss of 17¢ versus a loss of 10¢.  The Company fell on its face in Canada, and is withdrawing, closing stores and taking write downs.

Express (EXPR:  NYSE)  Talk about going off a cliff.  Express lost 20 percent of its value in one day.  Ouch!  Third quarter sales were in line with expectations, at $503m vs. $468m, and net income of $68.6m/$0.81 per share versus $75m/$0.86 per share YOY.  Thanksgiving weekend sales, while higher than last year, did not meet expectations.  Hence the stock cliff.

Five Below (FIVE:  Nasdaq) sales increased 28 percent to $111m, with net income of $1.7m vs. $0.7m in GAAP income or 3¢ vs. 1¢.  This was another case of good results, but not good enuff [sic].  Consensus estimates were $112m and 4¢.  Five Below’s merchandise is targeted at teenage grrls [sic] which may be another reason why I find the store has such a cacophonious feel to it.

Ulta Salon Cosmetics & Fragrance  (ULTA:  Nasdaq) Ulta Salon was perceived to have an ugly third quarter with earnings of $45.4m or 70¢ a share, up 19 percent.  Sales increased 22 percent from $619m from $506m.  Consensus estimates were sales of $622m and earnings of 72¢.

Twenty percent growth is nothing to sneeze at.  But such is the danger of setting expectations and missing.  I went by an Ulta store in the Manchester mall this past week, and thought its selection was week, and traffic was negligible.  Wish I’d visited the prior week, made those observations, and shorted the stock.  Woulda shoulda.

IPOs[1]

One brave company went public this week, and it appears to have been an act of desperation:

Xencor (XNCR:  Nasdaq)  offered 12.7 milllion shares at $5.50 per share, raising $69.85m at a valuation of $169m.  The Company closed the week at $7.76 per share.  Xencor originally filed to offer five million shares at $14 to $16 per share.  How do you say dilution/desperation?  The Company is developing antibodies for severe autoimmune/allergic diseases and cancer.  Credit Suisse, Leerink Swann and Wedbush were the underwriters.

Mergers &Acquisitions[2]

Software

Prolexic Technologies was acquired by Akamai Technologies for $370m.  Prolexic is a Florida-based provider of cloud-based security solutions for data centers and enterprise IP applications.

Critical Path, an email solution provider, was acquired by Openwave Messaging, a provider of innovative messaging software solutions.

Desktop visual search company, HOVR.IT. a graduate of INcubes, a Toronto accelerator, was acquired by visual search platform, Calgary-based Slyce

SkyPhrase, a natural language processing (“NLP”) company was acquired by Yahoo!

Social

Topsy Labs was acquired by Apple for $200m.  Topsy Labs is a twitter analytics company.  It’s time that Apple joined Social.  We recently had dinner with a former Apple fan-boy, who proudly announced that he had sold all his Apple devices, as the Company has that 1990’s feel of a Company going down hill.  Too much cream skimming.  Of course, he is using his wife’s Apple laptops, so he’s doing a bit of cheating.

Services

CyberCoders was acquired by On Assignment for $105m.  CyberCoders is a recruiting firm with a tech edge.  On Assignment (NYSE:  ASGN) is a “global provider of in-demand skilled professionals in the technology, healthcare and life sciences sectors.”  Read:  head hunting firm.

Opus Capital Markets Consultants was acquired by Wipro Technologies for $75m.   Opus Capital is a US-based mortgage consulting firm, and was purchased by Wipro to increase its presence in that sector’s backoffice business. Wipro is the India-based software outsourcing company.

Private Placements [2]

Storage

Online storage provider, Box, raised a $100m Series F round.

Social

Glassdoor, which allows employees to ‘review’ their companies, raised a $50m Series E round.

Social data aggregator, DataSift raised $42m Series C round.

Services

Homejoy , which allows you to go online to schedule house cleaning priced at $20 per hour, raised a $38m Series A & round.

Software

London-based MetaPack, a delivery management platform for local and global eCommerce, raised $30m GBP

Rio De Janeiro-based antivirus company, PSafe raised a $30m Series C round.

Energy-storage company, Stem raised a $15m Series B round.  Stem was founded in 2009, and offers hardware and cloud-based analytics programs to tackle peak-demand issues.

Trifacta, a Big Data startup, raised a $12m Series B round.

Gridstore, which develops applications accelerators, raised an $11m Series B round.

Clever, a source of online learning for school systems, raised a $10m Series A round.

Consumer

Washington, D.C.-based Sweetgreen, a farm-to-table salad chain, raised a $22m round.

Misfit Wearables , which develops wearable sensor products, raised $15.2m

Germany-based navabi, a plus size retailer that claims to be synonymous with “fashion beyond a size zero,” raised 10m EUR in a Series C round.

Chinese wedding service provider, 591wed raised $10m round.

Medical-related

Shareable Ink, a clinical documentation and analytics solution used in multiple hospital departments, raised an $11m Series C round.

Enjoy the last two weeks leading up to Christmas!

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] Information sourced from TechCrunch, company websites, technology newsletters and other soucres.