FT Lex : Philips: healthier rating

Philips: healthier rating
Acquisition of Spectranetics could result in a higher stock valuation



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Buying a business that trades at a far higher multiple of profits than your own is often a route to value destruction. But one eventual consequence of Dutch healthcare group Philips’ latest acquisition might be a higher valuation for its own stock.

On Wednesday, Philips said it would buy Spectranetics, a lossmaking US vascular devices group, for $38.50 a share or $1.7bn, in cash. That is 27 per cent above its undisturbed price and seven times its 2016 sales. Its previous medical acquisitions Volcano, Intermagnetics and Respironics were done at three to four times sales.

At least it can afford the indulgence. Philips’ own balance sheet is lightly geared with net debt of about a year’s earnings (before interest, tax, depreciation and amortisation). Its two-fifths stake in Philips Lighting, whose shares have risen 50 per cent this year, is worth €2.1bn. And it has €1.3bn coming in from the pending sale of Lumileds, another lighting business, to private equity groups.

The Dutch group justifies the price by pointing to Spectranetics’ rapid sales growth, and by promising cost savings and extra sales as it pushes the US group’s products — currently sold overwhelmingly in the US — through its international sales force. Philips thinks its image-guided therapy sales could reach €1bn by 2020, from about €400m now. Even so, it does not expect the acquisition to cover its cost of capital for five years.

Meanwhile, Philips’ own shares are re-rating as it sheds its industrial past. Its enterprise value is now 9.9 times ebitda; back in 2011, it was just five. Earlier this year, index provider Stoxx moved it to the healthcare sector, where valuations tend to be higher than among industrials. One day, it may be able to do deals like this with stock as well as cash.

Still, a flush balance sheet and more highly valued shares should not be a cue to throw caution to the wind.

NY Post : EU’s record $2.7B Google fine could be signal of more to come

The $2.7 billion slap that European regulators gave Google on Tuesday may eventually pack a wallop in the US.
To date, US regulators haven’t shown themselves to be as alarmed about privacy, taxes and monopolistic tactics as their counterparts overseas.
But with the EU’s eye-popping penalty in the headlines, well-placed insiders believe US authorities may now take a fresh look at the unprecedented dominance of Google’s search engine — in the form of a new regulatory probe.
“The fine is a very big deal,” said Seth Bloom, an antitrust lawyer who advised Yelp in its complaint that successfully pushed for the EU penalty. “It’s the first real sanction against Google.”
“Certainly the strong possibility exists the FTC will want to take another look” and reopen the Google antitrust case, Bloom told The Post.
In January 2013, the FTC closed an investigation into a slew of gripes about Google’s search engine — including the EU’s specific concern that it shows a preference for its own shopping-comparison site in product searches — without levying any financial penalties.
But after Tuesday’s news from the EU, a source who played a key role in the 2013 FTC investigation, siding with Google at the time, also believes there could be a new investigation coming from the FTC.
“The fact Europeans are fining Google keeps the issue alive in the US,” according to the well-placed source.
“We respectfully disagree with the conclusions announced today,” Kent Walker, Google’s general counsel, said in a statement. “We will review the commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case.”
The US Federal Trade Commission has long been slammed by critics for going soft on Google as it increasingly expands its reach into every facet of daily life, disrupting traditional industries.
That’s in sharp contract to the European Union, whose massive fine against Google was the latest in a series of mega-penalties it has levied against the likes of Apple, Facebook and Microsoft.
When the FTC investigated Google, President Obama had close relations with Google Chief Executive Eric Schmidt, an Obama campaign adviser. Now, President Trump, who is not cozy with Silicon Valley, is in charge.
The European Commission’s fine and the renewed possibility of a US investigation into Google make it more likely the Trump administration will choose a new FTC chief, sources said.
Interim FTC Chair Maureen Ohlhausen was a Republican FTC commissioner who voted to close the Google search investigation in 2013.
Meanwhile, tech Web giants including Amazon and Facebook cannot see the Google fine as welcome news.
“They should be scared and be formulating a different Euro strategy,” said another source close to Google who was involved in the tech giant’s 2013 case.

TechCrunch : Tinder’s new subscription, Tinder Gold, lets you see who already li

Tinder’s new subscription, Tinder Gold, lets you see who already likes you

Tinder this morning announced it will begin testing a new service called Tinder Gold in select markets, aimed at increasing the number of paying users for its popular dating app. With Tinder Gold, which will be an upgrade available to both existing Tinder Plus subscribers as well as free users, users will have a direct way to see all those who have already swiped right on their profile, through a new feature, “Likes You.”
The company will initially test the service in Argentina, Australia, Canada, and Mexico. It won’t be available in the U.S. at this time.
Tinder is also not detailing the pricing for the upgrade, as it will test a number of different price points, in order to see what users feel comfortable paying.
However, for existing Tinder Plus subscribers, it will only be a small additional fee beyond what they’re already paying. Free Tinder users can also choose to upgrade to Tinder Gold, which will include all the features currently available in Tinder Plus – like rewinding past swipes, browsing matches outside your city, more control over your profile, an ad-free experience, and more.
Like Tinder Plus, the new premium tier will also be offered at a discount for those who choose to subscribe for longer periods of time – that is, the price drops when you choose 6 or 12 months, instead of opting to pay monthly.
As for the “Likes You” feature itself, the goal is to offer an easier, quicker way to use Tinder without having to swipe through people’s profiles in the hopes of getting matches. After purchasing a subscription, you’ll be able to see your Likes on the same screen where you view matches today. These will appear in the first circle before matches’ individual profiles. The circle, which is outlined in gold, will also tell you how many Likes you have.
By tapping on this circle, you’re then taken to a new screen where all your Likes’ profile are laid out in a grid you scroll through vertically. From the grid itself, you can swipe left or right on people’s profiles, or you can tap to view the profile in more detail, then make your decision.

Those who have already liked you will have a gold heart icon by their name as well, which you’ll also see here, or when you’re swiping through Tinder in the traditional way.
Of course, both users will still have to swipe right on each other before a match is made – this is not opening up the ability for anyone to message you, as on some rival dating apps like OKCupid or Plenty of Fish, for example.

“Tinder Gold members are interested in taking advantage of all the features Tinder has to offer,” said Brian Norgard, Chief Product Officer at Tinder.
“They’re using the app to meet new people, and Likes You makes that easier and more efficient than ever by letting users know when someone is interested. Likes You builds on previous features like Boost to help users optimize their time – and go from matching in app to getting together in the real world,” he says.
The ability to see your likes is a feature that’s been in demand among Tinder’s user base for some time. In fact, a number of (very unofficial) third-party apps have hacked into Tinder’s API in order to offer a similar feature to their own users, though their functionality was always hit or miss, as Tinder battened down its hatches.
Beyond making Tinder more usable, Tinder Gold gives the company the ability to convert more of its users to paying subscribers. Though Tinder doesn’t share its user numbers, the company is estimated to have over 50 million users worldwide, and over 1 million have already converted to Tinder Plus. Though Plus certainly has an array of features today, many of them feel like “nice to have” additions rather than “must-haves.” Tinder Gold could change that.
Tinder Gold will roll out in the “coming days” to Argentina, Australia, Canada and Mexico, says the company, but is expected to reach all Tinder users soon after.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:
  • AVAV -5%, RYI -3.3%, CAMP -2.1%
Other news:
  • NSAT -100% (thinly traded; Norsat receives final court approval for plan of arrangement with Hytera Communications )
  • MRDN -34.7% (filed Form 424B5 relating to a potential offering of common stock and warrants to purchase shares of common stock)
  • GMRE -10.5% (commences public offering of 3.5 mln shares of its common stock; provides update to Lubbock acquisition; Surgery Partners to only guarantee ~52% of the rent payments)
  • RGEN -2.7% (prices offering of 2,807,017 shares of common stock at $42.75 per share)
  • GOOS -1.5% (prices secondary offering by existing shareholders of 12.5 mln at $20.75 per share)
  • BLUE -1.4% (prices/upsizes public offering of 3.81 mln shares of common stock at $105.00 per share)
Analyst comments:
  • QCOM -0.5% (downgraded to Market Perform from Outperform at Northland Capital)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:
  • SJR +1.8%, MON +1%, PKE +0.5%
M&A news:
  • AMCN +23.9% (enters into Amendment No. 3 to the Agreement and Plan of Merger, extends the Termination Date to July 31, 2017 'so as to give the Special Committee sufficient time to consider the Revised Proposal')
  • SPNC +26.3% (to be acquired by Philips (PHG) for $38.50 per share)
Other news:
  • NVIV +14.5% (announced that two patients in the INSPIRE study of the Neuro-Spinal Scaffold have improved from sensory incomplete AIS B spinal cord injury to motor incomplete AIS C SCI in their most recent INSPIRE assessments)
  • ALQA +14.3% (indicated higher after Celgene affirms increased active stake to 18.8% pursuant to June 23 securities purchase agreement)
  • NTNX +8.2% (signed partnership with Google )
  • CRNT +5.2% (Q2 orders update)
  • CBIO +4.3% ( granted orphan medicinal product designation by the European Commission for CB 2679d/ISU304)
  • SGBX +3.3% (signs an agreement with One Earth Recycling)
Analyst comments:
  • CY +3.9% (upgraded to Overweight from Equal Weight at Barclays)
  • HUM +2% (initiated with a Buy at Citigroup)
  • DLTR +1.8% (upgraded to Buy from Hold at Loop Capital)
  • NVDA +1.5% (target raised to $170 from $145 at Susquehanna)
  • EXPE +1.4% (upgraded to Buy from Neutral at Citigroup)
  • GM +0.8% (resumed with a Overweight at Morgan Stanley)