BLP’s WiR: Earnings, IPOs, M&A and Private Placements

BLP’s Week in Review:  September 3, 2013

photoGreetings from Taos.  We have managed to slog through the creation of this newsletter with a beastly slow internet.  But hope is on the way, courtesy of TARP funds deployed through  Kit Carson, my electric cooperative. Fiber is coming, and my new best friend Steve claims that it should be installed on Orchard Road in Des Montes in October.  Hallelujah!  Ironically, fiber has yet to arrive in Londonderry, NH, a Boston suburb.  Our provider, Comcast is focusing on content/media rather than improving network performance for its clientele.  Vexing.

The horse sculpture, to the left, is one of many open-air art objects, displayed by the residents of the Taos region.  The horse grazes silently in a pasture at the intersection of the Hondo-Seco Rd and NM230.

Earnings Reports

Guidewire (GWRE:  NYSE) To quote Seeking Alpha:  “Guidewire market goes haywire following earnings conference call.”  Guidewire provides systems software to the property and casualty industry, primarily in the United States, Canada and Australia. Sales grew handsomely at 26%.  Consensus earnings had been at $0.13 – $0.14 per share, and the Company came in at $0.25 per share.  However, the outlook for 2014 seems much less ebullient.

Ciena (CIEN: Nasdaq) is a sentimental favorite from the frothy days or y’or.   They have beaten guidance for two consecutive earnings periods, growth is accelerating, and they are approaching break-even.  The packet business is experiencing strong growth while the optical transport business is declining rapidly.  Ye old product cycle.

Ciena’s stock went to a high of $900 per share in August, 2000 and a low of $6.70 in November 2008.  The stock is currently at $24 per share, with the volume picking up nicely over the years.

Fuel Cell Energy (FCEL:  Nasdaq) is a true microcap with a market cap around $250m and LTM sales of $142m.  The company designs, manufactures, installs and operates fuel cell power plants.  An industry very much in its infancy.  Sales  were up 81%, and the loss is in the single digit (million) range.  The stock trades is trading at $1.31 per share,  LTM sales are $144m, and the enterprise value is $211m.

Quiksilver (ZQK:  NYSE) may be on the wane.  Everything is down:  sales, margins, profits.  Either surfing and snowboarding, and that image, is now longer popular with the young set, or they don’t have the money.  Either way, Quiksilver is talking about cost control and margin improvement—never a good sign for a stock or a company.

IPO’s of the Week[1]

No IPO’s this week.  Three companies “set the terms” for their IPO, which means they filled in the price range in their S-1/A filing:  BIND Therapeutics (BIND: Nasdaq), Benefitfocus (BNFT: Nasdaq), and Five Prime Therapeutics (FPRX: Nasdaq).  Two biotechs and one cloud based benefits, as in healthcare, management system companies.

M&A of Interest

Japanese e-commerce giant, Rakuten (RKUNF:  Nasdaq), acquired Viki, a global video streaming platform that crowdsources subtitle translations for $200m.

Acton Pharmaceuticals, which recently obtained approval for its asthma drug, is being acquired for $135m by Meda, a Swedish based pharmaceutical company.

Israeli based Amdocs (DOX: NYSE), a provider of CRM and billing software to communications service providers is buying Aptix, a mobile network optimization company, for $120m.  Aptix provides geolocation software and delivers subscriber and network analytics.

Combinenet, an eSourcing solution, was acquired for $43m by SciQuest (SCI: Nasdaq) which provides cloud-based spend management software.

Abor-Networks, a denial-of-service company, acquired Sydney based security company, Packetloop.

And finally, Eventbrite  went on a world-wide shopping spree, making two acquisitions: Argentina-based Eventioz and London-based Lanyrd.

Private Placements of Interest[2]

Lithium Technologies, which raised $50m, is a Saas platform that enables companies to build communities to engage customers and drive sales.

Zuora, which provides cloud based subscription billing, raised $50m

Hearsay Social helps sales people use social selling techniques to attract prospects and retain customers.  The Company raised $30m.

iPierian, which is developing therapies for neuro degenerative diseases, raised $30m

AlienVault which provides “unified” security management, raised $26m.

Whisper, a secret sharing app–I kid you not–raised $21m.  They carry this all the way through to the url:   This is an “anonymous sharing network.”   With “whispers” like “I just quit my investment banking job to join a band” sounds like a broader version of

Check, a mobile payments app, raised $24m.  This company also has a cute url:  It does have my attention, as it theoretically alerts you as to balances and payments pending, all in one place.  From the reviews, I would speculate that Check is just beyond beta.

Vestiaire Collective, which is a luxury resale web-store, raised $20m.  I have oodles of stuff they could sell for me, if only their website worked. Patience.  I am more than sympathetic to startup companies’ system issues.  The computer/internet makes our businesses possible, and at the same time adds huge complexity.

Swiftkey, which bills itself as the “clairvoyant keyboard,” raised $18m.

As I publish this, I am off to breakfast at the Taos Diner, and on my way out of Taos, with most of my checklist completed.  Of course, another five or six items have since hopped on to said checklist!

Margaret S.C. Johns

Founder, BlueLake

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*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

[2] Note:  In the interest of brevity, some of the company descriptors sound weak, vacuous, and full of mumbo-jumbo.  They are.