Rearview Mirror: Week Ending March 30th, 2014

Rearview Mirror

Earnings, IPO’s, M&A and Private Placements

Week Ending March 30th, 2014

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Source: “Lehigh Valley Rambler” April 11, 2012

It’s windy and cold, raining cats and dogs.  Fortunately, the snow, like the Wicked Witch of the East, is melting.  My puppies can now wander into the back yard and not sink, becoming enveloped by that cold white stuff. Come Tuesday, it will be sunny and wandering towards the high 50’s.  Spring is on the way.

The Market/Earnings[1]

Click on the Company Name for the earnings announcement, and the Company Symbol for the stock chart

One-third of investors are wary of stocks—having been burned twice in the past 15 years, first by the dot-com bubble in the late ‘90s and then by  the banking crisis in 2008.

And talking about the banking crisis and best-laid-plans:  Citigroup failed the Fed’s stress test on qualitative measures, which caused Citigroup’s CEO, Michael Corbat, to abruptly cancel his Asia trip, mid-air.  The Fed rejected Citigroup’s planned share buyback and dividend plans.

The biotech bubble appears to have burst.  The Nasdaq Biotechnology Index had doubled from January 2013.  The Index slid 14 percent since hitting an all-time high in late February.

Blackberry (BB:  TOR) lost $423m on revenues of $976m.  This is Blackberry’s first reporting of revenues under one billion dollars.

Finish Line (FINL:  Nasdaq) reported 17 percent revenue growth to $518m and earnings growth of 26 percent at $43m or $0.87 vs. $34m or $0.69.  Early indications of a  big marathon season.

Walgreen (WAG:  NYSE) announced earnings of $880m or $0.91 for it’s second fiscal quarter on sales of $19.6b, up 5.1 percent.  I will admit to have my interest piqued by their massive Walgreen’s-on-Every-Corner expansion over the past few years, and whether it is paying off.

Gamestop (GME: NYSE) reported weaker than expected fourth quarter profit, and said it will be closing about two percent of its store.  Revenues rose to $3.68b from $3.56b, and earnings fell to $220.5m or $1.89 per share as opposed to $261.1m or $2.15 per share YOY.  Users are downloading more games, rather than purchasing at retail, especially with the new generation of consoles released by Sony and Microsoft.

IPO’s[2]

Click on the Company Name for the S-1 filing and the Company Symbol for the stock chart.

(8 IPO’s)

Candy Crush creator, King Digital Entertainment suffered the worst first day trading of any IPO this year, down 19.5 percent.  Looks like management, along with the IPO buyers, got greedy, and pushed the bankers a bit too far.

Common occurrence:  Hot deal-oversubscribed 10x because everyone thinks the stock will pop and they can flip and run.  “Thump,” down we go.  When you have a hot deal, you have an overabundance of “ten percent buyers” which leads one to believe that the deal is vastly oversold.  Not.  In reality,institutions are putting in orders for stock, far in excess of what they want.  They figure that if they told the bankers their real number, they wouldn’t get any stock at all.  On top of this, the retail public is glomming on, suspecting a hot deal.  Froth on top of froth.

Games

King Digital Entertainment (KING:  Nasdaq) sold 22.2m shares at $22.50 per share raising $499.5m at a valuation of $7.1b.  The stock closed the week at $18.08 per share.  King is based in Ireland and San Francisco, and is the entity behind that much addictive game, Candy Crush.

Education

2U (TWOU:  Nasdaq) sold 9.2 million shares at $13 per share, raising. $119.6m at a valuation of $509m.  The stock closed the week at $13.98 per share.

We [2U,Inc.] are a leading provider of cloud-based software-as-a-service solutions that enable leading nonprofit colleges and universities to deliver their high quality education to qualified students anywhere. Our innovative online learning platform and bundled technology-enabled services provide the comprehensive operating infrastructure colleges and universities need to attract, enroll, educate, support and graduate their students. By leveraging our solutions, we believe our clients are able to expand their addressable markets while providing educational engagement, experiences and outcomes to their online students that match or exceed those of their on-campus offerings.[3]

Technology

Aerohive Networks (HIVE:  Nasdaq)  sold 7.5m shares at $10 per share raising $75m at a valuation of $436m.   The stock closed the week at $10 per share.

Aerohive has designed and developed a leading cloud-managed mobile networking platform that enables enterprises to deploy a mobile-centric network edge.  The point at which devices access the enterprise network is commonly referred to as the network edge. [4]

Energous (WATT:  Nasdaq) sold 4 million shares at $6 per share raising $24m at a valuation of $52.9m.  The stock closed the week at $10.58 per share.[5]

We [Energous] are a development stage technology company. We are developing technology that can enable wireless charging or powering of electronic devices at distance.  Sounds like WITricity, which is based in Watertown, MA.

Medical/Biotech

Everyday Health (EVDY:  Nasdaq) sold 7.2m shares at $14 per share raising $100.8m at a valuation of $415m.  The stock closed the week at $13.50 per share.  Everyday Health is located in Manhattan, down on Hudson Street, and claims to be a “leading provider of digital health and wellness solutions.[6]

Our portfolio of properties includes leading brands such as Everyday Health, MedPage Today, What To Expect, Mayo Clinic, Jillian Michaels and The South Beach Diet.  It incorporates content from highly respected health authorities such as Dr. Sanjay Gupta.[7]

Applied Genetic Technologies Corporation (AGTC:  Nasdaq) sold 4.2m at $12 per share raising $50.4m at a valuation of $154m.  The stock closed the week at $14.55 per share.

We [Applied Genetic Technologies] are a clinical-stage biotechnology company that uses our proprietary gene therapy platform to develop products designed to transform the lives of patients with severe inherited orphan diseases in ophthalmology.[8]

Financial

Square 1 Financial (SQBK:  Nasdaq)sold 5.8m shares at $18 per share raising $104.4m at a valuation of $532m.  The stock closed the week at $20.49 per share.  This is a Silicon Valley Bank wannabe:

We [Square 1 Financial] are a financial services company headquartered in the greater Research Triangle Park area of North Carolina and became the bank holding company for Square 1 Bank, a de novo North Carolina commercial bank, in August 2005 upon the commencement of Square 1 Bank’s operations.  Through Square 1 Bank, which was formed by experienced venture bankers, commercial bankers and entrepreneurs, we focus our banking activities almost exclusively on venture capital firms and private equity firms (which we collectively refer to as “venture firms”) and the portfolio companies funded by such firms.

TriNet Group (TNET:  Nasdaq) sold 15m shares at $16 per share raising $240m at a valuation of $1.1b.  The stock closed the week at $21.31 per share.

TriNet is a leading provider of a comprehensive human resources solution for small to medium-sized businesses, or SMBs.  We enhance business productivity by enabling our clients to outsource their human resources, or HR, function to one strategic partner and allowing them to focus on operating and growing their core businesses. Our HR solution includes services such as payroll processing, human capital consulting, employment law compliance and employee benefits, including health insurance, retirement plans and workers compensation insurance. . . Our proprietary, cloud-based technology platform and our team of HR professionals make HR transactions simple, seamless and efficient for employers and employees.[9]

Mergers & Acquisitions[10]

Click on the highlighted phrase for the Company’s M&A announcement/description.

(8 transactions noted)

Mobile

Mobile network operator, eAccess, is being acquired by Yahoo! Japan for $3.2b.  eAccess was owned by SofBank Corp.  Yahoo! Japan is buying eAccess to launch its own mobile internet service.

Hardware

Oculus VR acquired by Facebook for $2.0b.

Media

Maker Studios, a video supplier for YouTube, is being acquired by The Walt Disney Company for $500m, that could be worth $950m.

Education

Sterling Early Education acquired by G8 Education for $228m.

Software

Klout acquired by Lithium Technologies, a provider of social customer solutions for the enterprise, for $200m.  Lithium Technologies is a privately owned company.

KnowledgePath Solutions  is being acquired by Digital Management for $22m.  KnowledgePath, based in Burlington, MA, is a rapidly growing provider of mobile and omnichannel commerce solutions.

Fieldglass, the leading technology provider for procuring and managing contingent labor and services, is being acquired by SAP.

Berkeley Design Automation (BDA) is being acquired by Mentor Graphics.  BDA is a leader in nanometer analog, mixed-signal and RF circuit verification.

Recipe finding app, Gojee, is being acquired by XO Group, the owner of several female-focused websites, including the Knot, The Bump and Wedding Channel.

Seattle Health gaming startup, Mindbloom is bering acquired by Welltok, which is based in Denver..

Energy

Elemental Energy is being acquired by RGS Energy (RGSE:  Nasdaq) for $19m.  Elemental Energy operates under the Sunetric brand, and is based in Oahu, Hawaii.  RGS Energy is based in Louisville, CO.

Private Placements[11]

Click on the Company name for the website or deal information.

(19 transactions noted that were over $10m)

Software

Actifio, which claims to be ”radically simple copy data management” raised a $100m series A round.

Hortonworks, whose Hadoop software has been a big driver of the current interest in Big Data, raised a $100m Series D round. Investors include Blackrock and Passport Capital.

RelateIQ raised a $40m Series C round.  The round was led by Redpoint Ventures.  RelateIQ provides a relationship intelligence solution for professionals to build better relationships and make fact-based decisions.[12]

AI-company, Vicarious FPC, which is developing machine learning software, raised a $40m Series B round, led by Formation 8, along with Mark Zuckerberg, Elon Musk and Ashton Kutcher.

Anti-cyber fraud specialist, ThreatMetrix, raised $20m in a Series E round from Peter Thiel’s Valar Ventures and Square Peg Capital.  Total capital raised to date is $56m.

Vend raised a $20m Series B round, co-led by Peter Thiel’s Valar Ventures and Square Peg Capital.  Vend claims to be the world’s fastest growing online point-of-sale (“POS”) software provider.

London-based, FTBpro, the largest fan-generated media platform, raised $18m.

Clio, a developer of law practice management software, raised an $18m Series C round.

Hired, which helps companies hire technical talent, raised a $15m Series A round.

Demandbase raised a $15m round to grow its B2B ad targeting platform.

Tactile, an enterprise company that helps workers sync their personal and professional data via an app called “Tact”, raised an $11m Series A round.

Amplidata, a leader in software defined storage, raised an $11m round.  The company is based in Belgium and Milpitas, CA.

Hardware

Israeli-based OrCam, which harnesses the power of Artificial Vision to compensate for lost visual abilities, raised $15m from Intel.

Communications

French startup, SigFox, raised 15m EUR in a Series B round to expand it’s dedicated internet-of-things network.[13]

eCommerce

Souq.com, the largest eCommerce site in the Arab world, raised a $75m round.

Financial

Boston-based digital currency company, Circle Internet Financial, raised $17m in a Series B round.  Investors include Breyer Capital, Accel, and Oak Investment Partners.

CircleUp, which is an equity crowdfunding platform, raised a $14m Series B round.

Gaming

Gamblit Gaming, a European eSports organization, raised $12m.

Biotech

RuiYi raised a $15m Series B round to advance its pipeline of therapeutic monoclonal antibodies targeting GPCR.

Food

Sprig, a food delivery service, that is ordered via a phone app, and delivers healthy meals direct to San Francisco residents, raised $10m from Greylock Ventures in a Series A round.

Please send me any comments or feedback.

Margaret Johns

Founder, BlueLake Partners, LLC

 

Affiliates:

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Jan Robertson

SiVal Advisors, LLC

 

 

 

 

 

Chartworth2Susan Woods and Vlad Harris

 

,———————-
Margaret Johns is the Founder and Chairman of BlueLake Partners, a boutique M&A investment bank based in the Greater Boston Area.  Prior to founding BlueLake she was an employee founder and Managing Director at Needham & Company where she worked in Corporate Finance in New York City and headed up its Boston office.  She now lives in Londonderry, New Hampshire with her husband, 17 year old step-daughter and three pugs.  When she’s not working with clients, FINRA or writing blogs she competes on the Granite State Penguins Masters Swim Team, skis, rides her bike or is out walking her pugs.

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] WSJ Moneybeat, Mar 24-28, 2014

[2] Certain information from Renaissance Capital, in addition to the SEC, nasdaq.com, and other sources.

[3] 2U, Inc. S-1

[4] Aerohhive Networks’ S-1

[6] Everyday Health S-1

[7] Everyday Health S-1.

[8] Applied Genetic Technologies S-1

[9] Tri-Net S-1

[10] TechCrunch, Company websites and other news media.

[11] TechCrunch, Company websites, other news media.