Gapping down
In reaction to disappointing earnings/guidance:
- CAT -5.2%, ARLP -1.5%
M&A news:
- DBX -0.8% (confirms agreement to acquire HelloSign for $230 mln in cash)
Other news:
- PCG -8.7% (still planning bankruptcy according to Axios Report)
- VALE -8.3% (Vale S.A. updates information on the breach of the Dam I of the Córrego de Feijão mine that occurred in the early afternoon of January 25th, 2019; suspends dividends on interest on capital as well as any deliberation on share repurchases)
- E -3.6% (acquires from Adnoc a 20% equity interest in ADNOC Refining)
- DE -1.5% (in sympathy with CAT)
Analyst comments:
- CRSP -5.1% (downgraded to Neutral from Buy at Goldman)
- ATHM -3.8% (downgraded to Underweight from Neutral at JP Morgan)
- NRG -1.1% (downgraded to Hold from Buy at Deutsche Bank)
- USB -0.7% (downgraded to Neutral from Outperform at Robert W Baird)
Gapping up
In reaction to strong earnings/guidance:
- COMM +1%
M&A news:
- CHFC +8.9% (Chemical Financial Corp. and TCF Financial (TCF) will combine in an all-stock merger of equals transaction), TCF +5.9%
Select metals/mining stocks trading higher:
- DRD +3.5%, HMY +1.7%, AU +1.6%, SBGL +1.3%, MT +1%, BHP +0.5%
Other news:
- ARAY +6% (Accuray and China Isotope and Radiation Corporation form JV to manufacture and sell radiation oncology systems in China)
- ZAYO +4.8% (Hearing strength attributed to report that Google (GOOG) and CenturyLink (CTL) are interested in the company)
- USAT +2% (announced that Glen Goold has been appointed interim Chief Financial Officer, effective January 24)
- ALXN +1.2% (Phase 3 study of ULTOMIRIS met its primary objective in complement inhibitor-naïve patients with atypical hemolytic uremic syndrome) DB +0.6% (Bloomberg report that will get funding commitments from Qatari)
Analyst comments:
- MCHX +3.8% (upgraded to Buy from Neutral at ROTH Capital)
- W +3.2% (upgraded to Outperform from Neutral at Credit Suisse)
- GRUB +2.8% (upgraded to Outperform from Neutral at Credit Suisse)
- X +1.7% (upgraded to Equal-Weight from Underweight at Morgan Stanley)
- ZNGA +1.4% (upgraded to Overweight from Sector Weight at KeyBanc Capital Mkts)
- SNX +1.1% (upgraded to Buy from Neutral at Citigroup)
- FISV +0.6% (upgraded to Outperform from Sector Perform at RBC Capital Mkts)
China sees 100 tech groups reach $1bn valuation in 2018
Sharp slowdown recorded in final quarter as investor sentiment turned
Almost 100 tech companies reached a valuation of more than $1bn in China last year, led by ecommerce and video-streaming services, according to an annual ranking of the country’s top tech businesses by Hurun.
Hurun, which is best known for compiling an annual rich list, said China now had 186 tech start-ups worth more than $1bn, led by the fintech Ant Financial, which is worth Rmb1,000bn ($148bn).
The fastest growing start-ups include ByteDance, whose offerings include the Toutiao news feed and short video-streaming Douyin; Tencent-backed short-video app Kuaishou; and Meicai, an online platform for farmers selling vegetables. All three saw their valuations rise by 400 per cent in the past year.
The fastest growing sectors, in terms of valuation, were internet services, medical and health companies, and education.
But Hurun’s data showed a sharp slowdown in the final quarter of last year, when just 11 companies saw their valuations hit the $1bn mark. That compared with 86 over the previous three quarters.
Last year saw 24 Chinese tech initial public offerings, according to Hurun, but the weak performance of many of these companies on the public markets has soured investor sentiment. All but a handful of the listings in 2018 ended the year below their IPO price.
Allied with deflated valuations and a reduction in financing, many start-ups are braced for a capital winter. “Valuations have to come down to a level which is more sensible,” said one capital markets lawyer, pointing to a number of “down rounds” valuing start-ups below their previous fundraising.
“We’ve had a remarkable boom in unicorns [companies worth more than $1bn] over the past year, no question,” said Rupert Hoogewerf, founder of Hurun. “But clearly, to find a new unicorn every four days is just unsustainable. No country in the world is doing that.”
In the final quarter, he said, Hurun marked down valuations or eliminated six to eight companies that had been on the list, including ofo, the bike-sharing group that is facing bankruptcy.
Sequoia led the ranks of backers, investing in 49 start-ups last year, up from 27 in 2017. Tencent and Alibaba, China’s acquisitive tech giants, also played a key role. Tencent invested in 30 this year, while Alibaba backed 17.
The duo are favoured by start-ups, in large part because they are able to send traffic from their platforms, such as Tencent’s WeChat, which has more than 1bn users, to their apps.
Caterpillar misses by $0.44, reports revs in-line; guides FY19 EPS below consensus (136.86)
- Reports Q4 (Dec) earnings of $2.55 per share, excluding non-recurring items, $0.44 worse than the S&P Capital IQ Consensus of $2.99; revenues rose 11.2% year/year to $14.34 bln vs the $14.36 bln S&P Capital IQ Consensus.
- Co issues downside guidance for FY19, sees EPS of 11.75-12.75, excluding non-recurring items, vs. $12.77 S&P Capital IQ Consensus.
- "Our outlook assumes a modest sales increase based on the fundamentals of our diverse end markets as well as the macroeconomic and geopolitical environment. We will continue to focus on operational excellence, including cost discipline, while investing in expanded offerings and services to drive long-term profitable growth.
Two Groups Account for $1 Billion in Cryptocurrency Hacks, New Report Says
The two entities are likely still active, according to Chainalysis firm
Two groups of highly sophisticated cyber criminals likely have stolen some $1 billion in cryptocurrency hacks, a sum that accounts for the majority of the money lost in such scams, according to a new report from Chainalysis.
Moreover, the two entities probably are still active, said Philip Gradwell, the chief economist at Chainalysis, a maker of software that tracks cryptocurrency transactions.
Chainalysis, which plans to publicly release its findings Monday morning, spent about three months tracking the funds stolen in known hacks. The firm said that there is a chance its analysis is incorrect and that it is unsure of the identities of the two groups.
Cryptocurrency exchanges and investors are often targeted by hackers. More than $1.7 billion has been publicly reported stolen over the years, mainly from exchanges such as Mt. Gox and Bitfinex. The frequent hacks are a big reason why institutional investors have shunned digital currencies.
Bitcoin and other cryptocurrencies exist as digital currencies on independent networks. At the heart of that network is an open transaction ledger called the blockchain, a public record of every single transaction in the network’s history. In an effort to replicate the anonymity of physical cash, those transactions aren’t connected to an identity. That makes catching hackers difficult.
Organized groups such as the hacker collective Lazarus group have been suspected in some bigger breaches, but it was widely believed that the majority of hacks was committed by skilled amateurs acting alone.
Chainalysis’s digital investigators determined that likely wasn’t the case when they analyzed the transaction flows from known hacks. The firm believes it has connected most of the hacks to two groups, which it labeled alpha and beta.
Alpha is “a giant, tightly controlled organization at least partly driven by nonmonetary goals,” Chainalysis said in its report. Beta, the second group, is smaller and less organized, a “heavily sanctioned organization absolutely focused on the money,” according to the report.
Chainalysis said the two hacker groups employed an extensive network of digital wallets to hide their tracks and later converted the money to physical cash through online exchanges and individual transactions. The stolen funds were transferred an average of 5,000 times before they were converted into cash, Chainalysis found.
Alpha tends to immediately begin shuffling the funds around, according to the report. One hack involved 15,000 transfers. The entity converted about three-quarters of its stolen funds into cash within an average of 30 days.
Beta, on the other hand, may sit on the stolen funds for up to 18 months, waiting for any publicity surrounding the hack to fade. “When they feel ready to cash out, they quickly hit one exchange, cashing out over 50% of funds within days,” the report said.
Mr. Gradwell said the hackers will sometimes use regulated exchanges that employ antimoney-laundering controls. By the time the funds have gone through all those transfers, he added, it is hard for even regulated exchanges to know they are dealing with stolen money.
The firm hopes that by making this data public, it will provide exchanges with better insight into the threats they face.
“This should change how we think about hacks,” Mr. Gradwell said.
Early premarket gappers
Gapping up:
- ZAYO +4.9%, AUDC +4.4%, DRD +4%, MCHX +3.8%, W +3.2%, GRUB +2.6%, CYBR +2.2%, HMY +2.2%, LPSN +2%,SBGL +1.7%, IPHI +1.7%, X +1.7%, AU +1.6%, BHP +1.5%, ZNGA +1.4%, MT +1.3%, PLAB +1.1%, BBL +1.1%, DB +1%, VOD +0.9%, PRGO +0.7%, RIO +0.5%
Gapping down:
- VALE -11.2%, PCG -3.3%, TTM -3%, BLDP -2.5%, FRO -2.4%, SWN -2%, PBR -2%, YNDX -1.9%, ABB -1.7%, EQNR-1.6%, BUD -1.3%, WB -1.2%, NOK -1.2%, MU -1.2%, ANH -1.1%, ASML -1%, TWTR -1%, AA -0.9%, TOT -0.9%, TSLA-0.9%, STM -0.9%, NFLX -0.8%, SQ -0.7
Trade war takes toll on Chinese chipmaker Fujian Jinhua
Group to stop output by March after being accused by US of technology theft
US sanctions against Fujian Jinhua will force the Chinese state-owned company accused of stealing trade secrets from American memory chipmaker Micron to stop production by March, according to people familiar with the situation.
The case, under which the US commerce department in October practically banned all exports and technology transfers to Fujian Jinhua, is one of the clearest outcomes yet of Washington’s war on the rise of China’s tech sector.
Fujian Jinhua is rapidly running out of imported materials vital for keeping its fabrication plant running as a result of Washington’s export ban, according to two people close to Jinhua and United Microelectronics (UMC).
“They have come farther in ramping up yield than they are being given credit for but now they’ve pretty much reached the end of the road,” said one person involved in setting up UMC’s partnership with Jinhua.
The US Justice Department filed criminal charges late last year against Fujian Jinhua for allegedly conspiring to receive Micron technology through UMC, a Taiwanese contract chipmaker that is also a defendant in the criminal case.
Micron alleges that former employees of a company acquired by Micron left to join UMC, from where they handed technology belonging to the US chipmaker to Fujian Jinhua. UMC and Fujian have denied the allegation.
Industry experts see the case as a key battle in Washington’s effort not only to stop theft and forced technology transfer by China but also to prevent it from becoming a tech power rivalling the US.
Beijing is pushing the development of an indigenous chip industry with immense government subsidies. But analysts warn that the US’s stand-off with China is slowing the sector’s momentum.
TrendForce, a technology industry research firm, forecast that the growth of China’s semiconductor industry will drop to 16 per cent this year, the slowest since 2013.
More than 200 of the about 300 engineers UMC originally sent to work at Jinhua have returned home, leaving the Chinese company lacking vital experience on ramping up and running production of dynamic random-access memory, or Dram.
Two of the returnees, who now work at another memory chipmaker in Taiwan, said some of the Taiwanese engineers left Jinhua immediately after the US criminal charges in early November. But the majority had followed over the past two months under advice from UMC, their former employer.
UMC, due to report earnings on Tuesday, said immediately after introduction of the US sanctions against Jinhua that it was suspending its partnership with the Chinese company.
Washington sees Jinhua’s woes as proof that its policy of singling out and prosecuting Chinese companies accused of technology theft is yielding results.
“The naming and shaming is working, as are the indictments,” said a US official. “There appears to be some fear among the Taiwanese engineers of the legal risks of working there, and hopefully it will deter others from going down that path.”
The official said the Justice Department was likely to eventually drop the criminal charges against UMC and settle for a large fine in exchange for the Taiwanese company’s co-operation. A source close to UMC said the company also expected to negotiate a fine.
The Micron case is one of several in which Chinese firms are accused of illegally pursuing other companies’ technology by co-opting Taiwanese staff.
The US wants Taiwan law enforcement agencies to focus more on that issue. The American Institute in Taiwan (AIT), Washington’s quasi-embassy in Taipei, is working to organise workshops this year on the protection of trade secrets and intellectual property rights.
“In the past, most events were focused on economic or social topics, but we thought we really should move into law enforcement because the economic espionage issue is so important,” said a US official familiar with the plans.
Alexion Pharma announces that the Phase 3 study of ULTOMIRIS met its primary objective in complement inhibitor-naïve patients with atypical hemolytic uremic syndrome (121.44)
In the initial 26 week treatment period, 53.6 percent of patients (95% CI [39.6%, 67.5%]) demonstrated complete thrombotic microangiopathy (TMA) response. ULTOMIRIS provided immediate and complete inhibition of the complement C5 protein that was sustained over the entire eight-week dosing interval. The primary endpoint of complete TMA response was defined by hematologic normalization and improved kidney function. The safety profile was consistent with that observed in two large Phase 3 studies in patients with paroxysmal nocturnal hemoglobinuria (PNH).
- Detailed results from this Phase 3 study will be presented at a future medical congress. A Phase 3 study of ULTOMIRIS in children and adolescents with aHUS is currently ongoing.