WSJ : Starbucks Charges Into Wireless Charging

What are often called chicken-and-egg problems frequently slow the deployment of new technology. Wireless charging of mobile devices has been a case in point, but Starbucks SBUX +0.27% could be a force for change.

The big coffee chain, working with Duracell Powermat, on Thursday is announcing plans for a nationwide rollout of the technology. Charging services will be incorporated on the surface of tables and counters to allow customers to plop down compatible devices and fill up their batteries, for free, without any wires.

Its move could address this particular chicken-and-egg problem: people aren’t inclined to install charging surfaces unless there are smartphones that can use the technology. And phone makers aren’t eager to build wireless-charging capability in their products unless charging stations are widely available.

The situation is complicated by the fact that companies are proposing competing charging technologies, so hardware makers that move too early could bet on one that never takes off.

But Starbucks is nevertheless charging ahead. “We are anticipating our customers are going to come to want this in our stores much like they did with Wi-Fi,” says Adam Brotman, who holds the title of chief digital officer at Starbucks.

Powermat, a company founded in 2006 by the Israeli entrepreneur Ran Poliakine, has been among many companies pursuing alternatives to wires for charging cellphones and other devices. The company uses a technology called inductive charging, which can pass electricity between objects in close proximity.

The company, working since 2011 in a partnership with Procter & Gamble 'sPG -0.11% battery unit Duracell, has been offering products that customers can use now, including various sleeves and adapters to enable smartphones to be used with its charging mats.

Meanwhile, the company has also been working with others to help develop a multi-company charging standard, so consumers can get compatible handsets and accessories from competing vendors. An associated industry group–called the Power Matters Alliance, or PMA–has members that include AT&T, Sony, Samsung Electronics, Microsoft, Qualcomm and Toshiba.

Some phones now on the market incorporate PMA-compatible components or can work with special battery covers or other accessories that use the technology.

The other factor that has been missing, Poliakine says, is a big player to step up and put the technology in places that consumers congregate. Starbucks could be that catalyst, he says, similar to the way the retailer’s embrace of Wi-Fi in the past decade helped make wireless Internet access more ubiquitous.

“It’s a day that could be remembered as the day when people started to charge and get power in a totally new way,” Poliakine says.

Starbucks has been testing the Powermat technology in some stores in the San Francisco and Boston areas, Brotman says. To kick off the rollout, the company will first try to fully build out Bay Area locations before moving it to both Starbucks outlets and its Teavana stores, with most installations likely in 2015 and beyond, he says.

Powermat will supply charging spots and backend technology that helps identify various mobile devices and their power requirements. People can buy charging adapters for their devices at AT&T stores and other outlets, the company said.

Financial terms of the deal aren’t being disclosed. But Brotman estimates the company has about 7,500 company-operated stores, each of which could have a dozen or so charging spots.

Brotman admits the standards battle over wireless charging has not ended, but he feels confident in the PMA technology Powermat is offering. “We feel like we found what we believe is the winning standard,” he says.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: LULU -14.4%, EROS -8.2%, ONVO -5.4%.

Select metals/mining stocks trading lower: SWC -5.1%, RRC -3.5%, RIO -3%, CLF -2.6% (Casablanca Capital files definitive proxy statement and sends letter to Shareholders), GFI -1.6%, MT -1.4%, BHP -1.2%.

Other news: NEWL -15.1% (Ironridge Global IV confirmed it prevailed on the Temporary Restraining Order and Petition for Preliminary Injunctive Relief Pending Arbitration brought by NewLead Holdings), VTSS -9.4% (prices 7,462,675 shares of common stock at $3.35 per share), CNAT -7.7% (following 50% surge higher yesterday), APU -5.1% (AmeriGas Partners announced that Heritage ETC, affiliate of Energy Transfer Partners, commenced a public underwritten offering,of 8.5 mln AmeriGas common units that it currently holds), PBF -4.4% (announced secondary public offering of 18 mln shares of Class A common stock by funds affiliated with The Blackstone Group and First Reserve Management), RRC -3.5% (has agreed to sell 4,560,000 shares of its common stock in an underwritten public offering), ARIA -3.3% (announced its intention to offer $175 million aggregate principal amount of convertible senior notes due 2019), COMM -2.3% (commenced an offering to sell 15,000,000 shares of its common stock by an affiliate of The Carlyle Group, IBP -1.9% (prices secondary offering of 8.1 mln shares of common stock at $12.50 per share), EXC -1.7% (priced 50 mln shares of its common stock at a public offering price of $35.00/share), CLNY -1.5% (prices $150 mln of its 3.875% Convertible Senior Notes due 2021), OREX -1.4% (negative comment on Mad Money).

Analyst comments: HIMX -3.8% (downgraded to Hold at Craig Hallum), VALE -1.4% (downgraded to Equal-Weight from Overweight at Morgan Stanley), HA -1.3% (downgraded to In-line from Outperform at Imperial Capital).

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance: RH +16.1%, SIGM +11.7%, DDC +10.1%.

Select oil/gas related names showing strength: PBR +1.5%, HK +1.2%, EOG +1.1%, RDS.A +1%, SD +0.9%, SDRL +0.8%, BP +0.7%, XOM +0.7%, MRO +0.7%.

Other news: ZLCS +51.9% (Epirus Biopharmaceuticals announced positive data from a Phase 3 trial of BOW015 in patients with active rheumatoid arthritis; ZLCS entered into an agreement and plan of merger with Epirus on April 15), GERN +35.4% (reports removal of partial clinical hold on Myelofibrosis IST), PVCT +11.4% (to discuss outline of Phase 3 clinical trial of PV-10 to treat melanoma on conference call on June 19), KEYW +9.3% (U.S. Government Agency Selects HawkEye G for Advanced Threat Detection), TIBX +6.1% (Praesidium issues letter to TIBCO's Board of Directors; reports ownership of approx. 5.5 mln shares), MSLI +5.5% (announces $22.1 mln bought deal financing; Underwriters to purchase 13 mln common shares ), ARNA +4.4% (continued strength following exec on Fast Money), GTAT +2.7% (seeing continued strength (+6.5% yesterday)), FNSR +2.3% (earnings expected later today), BCR +2.2% (announces $500 mln share repurchase authorization, increases quarterly dividend ), SPEX +2.1% (commences litigation against Verizon (VZ) for patent infringement), CNX +2.1% (announces plans to form a Midstream Master Limited Partnership with CNX), BBRY +2.1% (announced new three-year agreement with EnStream), PLG +1.7% (reports the Waterberg Resource increases significantly to 29 mln ounces 4E-Platinum, Palladium, Rhodium and Gold), JD +1.6% (still checking), NQ(E) +1.6% (cont vol from yesterday), TSLA +0.9% (patent related announcement confirmed for Friday, according to Elon Musk tweet) NBL +0.8% (announces plans to form a Midstream Master Limited Partnership with Noble Energy (NBL)).

Analyst comments: SNSS +8.5% (initiated with a Buy and $14 tgt at UBS), HALO +3.3% (upgraded to Buy from Neutral at UBS), ACHN +1.6% (upgraded to Buy from Neutral at UBS), HPQ +1.2% (upgraded to Neutral from Sell at Goldman), SAM +0.5% (upgraded to Outperform from Underperform at Credit Agricole)

>>> Hewlett-Packard: Color on Investor Summit --> +1% Pre-Market

Hewlett-Packard: Color on Investor Summit
  • Needham notes yesterday afternoon, as part of the HP Discover 2014 event in Las Vegas, HPQ hosted multiple Q&A sessions with the sell-side and various executives, division heads, and Board members. While no new financial information was provided (HP plans to do so at the fall analyst day), the event did serve to clarify/reiterate certain targets previously communicated. In their opinion, the stock already reflects comfort with current projections, and it is time for real rev and earnings growth (driven by more than repurchases) to materialize.
  • Brean Capital reiterates their Buy rating and $40 TP, following yesterday's IR Summit held in conjunction with HPQ's annual Discover event in Las Vegas. They attended Q&A sessions with CEO Meg Whitman, CFO Cathie Lesjak, and several other key executives. We continue to believe upside exists to HPQ's '14 FCF guidance of $6.0-$6.5B (they estimate $7.2B -- yet they believe HPQ can deliver as much as $8B in '14 FCF) -- which underpins our stock buyback upside scenario of up to $3B in '14, vs. HPQ implied guidance of ~$2B. Their FCF upside conviction is supported by a firmer PC environment (driven by XP-related migration, as well as pent-up Commercial refresh demand) which was reinforced by their firmer Taiwan ODM work for May (6/11 note).
  • Stifel notes yesterday HP hosted an IR Event in conjunction with its HP Discover end user conference. While they are more positive on HP's overall portfolio strategy / direction / execution, they retain their Hold and believe investors will be gauging a sentiment transition away from a balance sheet restructuring story to top- / bottom-line upside drivers. The event included several open Q&A sessions with HP executives, from which they summarize the key takeaways and highlight some HDD vs. Flash takeaways (also note HP's Memristor plans), thoughts on CommVault (CVLT) (via conversation with Veeam), and HP's Moonshot strategy (ARMH-based chassis in 2H2014).
  • HPQ has continued to make solid progress on its turnaround over the last year. While much of the recent improvement has been internally controlled (e.g., execution improvements, cost cuts, etc.), they believe the next phase of the recovery could prove more challenging as HPQ needs to overcome secular and competitive headwinds across most of its business units. In their view, HPQ needs to demonstrate greater product innovation, top-line growth and margin improvement for further upside to shares. Please find below several of their key takeaways from the event as well as selected notes from presentations.
  • Goldman upgraded the stock to Neutral.

>>> US Early premarket gappers

Early premarket gappers

Gapping up: ZLCS +46.3%, GERN +33.5%, PVCT +17.1%, RH +14.1%, MSLI +10.4%, DDC +10.1%, KEYW +9.2%, SPEX +7%, TIBX +5.2%, DARA +2.6%, BCR +2.2%, JD +1.6%, HPQ +1.5%, TSLA +0.6%

Gapping down: NEWL -11%, VTSS -9.2%, LULU -9.1%, APU -5%, PBF -4.4%, ARIA -3.8%, RIO -2.9%, COMM -2.3%, CNAT -1.9%, IBP -1.9%, CLF -1.8%, RRC -1.6%, GFI -1.6%, CLNY -1.5%, MT -1.5%, HA -1.5%, SIGM -1%, INFY -0.9%, ACHC -0.8%, BHP -0.8%, INTC -0.5%