WSJ : France's Iliad Makes Bid for T-Mobile US

France's Iliad Makes Bid for T-Mobile US Bid Counters Earlier Offer From Sprint

Iliad makes an offer for T-Mobile US, threatening to disrupt the carrier's expected deal with Sprint. Above, a woman talks on her phone as she walks past T-mobile and Sprint wireless stores in New York. REUTERS French upstart telecommunications company Iliad SA ILD.FR -1.34% has made an offer for T-Mobile US Inc., TMUS +4.36% in a bold bid to counter an offer for the country's fourth-largest wireless carrier by Sprint Corp. S -3.99% , said people familiar with the matter.

The contours of the offer, which was made less than a week ago to T-Mobile's board, are unclear, but one of the people said it involves control of the U.S. company. It is unclear what, if any, the response to the bid has been.

T-Mobile US had a market value of $24.8 billion. Iliad's was €12 billion ($16 billion) and it's not clear how the French company would pay for such a deal. Iliad is working with several banks to secure financing, one of the people said.

Related T-Mobile US Swings to Profit, Adds Customers Sprint Prepares for Aggressive Subscriber Push (7/30/2014) Sprint and T-Mobile Play the Waiting Game (7/29/2014) Sprint, T-Mobile Seek to Raise $10 Billion for Spectrum Auction (7/15/2014) Iliad, which has sparked a fierce price war in France's mobile-telephone market via its cutthroat rates, sees the offer as a "one-time opportunity to enter the world's-largest telecoms market," said the person.

Sprint and T-Mobile US have been pursuing a combination for months, and the two sides have agreed on the broad outlines of a deal valuing T-Mobile US at more than $30 billion, people familiar with the matter have said. Any announced deal between Sprint, which is majority-owned by SoftBank Corp., is expected to face stiff antitrust scrutiny.

Iliad believes its offer for T-Mobile US, which is owned by Deutsche Telekom AG, would be favorably viewed by U.S. regulatory authorities because the company isn't active in the U.S., the person said.

Trading in shares of both T-Mobile and Sprint was halted after news of the Iliad offer broke, but the stocks have since resumed trading. T-Mobile shares recently traded up 5%, while Sprint shares fell 3%.

>>> GoPro Second Quarter Earnings Preview (45.86 -0.46)

GoPro Second Quarter Earnings Preview (45.86 -0.46)
Recent IPO GPRO is expected to report its first earnings as a public company tonight after the close. There is a conference calls scheduled for 17:00. The Capital IQ consensus calls for EPS of $0.07 on revenue of $238.0 mln. It is unclear if the company will provide guidance, but Q3 Capital IQ consensus calls for EPS of $0.04 on revenues of $251.0 mln.

Background: GPRO manufactures moutable and wearable cameras and accessories, enabling professional quality image capture. Its core product is the HERO line of devices with the first version being launched in 2009. It then launched the HERO2 camera in 2011, the HERO3 in 2012, and the HERO3+ in 2013.

Looking at its 1Q14 results, revenue fell 8% year/year to $235.7 million, again, due to the product delays of its HERO3 Black edition in 4Q12. These production delays correspondingly delayed shipments until 1Q13, which resulted in revenues in 1Q13 that did not reflect the traditional seasonality in its business. The three months ended March 31, 2014 were not similarly affected. GPRO says that in order to launch its HERO3 line in time for the 2012 holiday season, it had a shorter design and manufacturing cycle. Consequently, its initial production run of its HERO3 Black edition devices suffered from a number of design issues, part shortages, and manufacturing problems.

On the positive side, gross margin improved by 590 basis points from a year ago, mainly due to lower product costs for its HERO3+ devices compared to the prior generation HERO3 devices. Additionally, there was a 3% increase in ASPs of units shipped. Going forward, GPRO says it expects gross margin to fluctuate based on product mix, changes in product costs, and changes in average selling price. Robert Baird said it believes company is uniquely positioned within the fast-growing POV camcorder segment. The firm also sees opportunity for company to monetize the compelling content generated by its capture devices. Additionally, the firm expects EPS growth to outpace rev growth on better near-term product margins and longer-term SG&A leverage. That being said, the firm views the shares as fairly valued at current levels, with upside on the potential over-delivery of near-term results.

Options Activity
  • Based on GPRO options, the current implied volatility stands at ~ 86%, which is ~ 26% lower than historical volatility (over the past 30 days). Based on the GPRO Weekly Aug01 $46 straddle, the options market is currently pricing in a move of ~11% in either direction by weekly expiration. (Friday). GPRO calls are outpacing puts in early trade (~4.0K calls traded vs ~2.2K puts).
Technical Perspective
  • GPRO has outperformed the Nasdaq since its IPO with (GPRO +45% vs the index gaining 1%). On a positive report, look for resistance near the $49.00-49.50 vicinity. On a negative report, the $41.90-42.50 area may provide support.

*U.S. INITIAL JOBLESS CLAIMS ROSE 23,000 LAST WEEK TO 302,000

*U.S. SECOND-QUARTER EMPLOYMENT COST INDEX INCREASES 0.7%
*U.S. FOUR-WEEK CLAIMS AVERAGE FALLS TO 297,250 FROM 300,750
*FOUR-WEEK CLAIMS AVERAGE FALLS TO LOWEST SINCE APRIL 2006
*U.S. SECOND-QUARTER EMPLOYMENT COST INDEX INCREASES 0.7%
*U.S. INITIAL JOBLESS CLAIMS ROSE 23,000 LAST WEEK TO 302,000
*U.S. INITIAL JOBLESS CLAIMS ROSE 23,000 LAST WEEK TO 302,000

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance: EHTH -32.1%, QUIK -19.6%, ATEN -18.8%, CLUB -14.2%, CODE -13%, AVG -8.4%, MTW -8.3%, GLUU -8.1%, (also plans to acquire Cie Games for ~ $100 mln; co anticipates the transaction being earnings accretive from its first quarter of consolidation), TTEK -7.1%, (light volume), ALU -7%, TGB -6.8%, (light volume), AKAM -6.5%,ANIK -6.5%, PVA -6.5%, (Penn Virginia announces the sale of Eagle Ford Oil gathering and intermediate transportation rights for $150 mln), FEIC -5.9%, (light volume), NOW -5.8%, SMSI -5.4%, (thinly traded), WSTL -5%, CAVM -4.8%, OCN -4.8%, (light volume), ENTR -4.2%, (light volume), RNWK -4%, (also appoints Rob Glaser to be permanent CEO), CTRP -3.9%, WFM -3.7%, (downgraded to Neutral from Buy at UBS; downgraded to Neutral from Overweight at JP Morgan ), SZYM -3.5%, (also Solazyme and AkzoNobel expand partnership in surface chemistry), YELP -3.4%, WDC -3%, HIG -2.7%, VECO -2.2%, MET -1.9%, TGI -1.9%, EXL -1.8%, (light volume), TEF -1.7%, PEIX -1.6%, LRCX -1.5%, ISIL -1.5%, EPD -1.4%, (light volume), KRFT -1.3%, (also downgraded to Hold from Buy at Deutsche Bank), WTW -1.2%, K -1.1%, (light volume), CNL -0.9%, (and following late spike on reports that Iberdrola (IBDRY) may bid for CNL), ABX -0.9%, (light volume), CACC -0.7%, (thinly traded), AZN -0.3%, DTV -0.3%.

M&A news: AHL -2.7% (Endurance terminates offer to acquire Aspen).

Select financial related names showing weakness: DB -2.7%, ING -2.7%, NBG -2.7%, CS -2.3%, SAN -1.8%.

Select telecom stocks trading lower: PT -4.5%, VOD -1.9%.

Select Argentina names lower following S&P news: BMA -4.5% BFR -3.4%, PAM -1.9% YPF -1.3%

Other news: PERI -8.6% (still checking), YUM -6.2% ( confirms it terminated its relationship with OSI ), MU -6.2% (following SSNLF results; also Tessera Tech and Micron Technology announce execution of new technology and patent license agreements), QIHU -5.1% ( announces offering of $900 mln convertible senior notes due 2020), CNHI -3.3% (on MTW results), RPT -2.2% (commences public offering of 5.25 mln newly issued common shares of beneficial interest ), NOK -1.7% (following ALU results; also Nokia Networks to buy part of Panasonic's (PCRFY) wireless network business), AAPL -1.4% (still checking), TSN -1.4% (announces pricing of of 23.81 mln shares of its Class A common stock at $37.80/share and 30 mln of its 4.75% tangible equity units),MANU -1.3% (announces offering of 8 mln Class A ordinary shares by the selling shareholder), STX -1% (following WDC results), AMZN -0.7% (plans to expand into local services, according to reports ), TSLA -0.7% (Tesla Motors and Panasonic confirmed agreement for the Gigafactory), GPRO -0.6% (following yesterday's 5% move higher), MCD -0.3% (following YUM update).

Analyst comments: HOG -1.5% (Harley-Davidson downgraded to Hold from Buy at Argus), QCOM -1.1% (downgraded to Mkt Perform from Outperform at Bernstein ), UN -0.3% (Unilever downgraded to Neutral from Buy at Goldman)