Starbucks: Starbucks adds another layer of future growth: Consolidating Japan
RBC notes Starbucks announced its intent to purchase the remaining 60.5% of Starbucks Coffee Japan, ltd. While the co provided limited detail around its performance in the region, Starbucks Japan should represent ~7-8% of total rev. Over time, they see the opportunity to accelerate revenue growth through Channel Development (CPG) and unit growth. In addition, they believe the Teavana brand will be an important part of the growth story in Japan, given the high relevance of tea in the region.
--> ACN -2.5% Pre open - only 17,5k shares traded - ADEN not really moving
Accenture misses by $0.02, beats on revs; guides Q1 revs just below consensus; guides FY15 EPS and rev below consensus; raises dividend 10%
Reports Q4 (Aug) earnings of $1.08 per share, $0.02 worse than the Capital IQ Consensus Estimate of $1.10; revenues rose 9.7% year/year to $7.78 bln vs the $7.62 bln consensus.
Co issues downside guidance for FY15, sees EPS of $4.74-4.88 vs. $4.96 Capital IQ Consensus Estimate; sees FY15 revs +4-7% in constant FX, with 200 bps FX heawind: +2-5% to ~$30.6-31.5 bln vs. $31.59 bln Capital IQ Consensus.
- New bookings for the fourth quarter were $8.3 billion and reflect a 1 percent positive foreign-exchange impact compared with new bookings in the fourth quarter of fiscal 2013.
- Consulting new bookings were $3.9 billion, or 47 percent of total new bookings. Outsourcing new bookings were $4.4 billion, or 53 percent of total new bookings.
- During Q4, Accenture repurchased or redeemed 8.2 million shares, including 6.9 million shares repurchased in the open market, for a total of $658 million.
Co issues downside guidance for FY15, sees EPS of $4.74-4.88 vs. $4.96 Capital IQ Consensus Estimate; sees FY15 revs +4-7% in constant FX, with 200 bps FX heawind: +2-5% to ~$30.6-31.5 bln vs. $31.59 bln Capital IQ Consensus.
- Accenture is targeting new bookings for fiscal 2015 in the range of $34 billion to $36 billion.
Executives with Rupert Murdoch's 21st Century Fox and Starz met Tuesday to discuss a possible acquisition of the premium cable movie service, a deal that could expand Murdoch's reach into homes across the country..
Starz Chief Executive Chris Albrecht and investment bankers held the discussion with Fox executives at the company's studio lot in Los Angeles, according to three people familiar with the meeting who asked not to be identified because they were not authorized to discuss the matter.
There is no deal yet, and none may materialize, these people said. A full acquisition of the company could be valued at more than $3.2 billion based on its share price of $29.58 Tuesday. Fox could also decide to take an ownership stake instead of buying Starz outright. Another company might instead make a deal for Starz.
Starz said in a statement that "as a public company, we do not comment on rumors or speculation."
A person familiar with the matter said that Fox took the meeting with Starz as a courtesy.
Tuesday's meeting came nearly two months after Fox abandoned its surprise summer bid for rival Time Warner.
That proposed $80-billion takeover was widely viewed as a way for Murdoch to add muscle to his media company with more valuable TV channels — particularly premium pay networks HBO and Cinemax — to better compete in a rapidly consolidating entertainment industry.
If Fox decides to make a play for Starz, the move would underscore Murdoch's big appetite for more distribution channels. Starz also includes the Encore movie channel. Together the two channels boast 56 million subscribers, more than Time Warner's HBO and Cinemax. It also eclipses CBS' Showtime networks.
Liberty Media Corp. in January 2013 spun off Starz and Encore into a separate publicly traded company. The spinoff, orchestrated by Liberty Chairman John Malone, was intended to streamline his company's businesses — and make Starz and Encore easily digestible for a big media or technology company that might want to swallow it.
Starz's revenue this year should reach nearly $1.4 billion, according to consulting firm SNL Kagan. Nearly all of its revenue comes from affiliate fees paid by pay-TV providers, including Time Warner Cable, Comcast Corp., DirecTV and Cox Communications.
Starz in recent years has been trying to establish itself with original programming. In early 2010, the company brought in Albrecht to run Starz and revitalize the brand. The goal was to establish Starz as a destination for Hollywood producers and writers, much the way that Albrecht did when he ran HBO and helped launch "The Sopranos," "Sex and the City," "Six Feet Under" and "Curb Your Enthusiasm."
Starz has started to gain traction with its original programming. It scored early with "Spartacus" and more recently with "Outlander," which is based on the popular fiction series by Diana Gabaldon about a World War II nurse who goes back in time to the 18th Century.
Starz also is launching a half-hour comedy executive produced by LeBron James called "Survivor's Remorse," set in the world of professional basketball.
The company has high hopes for the second season of its pirate adventure project, "Black Sails," which launches in January. It centers on the tales of Captain Flint and his men two decades before the events in "Treasure Island," the Robert Louis Stevenson classic.
"I do feel, in 2014, we've really accomplished an important goal, which is having a year-round presence in originals," Albrecht said this month at a Goldman Sachs investor conference in New York. "And what that's allowing us to do is lead into 2015 with a very strong slate of returning originals and a real plan."
Starz will spend about $670 million on programming this year, according to SNL Kagan.
The company still faces challenges filling its schedule.
One of its major movie studio suppliers, the Walt Disney Co., recently made a deal with Netflix instead of extending its partnership with Starz. That means Starz will lose its supply of fresh Disney movies by early 2017, but will have more money to spend on original programming.
Sony Pictures Entertainment extended its movie deal with Starz in an agreement that runs to 2021.
Meanwhile, Murdoch's company two years ago extended its deal to supply movies to HBO until about 2022. This could make it difficult for Fox to run its films on Starz and Encore for many years.
When Starz became a publicly traded company it carried about $1.5 billion in debt. Liberty Media received a cash dividend as part of the split.
Fox will have no problem coming up with the cash for such a deal. After abandoning the Time Warner bid, executives told investors that its stockpile of cash is big enough to make other major acquisitions — though they pledged to not go on a shopping spree.
YHOO - UBS Removes from Key Calls List
Websites Are Wary of Facebook Tracking Software
Some Businesses Block Sharing of Data, Fearing Social Network's Increased Clout
Online retailers and publishers are pushing back against Facebook Inc. FB +1.94% 's efforts to track users across the Internet, fearing that the data it vacuums up to target ads will give the social network too much of an edge.
Web traffic experts say there is less data flowing from some sites to Facebook, suggesting they have been reprogrammed to hold back information.
Facebook has long kept track of the websites its users visit when they aren't on the social network. Three months ago, it began using the data to build more detailed user profiles, allowing advertisers to target people with more personalized marketing pitches.
That has rankled some retailers, advertisers and Internet publishers, which worry that the wider use of browsing history will hand Facebook, and potentially their own rivals, more information about existing and prospective customers.
In response, some businesses appear to have changed their sites to send less data to Facebook; others say they are considering such moves.
The change "freaked everyone out and rightly so," says Vivek Vaidya, co-founder and chief technology officer at Krux Digital Inc., which helps large online media companies manage their data. Mr. Vaidya said he has spoken to several media clients and "all of them, to some degree, have expressed concern about this."
The concern underscores the love-hate relationship between website owners and Facebook. Publishers, for instance, like it when their content is shared among Facebook's 1.3 billion users, as they hope to win new readers. And online retailers have had success combining their data with the social network's to track customers online.
But both groups are wary of Facebook's huge store of data. While other websites keep track of individuals who stop by, noting them by their computers, the difference is that Facebook has real names—allowing it to do more with the information that accumulates about a person's browsing and shopping habits. Facebook, meanwhile, has grown into an advertising juggernaut, with expected revenue of $12.2 billion this year, putting it in direct competition with publishers for ad dollars.
Facebook says it hasn't yet begun using data from other sites. When it does, it will let publishers opt out of the system, a spokesman said, though doing so might reduce how much of their content is seen by other Facebook users.
Publishers and advertisers that want users to share content on Facebook install a small bit of Facebook code, called a pixel tag, on their sites; the pixel is often associated with Facebook's "Like" and "Share" buttons. Many websites have installed the code, allowing the social network to record a significant amount of Internet activity.
Facebook places another bit of code, known as a cookie, on its users' computers. When a user visits other websites that have Facebook's code, Facebook can recognize the cookie, building a record of how the user surfs the Web.
Facebook also can track users on their phones. Some mobile app publishers, aiming to optimize their advertising on the social network, let Facebook know the unique hardware identifiers of their app users. Facebook can match the IDs to those of its own mobile users.
(In order to access Facebook, all users are required to agree to the company's terms of service, which allow for such data to be collected.)
Daniel Cotlar is chief marketing officer for Blinds.com, a large online retailer of window blinds and a Facebook advertiser. He fears that Facebook will identify visitors to Blinds.com as interested in home furnishings, and then help his competitors advertise to them.
Mr. Cotlar said he is considering removing Facebook's trackers from Blinds.com. "We haven't ripped it down yet, but we're talking about it," he said.
A spokesman for Facebook said its profiles of users won't rely too heavily on any one website, such as Blinds.com. The spokesman said advertisers can opt out of allowing their data to be used in ad targeting—but they won't be able to target users based on data gathered from other sites.
Some publishers and retailers appear to have curbed how much data they are sending to Facebook, according to Ghostery, a maker of privacy software. Ghostery's software recognizes Facebook's pixel code.
Ghostery says that across the Web, Facebook's pixels are sending data back to Facebook as often as ever. But Ghostery says that since the spring, it has seen Facebook's code less often on certain well-known sites, including those of the New York Times Co. NYT -1.53% , AirBnb Inc., Williams-Sonoma Inc. WSM -0.96% and Abercrombie & Fitch Co. ANF +0.79%
Ghostery executives said those companies appear to have modified the pixels on their sites. Chief Executive Scott Meyer said Ghostery doesn't know why the companies modified the pixels, but they may have wanted to send less data to Facebook.
Those companies declined to comment or didn't respond to requests for comment.
A Facebook spokesman counters that some website operators may have modified the pixels to speed the response of their sites.
John Strabley, director of strategy for Quaero, a firm that helps companies like ESPN and MSNBC manage the customer data they gather online, said many of his clients would rather not share data with Facebook—but they don't want to miss out on the potential traffic from readers who share their content on the social network.
Mr. Strabley thinks sharing data with Facebook might help the social network win advertising dollars that would otherwise go to publishers.
Advertisers that want to reach sports fans, for example, may choose targeted Facebook ads over ads on Sports Illustrated's website.
Moreover, Facebook ads can be more cost-effective because they allow advertisers to target specific demographic groups in narrow geographic locations.
Online publishers are "sharing their entire audience back to Facebook and what are they getting for it?" asks Mr. Strabley. "I can pretty much guarantee that the value publishers are getting from that is not worth it," he said.
Mr. Strabley wouldn't name the clients he said were concerned.
Sports Illustrated, MSNBC and ESPN all declined to comment.
To be sure, many other companies, including Google Inc., GOOGL -1.02% track the browsing histories of Internet users to help target advertising. But advertisers say sending information to Google doesn't scare them as much as sending information to Facebook, mainly because Facebook knows users' real identities.
Google has to infer users' interests from Web browsing, which can be misleading.
A Facebook spokesman said the company's personal data is "better" than Google's, but Google's is similarly detailed.
Google declined to comment.
Starz Said to Hire Firm to Look for Buyer
Pay-TV Company Met With 21st Century Fox, Which Is Said Not to Be Interested in Deal
On Tuesday, Starz met with 21st Century Fox FOX -0.87% to see if the entertainment company was interested in striking a deal. A person familiar with 21st Century Fox's thinking described the meeting as a courtesy and said there was no interest in buying or investing in Starz. A Starz spokeswoman said the company doesn't comment on rumors and speculation.
News of the meeting was first reported by the Los Angeles Times. (Until last year, 21st Century Fox was part of the same company as News Corp, NWSA -0.76% owner of The Wall Street Journal and Dow Jones Newswires.)
A competitor to Time Warner Inc. TWX -0.53% 's HBO and CBS Corp.'s CBS +0.75% Showtime, Starz has struggled to create strong original programming and is also losing access to theatrical movies from Walt Disney Co. DIS -1.10% starting in 2017. Until 2013, Starz was a unit of cable mogul John Malone's Liberty Media Corp. LMCA -0.44%
Starz has been seen as a potential takeover target since it went public. Its stock closed at $29.58 Tuesday and it has a market capitalization of $3.13 billion. Starz is in about 22 million homes and Encore, a sister channel, is in 35 million homes.
The boutique investment bank LionTree Advisors LLC has been retained by Starz, a person familiar with the matter said. LionTree wasn't immediately available to comment.
MILAN — Pietro Marzotto, the former chairman and chief executive officer of the Marzotto textile group, and 10 others are facing charges of environmental disaster and manslaughter.
Following a trial that began in March last year after several adjournments, prosecutors in Paola last weekend requested the court in the southern Italian town sentence the defendants for the illness and deaths of about 15 former workers at the Marzotto textilemanufacturing plant called Marlane, in Praia a Mare, a small town on the Mediterranean coast near Cosenza, Italy. According to legal sources, more than 100 former workers have died over the years in connection with the case. In the court papers obtained by WWD, there is a reference to 107 such individuals and, in some instances, the prosecutors requested acquittal because the statutes of limitations have expired or because there is no case to answer.
The investigations that led to the trial began in 1999 and alleged that the workers died of cancer following the inhalation of toxic fumes at the plant, which was shut down in 2004 when manufacturing was outsourced to the Czech Republic. The investigation also alleged that chemical and toxic components were illegally disposed of at the plant and the surrounding territory.
Prosecutors are asking that Pietro Marzotto be sentenced to six years in prison. They asked that former Marzotto top executives Jean de Jaegher and Silvano Storer, who held the titles of president and chief executive officer, respectively, be sentenced to five years. A five-year sentence was also requested for Marzotto veteran and former Valentino Fashion Group chairman Antonio Favrin. A 10-year sentence was requested for a former mayor of Praia a Mare.
“My conscience is clear,” Pietro Marzotto told WWD on Tuesday. “I have not seen the papers deposited by the prosecutors and I have not been following the trial but I know that we bought Lanerossi [the company that originally had the Marlane plant] in September 1987 and that in November 1987 we replaced the dyes that Lanerossi was using with the ones we were using in Valdagno [near Vicenza, where Marzotto was founded].
“We have never had any [health] problems in Valdagno; actually I am told that it is one of the towns with the highest rate of longevity,” said Marzotto.
The entrepreneur explained that dyes with chrome were common in the Sixties but that his family’s company had abandoned them in favor of nontoxic ones long before the acquisition of Lanerossi. The Marlene plant was first set up in 1958.
Pietro Marzotto spearheaded the expansion of the family-owned textile group in the Eighties and Nineties and engineered the acquisition of men’s wear giant Hugo Bossin 1991. The entrepreneur was pushed out of the family’s company in 2003 by a new shareholders’ pact established by some of the Marzottos.
A legal source said that financial settlements have been discussed with the families of the victims over the years.
The next hearings are scheduled for Oct. 3 and 4.
Following a trial that began in March last year after several adjournments, prosecutors in Paola last weekend requested the court in the southern Italian town sentence the defendants for the illness and deaths of about 15 former workers at the Marzotto textilemanufacturing plant called Marlane, in Praia a Mare, a small town on the Mediterranean coast near Cosenza, Italy. According to legal sources, more than 100 former workers have died over the years in connection with the case. In the court papers obtained by WWD, there is a reference to 107 such individuals and, in some instances, the prosecutors requested acquittal because the statutes of limitations have expired or because there is no case to answer.
The investigations that led to the trial began in 1999 and alleged that the workers died of cancer following the inhalation of toxic fumes at the plant, which was shut down in 2004 when manufacturing was outsourced to the Czech Republic. The investigation also alleged that chemical and toxic components were illegally disposed of at the plant and the surrounding territory.
Prosecutors are asking that Pietro Marzotto be sentenced to six years in prison. They asked that former Marzotto top executives Jean de Jaegher and Silvano Storer, who held the titles of president and chief executive officer, respectively, be sentenced to five years. A five-year sentence was also requested for Marzotto veteran and former Valentino Fashion Group chairman Antonio Favrin. A 10-year sentence was requested for a former mayor of Praia a Mare.
“My conscience is clear,” Pietro Marzotto told WWD on Tuesday. “I have not seen the papers deposited by the prosecutors and I have not been following the trial but I know that we bought Lanerossi [the company that originally had the Marlane plant] in September 1987 and that in November 1987 we replaced the dyes that Lanerossi was using with the ones we were using in Valdagno [near Vicenza, where Marzotto was founded].
“We have never had any [health] problems in Valdagno; actually I am told that it is one of the towns with the highest rate of longevity,” said Marzotto.
The entrepreneur explained that dyes with chrome were common in the Sixties but that his family’s company had abandoned them in favor of nontoxic ones long before the acquisition of Lanerossi. The Marlene plant was first set up in 1958.
Pietro Marzotto spearheaded the expansion of the family-owned textile group in the Eighties and Nineties and engineered the acquisition of men’s wear giant Hugo Bossin 1991. The entrepreneur was pushed out of the family’s company in 2003 by a new shareholders’ pact established by some of the Marzottos.
A legal source said that financial settlements have been discussed with the families of the victims over the years.
The next hearings are scheduled for Oct. 3 and 4.
Cross-Asset Dispatches
A Fistful of Dollars
How inconsistent is the market’s bullishness on the dollar and risk assets? We find less so than popular perception would suggest.
Dollar strength… You can’t keep a good trade down. After struggling in 1H14, the Greenback has strengthened considerably on the back of increasing growth and policy divergence with the rest of the world. It’s a trend our FX strategists expect to continue.
…leads to a conundrum: Dollar strength is a widely cited risk for markets, yet investors look positioned for both the dollar and risk assets to push higher. Is this inconsistent?
What does history tell us? Periods where both the dollar and US 2-year rates have moved higher have generally been good for both equities and credit. It’s the dollar strength when the 2-year is falling (i.e., ‘risk-aversion’) that is bad for returns.
What could be different this time? We summarise a number of our strategists’ insights into the impact of a stronger dollar. We think that EM equities and credit could struggle more under a strong dollar than history suggests, given increased USD borrowing and less leverage to improving US growth.
Is recent price action a dress rehearsal? Expectations of a stronger dollar and somewhat tighter dollar liquidity don’t make us bearish, but do contribute to a skew for DM over EM across our portfolio. Differentiation is key, of course, as weakness has opened up pockets of value in EM local rates and FX.
Trades for the theme: We highlight a number of ways to improve exposure and risk/reward against a backdrop of dollar strength.
Link {http://bit.ly/ZJTlhD}
Sources close to both Vodafone and AT&T have said that executives from the two companies are laying the groundwork for a possible acquisition, merger or partnership, which will boost the combined network’s coverage to about 500 million subscribers — second only to China Mobile’s (HKG: 0941) 740 million. In a deal estimated to reach US$175 billion at Vodafone’s current market capitalization, AT&T is seen to take ownership of Vodafone and its various business units around the globe by first quarter of 2015. However, while no formalities have been set, the potential merger would beg the question: which assets would remain, and which would be divested to other global or regional players, in the aim of revamping Vodafone’s mobile and broadband strategy in potentially high-growth European markets.
Splitting the pie
The complication lies in the need for AT&T to split up ownership of Vodafone assets in order to comply with antitrust regulations in the European Union and other territories. The likely scenario would be that AT&T would offer South American and certain European assets to Mexican telecoms firm America Movil, Asian subsidiaries to Chinese government-owned China Mobile, and African operations to French telecom firm Orange, which likewise runs subsidiary companies in Africa, such as South Africa and Mozambique. Orange has reportedly expressed interest in acquiring Vodafone’s African assets. A deal with Carlos Slim’s America Movil is also highly likely, with AT&T having a 9 percent stake in the company and two seats on its board of directors.
The American firm is set on gaining a strategic advantage with a presence in key European markets. As early as October 2013, AT&T CEO Randall Stephenson expressed interest in this market, with its “huge opportunity” given the still-nascent growth in the mobile broadband industry. However, he has said that Europe’s mobile spectrum policy needs an overhaul in order for significant investments to come about. As it stands, each EU member states still sells spectrum licenses on a country-per-country basis — a stark contrast to the US, where carriers can acquire national licenses in order to service its 315 million plus population.
The benefits
What does AT&T stand to gain, then, apart from having a foot in Europe’s door? Also, why does it have to focus on the EU market, instead of taking on Vodafone’s assets on a global scale?
Better negotiating power. Firstly, with control of the second biggest market bloc of mobile subscribers, AT&T and Vodafone will have better negotiating power against manufacturers like Apple and Samsung. The industry has already been shaken up with “uncarrier” and bring-your-own device setups, where the contract/subsidy model dominant in the US has been replaced by more transparent plans. Apple reportedly gains significant profits from iPhone subsidies, but if AT&T-Vodafone has better negotiating power, this might mean lower subsidy prices, and possibly even lower pass-on rates to consumers.
Access to high-growth markets. Competition is stiff in AT&T’s domestic market, with Japan’s Softbank having made a significant investment in Sprint, another top US carrier. At this point, the market is saturated with LTE providers, and carriers will need to look toward other markets with untapped potential. Here’s where Europe comes in. “I continue to be fascinated and impressed by how slow mobile broadband is moving in Europe,” said AT&T Stephenson in a statement in October 2013. Of course, AT&T and Vodafone will have to solve the dilemma of access to spectrum in the region, in order to better take advantage of scale.
Cost and technology advantages with scale. Sources familiar with the planned deal say that one of the strategic advantages AT&T and Vodafone foresee involves the cost and technology advantages that come with scale.
Meanwhile, Vodafone is reportedly feeling the crunch from a plateauing of the smartphone market in Europe. The company has partnered with German cable operator Kabel Deutschland AG to offer bundled wired and wireless broadband service. With AT&T’s focus on mobile broadband, a merger would boost the combined networks’ capability in fourth-generation technologies.
As to selling off non-European assets, AT&T would be at an advantage, given the bleak performance, so far, by these subsidiaries. For example, while Vodafone Africa was considered the company’s biggest profit generator by 2013 due to subscriber growth and a rising mobile-payment platform, revenue from this region declined 2.9 percent in FY 2014 due to poor market conditions in certain countries, reduction in mobile-termination rates and regulatory pressure.
Is this a good thing for AT&T? Definitely yes, but only if the regulatory hurdles are overcome. Firstly, the UK does not have a regulatory mechanism for blocking mergers and acquisitions by foreign entities. However, EU antitrust regulations are tough, and given precedent with the EU imposing stiff sanctions and fines on technology companies like Google and Microsoft, the concern is whether AT&T also face such scrutiny. In addition, it would be wise to echo AT&T CEO Stephenson’s concerns about the spectrum policy in the region, which could be a challenge for the telco.