BLP’s Week in Review: Earnings, IPOs, M&A and Private Placements

 

IMG_0564 Happy Labor Day Weekend 

And what says Labor Day better than a Lobster Bake!

 

 Earnings Reports

Software

Salesforce.com announced Q2 revenue of $957m, up 31%.  This is being interpreted as bad news, as growth is slowing from 38% a year ago.  Any other company would be thrilled with 31% growth.  But when you’re a high flier, and the leader of the Pack, people have expectations.

Workday, a recent IPO (WDAY:  NYSE) is a SaaS or “Cloud” solution for human resources and finance.  It beat expectations as sales beat expectations coming in at an increase of 71.5% YoY to $107.6m, though the loss widened to $36m or $0.21.

Consumer-ish

dELiAs, (DLIA:  Nasdaq), a teen retailer, announced an incredibly lousy quarter with sales for the quarter down from $39.8m to $33.2m year-to-year, and a doubling of the loss to $11m.  Peter Lynch was right, I should be following my stepdaughter around.  She stopped shopping at dELiAs a few months ago in favor of Forever21, which is privately owned.

As opposed to DSW, (DSW:  NYSE) Columbus-based discount shoe retailer, whose sales increased 9.7% to $562m and adjusted EPS rose 47% to $0.97 per share.  Women do 1) love their shoes and 2) love a deal.  Getting both is even better!

Krispy Kreme Doughnuts (KKD: NYSE)  Revenues beat expectations, up 10% to $112m, but earnings fell short to $0.07, from $0.14.  It’s always interesting to revisit some of the high fliers, to see how they’ve settled into life.

Williams-Sonoma (WSM: NYSE) also operates Pottery Barn which constitutes 43% of its revenue.  It’s all about the home:  food, kitchenware, linens, furniture.  WSM had the old good news/bad news scenario.  Reported better than expected, but guided lower.  The Company should be benefitting from expansion in housing, but apparently margins are under pressure.  Are people not entertaining like they used to?

Have people fallen out of love with Campbell Soup (CPB:  NYSE)?  The company was another one that issued a bomb of an earnings release.  So much for Andy Warhol and the tomato soup can.

Salt Lake City home automation company, Control4 (CTRL:  Nasdaq) reported revenues of $32.5m up from $27.6m.  Since its IPO August 1, they have introduced a new family of wireless control products, including a Wireless Music Bridge.  We may have to investigate Control4, as our current home automation software is buggy, with periodic crashes.

Education

Corinthian Colleges (COCO: Nasdaq) beat the earnings number, but not the revenue number.   Sales were $377.5m, down $10m Y0Y, with a loss of $(.02).  The Company is under pressure to increase student completion and placement rates.  The school is losing students, and is closing campuses.  Once upon a time, t’was a growth story.

K12 (LRN: NYSE) had revenues increase about 20% for the year and the quarter, with earnings being up 28% for the year, but down Y0Y for the quarter.  It looks like K12 had figured out a business model.  K12 is a Michael Milliken company, and runs virtual charter schools and hybrid schools sells into the public schools system, and enables them to set up “virtual academies.”  As K12 has no presence in New Hampshire and one location in Western Massachusetts, we have no familiarity.  Though they’re approaching one billion dollars in sales.

Industrial

Adept Technology (ADEP:  Nasdaq) which manufactures factory automation components and systems, originally for the semiconductor industry reported basically breakeven results.  Which means their turnaround seems to be on-track.  But, the market cap is still only $45m.  At that market cap, they’re an M&A play.  We know Adept from out days at Needham & Company when we took them public.

LTX-Credence (LTXC:  Nasdaq) issued a bomb, coming in way below analyst estimates in both sales, at $37.2m and earnings at $(0.07).  As a test manufacturer, they are a lagging indicator for the semiconductor market.  The Company would suffer from low PC demand. LTXC is still waiting on the economic upturn, though management sees an ‘up’ year.

Methode Electronics (MEI: NYSE) beat estimates handily, coming in at $0.36 vs. consensus of $0.16.  Revenue came in at $167m for the quarter, also leaping past consensus numbers.  Methode manufactures switches, subassemblies and other components for the industrial sector.  Fittingly, the Company is based in Chicago.  The economic upturn has arrived, at least for Methode.

IPO’s of Interest[1]

Not surprisingly, none in the week before Labor Day.  But hope remains for others in IPO Country, as two companies of interest, sandwich shop Potbelly, and with Buenos Aires-based operations, software company Globant, filed their S-1’s/F-1’s  (Street parlance for Red Herrings) this week.  The other filings were insurance companies and homebuilders.

M&A of Interest

The mega news of the week was Onyx Pharmaceutical acquisition by Amgen for $10b.  Onyx develops treatments for various cancers, including thyroid and breast cancer.

Generic pharmaceutical manufacturer, Hi-Tech Pharmacal was acquired by Akorn Pharmaceuticals, another generic pharma manufacturer, for $640m

Generics manufacturer Boca Pharmacal, out of Coral Springs, Florida, was acquired by generics and specialty pharma manufacturer Endo Pharmaceuticals for $225m.  .  Is there a generics roll-up going on?  You think?

Germany-based COMPUTERLINKS, a distributor of IT security and internet technology solutions and services was acquired by Arrow Electronics for $300 million.  COMPUTERLINKS revenues are approximately $1b per year.

Privately owned, Montreal based risk management and security services Gardaworld Security Corporation acquired G4S Cash Solutions for C$110m.  G4S is an international provider of risk management and secure transit of valuables.

Irvine-based Teradek, which produces wireless and wired video encoders and decoders that provide live streaming 1080p video over IP, was acquired by the UK-based Vitec Group for $30m.  Vitec appears have £345m in sales, and is a media equipment manufacturer roll-up of sorts, with over 1,900 employees.

99Designs expanded into Brazil with the acquisition at of LogoChef.

Netherlands-based Atrato Networks a leading provider of IP transit and carrier services was acquired by Ireland-based Hibernia Networks, a provider of wholesale, financial and media networks.

DocStoc acquired BestVendor and appears to be branching the advertising and media business by providing editorial content. BestVendor ranks text editors, development tools, and computer languages.  Now that I’ve taken HTML, CSS, Git and am about to start a Java course at WebStartWomen in Cambridge, I’m recognizing the products on the list.  And even more notable (to me), I have used them!

Trend tracker, Trendrr, was acquired by Twitter.

Private Placements of Interest

Flash array manufacturer Pure Storage raised a $150m Series E round.   It is reportedly targeting the big kahuna, EMC.  Next step, reportedly, is an IPO.  Julian Robertson, by way of Tiger Global Management, is an investor.

Argos Therapeutics, in North Carolina, raised $42m in a Series E round.  Argos is developing therapeutic vaccines against carcinoma, HIV, melanoma and like diseases.’

Cloud-based rights and content management company Filmtrack raised $20m.

Taulia, based in Germany, San Francisco and London, raised $18m Series C round.  Taulia works off of SAP as a dynamic discounting and vendor portal.

Camera360 raised $18m for its smartphone app.  Camera360 does just about everything from special effects, editing, to preview to composition.

Martini Media, a digital media and content platform assisting leading brands to engage with their customer network, raised $14m

Belly raised $12m Series B round for their app-based loyalty program for local merchants.

Eruditor, an about as no frills as you can get, no frills online bookstore, raised $12m.

Evolv, which focuses on big data solutions for workforce analytics, raised $12m.

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Content is researched, edited and reviewed on a best efforts basis.



[1] Certain information sourced from Renaissance Capital.