BLP’s WiR October 28th: Earnings, IPOs, M&A and Private Placements

WiR[1] October 28th

What’s Happenin’?

Earnings, IPOs, Mergers & Acquisitions, Private Placements

Source:  Microsoft
Source: Microsoft

The leaves are nearly all off the trees; Fall is done.  The first frost arrived on Thursday and snow flurries and daylight savings time arrived today.  Forward, onward towards Thanksgiving.

Earnings

Another long list of companies reporting. After reviewing this rather intimidating list, I have a new found compassion for Wall Street’s research analysts’ state during Earnings Week.  Companies report after the market close, and the conference call starts at 4:30 pm just as everyone else is finishing their last tasks of the day in anticipation of running for the train.  Then it’s wait for management’s call-backs, and write up of the release.  Makes for a long night and lots of midnight oil.

Apple (AAPL:  Nasdaq) had principally good news, and some not so good news.  The Company reported it’s third consecutive quarter of declining profits, but handily beat consensus estimates.  Importantly, margins are remaining steady, even during new product introductions, which typically carry higher costs.   The Company earned $8.26 per share on revenue of $37.5b.

Facebook (FB:  NYSE) reported third quarter revenue of $2b up 60 percent YOY and above estimates. Non-GAAP EPS was $0.25 up 104 percent YOY.  Facebook plus Instagram are dominating mobile, with more time spent on those two apps than most of the other leading apps, combined.

Jive Software (JIVE:Nasdaq)  reported a non-GAAP loss of $(0.11) per share or $(7.6m) on revenue of $37.4m.  Jive Software provides a social business platform and is used in one of my business associations. It is a great collaboration platform.

LinkedIn (LNKD:  NYSE) announced 3Q revenue of $393, a YOY increase of 56 percent.  The net loss was $3.4m or $(0.03), non-GAAP income was $46.8m or $0.39. The Company has 259 million members, which is a 36% YOY increase. LinkedIn recently introduced two new products in the all-important mobile space.

Sony (SNE:  NYSE)  And then there was Sony.  A disastrous quarter.  The net loss was $(196m), where operating profit fell 51 percent.   The good news:  the TV division turned profitable, and revenues were up 10.6 percent to $18.1b.

Yelp (YELP:  Nasdaq) announced a larger loss, at $2.3m and $(0.04) versus the anticipated $(0.01), with surging marketing costs.  Revenue exceeded expectations at $61.2m versus the anticipated $58 to $59m. The following day, the Company announced the pricing of a 3.75m share offering at $67 per share for a total of $251.3m.  The dilution is approximately six percent.  While YELP is a leader in its space, from a business perspective, they are still searching for their monetization model.  It’s a difficult balance and a struggle:  the need to monetize versus the importance for editorial veracity.

IPOs[2]

This week there were six IPOs of interest, half of which were foreign companies. Two of the companies pricing were Chinese:  58.com and Qunar.com, and one was French:  Criteo.  The foreign companies were internet-oriented.  Two of three US companies were in the medical arena:  Surgical Care Affiliates, and Veracyte.

58.com (WUBA:  Nasdaq), a Chinese version of Craig’s List, sold 11m shares at $17 per share raising $187m at a valuation of $2.65b.  The stock closed the week at $25.

Criteo (CRTO:  Nasdaq), a French web advertising company, sold 8.1m shares at $31 per share, raising $251m at a valuation of approximately $1.7b.  The stock closed  the week at $34.10.

Qunar Cayman Islands (QUNR:  Nasdaq), a Chinese online travel agency controlled by Baidu.com, sold 11.1m shares at $15 per share, raising $165m valuing the Company at $5.1b.  The stock closed at $28.40.  Keep in mind that the company revenue for the first six months of this year was $58.5m.  Can you say “bull market”?

Sugical Care Affiliates:  (SCAI:  Nasdaq), which is a TPG (LBO firm) buyout of HealthSouth’s outpatient surgery division, sold 9.8m shares at $24 per share, raising $235.2m  at a $915m valuation .  The stock closed the week at $26 per share.

The Container Store Group (TCS:  NYSE) sold 12.5m shares at $18 per share raising $225m at a valuation of $828m.  The stock closed at $36.20 per share.  A bit underpriced on the IPO by the bankers?  Having been there as a banker, I can truthfully say that the Company was probably priced with its comparables and the market “euphoria” took it higher.  Let’s see where the stock price settles out in two to three months.

Veracyte:  (VCYT:  Nasdaq) sold 5m shares at $18 per share raising $90m at a valuation of $268m.   The stock closed the week at $12.30 per share.  Veracyte is a diagnostic product in the field of molecular cytology.  Their first product is aimed at thyroid cancer.

Mergers & Acquisitions

Virtela Technology Services, “The world’s largest independent managed network, security, and cloud services company” was acquired by NTT Communications for $525m

BigMachines, which makes software that helps companies sell products and services faster, easier and more accurately, was acquired by Oracle Corporation for $400m.

Vidacare , the developed of EX-IO, a sepsis treatment and OnControl, a bone marrow access system , was acquired by Teleflex for $262m.

Net Optics, a manufacturer of network access and monitoring solutions, was acquired by IXIA for $190m

Montreal-based, iWeb Technologies, a dedicated server, cloud server and managed cloud hosting solutions, was acquired by Internap Network Services for $145m.

Soluto, which manages PCs remotely over the web, acquired by Asurion, my not so favorite cell phone insurance company, for $130m.

DIIG Europe was acquired by DMGT.  DIIG(E) is a portfolio company of TPG Capital for 75 GBP.  The Company does property searches for residential and commercial properties for legal professionals

Shipwire, a shipping logistics company, was acquired by Ingram Micro

Avado, a next generation patient relationship management solutions, [PRMS?] was acquired by WebMD

Endurance Lending Network, an online lender to SMB’s, was acquired by Funding Circle.  Funding Circle recently raised a $37m private equity round, which was announced last week.  Funding Circle orchestrates peer-to-peer lending.

Perka, a mobile loyalty platform, was acquired by First Data Corporation.

Private Placements

Nextdoor, which is a private social network of your neighborhood, raised a $60m Series C round.

Nomorerack, a deal site, raised a $40m Series B round.

2U, which provides universities with the technology, infrastructure and support and capital to transform on-campus programs into state-of-the-art web-based programs, raised $31m in private equity.

Berlin-based 6Wunderkinder, which develops and sells an organization app which you manage and can share with others, raised $30m a Series B round

Mobile media operator, Beijing VIVA Information Technology Co., raised a $20m C Round.

Rumble Entertainment, which develops role playing games, raised $17.6m Series B.

PeopleMatter, which sells an HR Platform targeted at the service industry, raised a $16m Series E round.

Cyphort, which provides an advanced threat protection platform, raised a $16m Series B round.

Brighter.com, where one discovers and schedules dentists, raised a $15m Series C round

Kumu Networks, which developed a wireless full duplex technology, raised a $15m Series-B round.

Magisto, which helps you create a movie from your videos, raised a $13m Series C round

IfOnly, which offers members unique and memorable experiences with top luminaries in the fields of food, wine, gold and more, raised a $12m Series A round

Rethink Robotics, which has developed a robotic innovation platform, raised a $12m Series-D round.

Stratoscale, an Enterprise Company developing solutions for the datacenter, raised a $10m Series A round.

Have a great week and enjoy the on-coming cool crisp weather.

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.


[1] WiR or Week in Review

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