Gapping down
In reaction to disappointing earnings/guidance:
- WAT -15%, EDU -3.5%, SHW -3.5%, RMBS -2.7%, GES -2% (also announces offering of $250.0 mln of convertible senior notes due 2024 in private placement; reduces quarterly dividend to $0.1125/share from $0.225/share), FITB -2%, EFSC -1.4%, PG -0.7%, STT -0.6%
Other news:
- EMES -55.7% (enters into restructuring support agreement)
- GRTS -8.2% (files for 6.5 mln share common stock offering)
- RAD -0.9% (after closing near highs - up more than 10% on the day)
Analyst comments:
- HRL -3.9% (downgraded to Sell from Neutral at Goldman; downgraded to Underweight from Neutral at JP Morgan)
- BBL -1.3% (downgraded to Neutral from Buy at UBS)
- CROX -1.2% (downgraded to Neutral from Overweight at Piper Jaffray)
- OFC -1.2% (downgraded to Underweight from Sector Weight at KeyBanc Capital Markets)
- BHP -1.1% (downgraded to Neutral from Buy at UBS)
- DLR -1.1% (downgraded to Hold from Buy at Jefferies)
Gapping up
In reaction to strong earnings/guidance: HAS +15.8%, CMRE +11.9%, WHR +8%, TWTR +7.3%, LMT +6.7%, HSTM +5.9%, TECK +5.7%, BEDU +5.3%, CDNS +5.3%, BRO +4.9%, PHM +4.3%, ATI +3.8%, ACC +3.6%, KO +3.6%, UTX +3.4%, IRDM +3.3%, CNC +3%, ALSN +2.8%, AXE +2.5%, JBLU +2.3%, BANC +2.2%, PII +2.1%, MINI +1.9%, RRC +1.7%, WAL +1.5%, NUE +0.9%M&A news:
- NOG +4% (announces accretive acquisition in the core of the Williston Basin; assets are expected to be accretive to earnings, cash flow per share)
- MUR +3.5% (to acquire deep water Gulf of Mexico assets from LLOG Exploration Offshore, L.L.C. and LLOG Bluewater Holdings for cash consideration of $1.375 billion)
Other news:
- GNC +9.2% (now offering topical cream products containing cannabidiol, in select retail locations and online in 23 states and the District of Columbia)
- ALDR +8.2% (announces FDA acceptance of BLA for eptinezumab)
- PCG +2.8% (submits updated financing proposal infrastructure investments)
- VCYT +1.8% (ticking higher; received regulatory authorization from the New York State Department of Health to offer the Envisia Genomic Classifier for patients in the state effective immediately)
- DAVA +1.6% (continued strength)
Analyst comments:
- TRVG +4.7% (upgraded to Buy from Neutral at Guggenheim)
- ROKU +2.5% (initiated with Positive rating and $80 tgt at Susquehanna)
- LYFT +2.5% (initiated with a Overweight at JP Morgan; initiated with a Outperform at Raymond James, among others)
- CI +1.4% (initiated with a Buy at UBS)
- SAFM +0.7% (upgraded to Neutral from Sell at Goldman)
Applied Materials halts work for red-flagged Chinese chipmaker
US supplier pulls staff from San’an Optoelectronics following government listing
California-based Applied Materials, the world’s top chip and display equipment maker, has ordered staff to halt all deliveries and servicing for China’s biggest LED chipmaker, which was named on a red-flag list recently issued by the US government.
Xiamen San’an Optoelectronics is one of at least three Chinese customers of Applied Materials that were identified on the US government’s “unverified list”, people with knowledge of the situation told Nikkei Asian Review. While the list does not embargo dealings with these entities, it requires US companies to treat them with caution. US suppliers can no longer use existing licences to sell them products or to service installed equipment, but must reapply for new ones. San’an Optoelectronics is also the world’s biggest LED chipmaker by revenue and is listed in Shanghai.
Xi’an Jiaotong University, one of China’s top 15 universities and a unit of the Chinese Academy of Sciences, the country’s top research agency, is another Applied Materials customer named on the list, which was published on April 11, according to a supply chain source familiar with the situation. Some 37 Chinese companies and research institutions were named on the list, as well as seven organisations in Hong Kong, four in the United Arab Emirates, two in Malaysia and one in Indonesia.
The US government’s move marks another setback to companies and research institutions that are crucial to China’s ambitions to become a global tech superpower.
Applied Materials supplies almost all the world’s leading semiconductor and panel manufacturers. Market leaders such as Intel, Samsung Electronics, Taiwan Semiconductor Manufacturing Co and China’s national display champion BOE Technology Group could not make their products without the company’s tools and services.
As an industry leader in advanced tools for the critical semiconductor industry, Applied Materials’ decision to immediately stop all business with those on the list could influence other US vendors, as well as others outside the country, industry sources told Nikkei.
On April 12, Applied Materials sent a notice, obtained by Nikkei, to all staff involved with the named companies telling them to “immediately stop all pending and future equipment delivery, and cease all service activities at their sites”. It also demanded that staff, contractors and other personnel immediately leave the sites of those companies.
It warned that failure to follow its instructions could lead to significant violations of US trade law.
The company’s actions come just weeks after Gary Dickerson, chief executive of Applied Materials, travelled to China in late March to attend SEMICON China, one of the industry’s biggest events and an important showcase for Chinese technology since Beijing made development of the chip industry a top policy priority in 2014.
At the event, Mr Dickerson made his first clear and public statement about the US-China trade tensions that have hit the chip industry hard. “The strained relationship between China and the US can put decades of economic growth at risk,” he said. He also warned it would be “a lose-lose proposition” if the world’s two biggest economic powers were unable to get along.
Applied Materials generated some 26 per cent of its revenue from China, its biggest market, in the most recent quarter ending January 27. The US company did not immediately respond to a request for comments. San’an also did not respond to a request for comments.
Gao Feng, China’s commerce ministry spokesman, hit back at the new unverified list, saying the US move could damage the reputations of Chinese companies and disrupt normal trade activities. Beijing said it objected to the abuse of national security and export control rules and demanded that the US withdraw the new curbs as soon as possible.
Akin Gump, an international law firm, warned companies in a research note that they would have to respond to the requirements of the unverified list. “As a result of this development, US and non-US companies and others should update their internal control program screens to ensure compliance with the new requirements,” the note said.
Harry Clark, a partner with law firm Orrick, Herrington & Sutcliffe in Washington, told Nikkei that being added to the unverified list did not mean a broad ban on US exports and re-exports to a named entity, but companies would need to obtain extra licences and file additional reports if dealing with such entities. It also applied to foreign persons.
“My firm advises clients to be especially careful to ensure that any export or re-export involving an unverified list entity is scrupulously compliant with the regulation,” Mr Clark said.
SoftBank Founder Masayoshi Son Lost $130 Million on Bitcoin
Japanese billionaire made a huge personal investment in the digital currency as prices peaked
Masayoshi Son, shown in February, is known for quick investment decisions and big risky bets, most of which have paid off. PHOTO: YOSHIO TSUNODA/AFLO/ZUMA PRESS
Masayoshi Son, the billionaire founder of SoftBank Group Corp. 9984 0.31% , made a huge personal bet on bitcoin just as prices for the digital currency peaked, losing more than $130 million when he sold out, according to people familiar with the matter.
Mr. Son, who launched the world’s biggest venture-capital fund on the strength of his long-term investing acumen, made the investment at the recommendation of a well-known bitcoin booster, whose investment firm SoftBank bought in 2017, the people said.
The investment came at the peak of the bitcoin frenzy in late 2017 after the digital currency had already risen more than 10 fold that year. The exact size of the bet couldn’t be determined, but bitcoin peaked at nearly $20,000 in mid December 2017 and Mr. Son sold in early 2018 after bitcoin had plummeted, the people said.
Bitcoin closed Monday at $5,381.05.
Mr. Son is known for quick investment decisions and big risky bets, most of which have paid off. He decided to back Alibaba Group Holding Ltd. after spending just five minutes with its founder, Jack Ma. He took a half-hour to greenlight a $200 million investment in a startup that grows vegetables indoors.
Crypto CrashBillionaire investor Masayoshi Son personallybought bitcoin near its peak and lost money.Price of bitcoin, in dollarsSource: CoinDesk; people familiar with the matter
2017’18’1905,00010,00015,00020,000$25,000
Mr. Son’s previously unreported loss shows that even some of the world’s most sophisticated and wealthiest investors got caught up in the frenzy. With a net worth estimated by Bloomberg LP at $19 billion, Mr. Son will hardly notice, though it dents his reputation as a patient and prophetic investor.
A SoftBank spokesman declined to comment on Mr. Son’s behalf.
Mr. Son was encouraged to make the investment by Peter Briger, the co-chairman of asset manager Fortress Investment Group, the people said. SoftBank bought Fortress in February 2017, inheriting the asset manager’s bitcoin reserves along with its more traditional investment funds.
Fortress under Mr. Briger first bought bitcoin in 2013, when it was still a fringe technology used mainly in the darker corners of web commerce. By the time the SoftBank deal was completed, its holdings were worth more than $150 million.
Mr. Briger declined to comment through a spokesman.
Mr. Son built SoftBank mostly on long-term technology investments and used his record to launch the $100 billion SoftBank Vision Fund. The fund, backed by the government investment fund of Saudi Arabia, owns big stakes in Uber Technologies Inc. and WeWork Cos., and has been credited with driving up valuations of some of the biggest private technology companies.
The Vision Fund is facing a test of its success with the coming initial public offering of Uber, which is aiming for a valuation of as much as $100 billion, below previous expectations but still above where the fund invested.
Even as it looks ahead to futuristic technology, SoftBank’s most immediate problem is its controlling stake in U.S. mobile phone company Sprint Corp. The 2013 deal has weighed down the conglomerate with debt, limiting its investing options.
Last week The Wall Street Journal reported that Sprint and T-Mobile’s merger had been challenged by U.S. Justice Department staff lawyers, who expressed concerns that the all-stock deal would threaten competition.
Sprint, hoping for approval, said in a regulatory filing last week: “Sprint is in a very difficult situation that is only getting worse. Sprint is not on a sustainable competitive path.”
Procter & Gamble beats by $0.02, reports revs in-line; co also raises organic growth guidance, maintains Core EPS guidance (106.01)
- Reports Q3 (Mar) earnings of $1.06 per share, $0.02 better than the S&P Capital IQ Consensus of $1.04. Excluding the impacts of foreign exchange, acquisitions and divestitures, organic sales increased five percent.
- Unfavorable foreign exchange was a five percent hurt to sales for the quarter. Excluding the impacts of foreign exchange, acquisitions and divestitures, organic sales increased five percent driven by a two percent increase in organic shipment volume. Pricing added two percentage points to organic sales. Positive mix impact was a one percent help to organic sales due to strong growth in developed markets and disproportionate growth of premium priced products, such as SK-II and Tide Pods.
- Beauty segment organic sales increased nine percent versus year ago.
- On a currency-neutral basis, core gross margin increased 60 basis points driven by 160 basis points of productivity savings and 80 basis points of pricing benefit, partially offset by 70 basis points of commodity cost increases, 30 basis points of innovation reinvestments and 80 basis points of unfavorable product mix and other impacts.
- The Company now estimates fiscal 2019 all-in sales growth in the range of in-line to up one percent vs prior guidance of down one to up one percent. P&G increased its guidance for organic sales growth from a range of two to four percent to four percent for fiscal 2019.
- The Company maintained its guidance ranges on the bottom line. On an all-in GAAP basis, diluted net earnings per share are expected to increase seventeen to twenty-four percent versus the prior year. Core earnings per share are expected to increase three to eight percent versus fiscal 2018 Core EPS of $4.22
Harley-Davidson beats by $0.11, beats on revs (39.72)
- Reports Q1 (Mar) earnings of $0.98 per share, $0.11 better than the S&P Capital IQ Consensus of $0.87; revenues fell 10.1% year/year to $1.38 bln vs the $1.21 bln S&P Capital IQ Consensus.
- Worldwide retail sales decreased 3.8% in the first quarter. International retail sales were down 3.3%. U.S. retail sales were down 4.2% in the first quarter driven by continued weak industry sales which were down 4.7 percent. First quarter worldwide retail sales were impacted by the limited availability of Street motorcycles due to the recall we announced in January.
- The U.S. 601+cc industry was down 4.7% in the first quarter compared to the same period in 2018. HOG's first quarter U.S. market share was up 0.6 pts to 51.1%. HOG's Europe market share was down 1.6 percentage pts to 8.8%.
- Outlook: HOG expects motorcycle shipments to be approximately 217,000 to 222,000 motorcycles. In the second quarter, the company expects to ship approximately 65,500 to 70,500 motorcycles. Motorcycles segment operating margin as a percent of revenue to be approximately 8.0-9.0%. Financial Services segment operating income to be down year-over-year.
Waters misses by $0.13, misses on revs; guides Q2 EPS below consensus; guides FY19 EPS below consensus (241.04)
- Reports Q1 (Mar) earnings of $1.60 per share, excluding non-recurring items, $0.13 worse than the S&P Capital IQ Consensus of $1.73; revenues fell 3.2% year/year to $513.9 mln vs the $545.82 mln S&P Capital IQ Consensus.
- Co issues downside guidance for Q2, sees EPS of $2.05-2.15, excluding non-recurring items, vs. $2.21 S&P Capital IQ Consensus. Co sees Q2 constant currency sales growth of +2-4%
- Co issues lowered guidance for FY19, sees EPS of $9.05-9.25 from $9.20-9.45, excluding non-recurring items, vs. $9.34 S&P Capital IQ Consensus. Co lowers constant currency sales growth to +2-4% from +4-6% prior guidance.