In after-hours action, two stocks are halted this afternoon, after weak outlooks.
Enterprise software provider Verint Systems (VRNT) is halted after missing fiscal Q4 expectations and forecasting this fiscal year below consensus; and chip equipment maker FormFactor (FORM) is also stuck after warning Q1 results for the March quarter will miss expectations substantially, while revenue for Q2 is expected to be above consensus.
The stocks are expected to resume trading at 4:35 pm, Eastern time.
Verist reported revenue of $281.8 million, and EPS of 90 cents, excluding some costs, below consensus for $319 million and $1.16 a share. For the current year, the company sees revenue and earnings to be “similar” to this year just ended, versus expectations on the Street for 5.3% revenue growth and 6.8% earnings-per-share growth.
The company said its board authorized a $150 million share repurchase program, to take place over two years.
CEO Dan Bodner noted underperformance in the company’s “security intelligence” business line, but added,
We believe the need for sophisticated security intelligence solutions remains strong and the emerging market headwinds are temporary. In the current year, we expect growth in Enterprise Intelligence and longer-term, as emerging markets improve, we expect Security Intelligence to return to growth as well.
FormFactor said its revenue for Q1 will be in a range of $53 million to $54 million, with a net loss per share, excluding some costs, of 10 cents to 12 cents. The Street has been modeling $68.3 million and 5 cents a share profit.
FormFactor attributed the cut in outlook to “two timing-related factors,” an increase in capacity that proceeded at a slower pace than expected, and “push-outs in DRAM probe card deliveries by certain customers from the first quarter to the early part of the second quarter.”
For Q2, however, the company sees revenue of $72 million to $80 million, which is above the average estimate for $73.1 million on the Street.
Update: Verist is now down $5.16, or almost 15%, at $30.03.
Shares of eBay (EBAY) are son 11 cents, or half a percent, at $24.01, after Barclays’s Paul Vogel today cut his rating on the stock to Underweight from Equal Weight, and trimmed his price target to $25 from $28, writing that there’s more “upside” in other names, and that he sees several disturbing parallels with problems at Viacom (VIAB).
Although “eBay is a pretty inexpensive stock and valuation does not look challenging,” observes Vogel, nevertheless, “we believe fundamentals continue to be weak, share repurchases may not be enough and within the confines of large cap Internet sector, we see more upside in most of the other stocks within our coverage universe.”
The “narrative” on the stock is supposed to be simple, writes Vogel: after splitting from PayPal (PYPL) last year, the company was supposed to see “steady growth, rising margins and capital returns to shareholders.”
But it’s not playing out that way, based on the most recent quarterly results, he writes:
Nomura U.S. Equity Research’s Sanjay Chaurasia today reiterates a Neutral rating on shares of Advanced Micro Devices (AMD), and a $3 price target, writing that the company could take share of “graphics processing units,” or GPUs, from Nvidia (NVDA) with the help of technology called “async.”
Chaurasia notes that AMD’s GPU chips have “consistently shown better performance than Nvidia’s Maxwell GPUs on several DX12 optimized games,” referring to the technology known as “DirectX 12,” a graphics technology introduced by Microsoft (MSFT) with Windows 10 that does things such as improve frame rates in video games. (More on the Microsoft DirectX developer blog.)
Morgan Stanley’s Joseph Moore this morning raised his rating on shares of video chip maker Ambarella (AMBA) to Overweight from Equal Weight, arguing that the business should “grow nicely from here” with sales into a variety of product categories, including wearable tech, drones, surveillance cameras, and automobiles.
Ambarella is a prominent supplier to adventure camera maker GoPro (GPRO), and the stock’s fortunes have been hurt this year by the shortfall in the latter’s camera sales: Ambarella stock is down 22 this year, and 38% in the last 12 months, though it is up $2.71, or 7%, at $43.42, today.
Moore, who has a $55 price target on the shares, writes that he’s been on the sidelines with the stock because “we thought that the multiple had climbed too high given customer concentration.”
He thinks now is the time to change tune because the GoPro business has “bottomed,” the other segments such as drones “should continue to drive robust growth,” and he likes the prospects for “computer vision” chips coming out later this year, for things such as “driver assistance,” or “ADAS” car systems.
Shares of chip maker ON Semiconductor (ON) are up 10 cents, or 1%, at $9.51, after B. Riley & Co.’s Craig Ellis this morning reiterated his Buy rating on the shares, and $13 price target, arguing for the compelling “accretion” that will come should the company consummate its $20 tender offer to buy Fairchild Semiconductor (FCS).
The current tender offer, extended on March 18th, is due to expire on March 31st.
Ellis describes a big jump in profit based on what he asserts are “conservative” assumptions:
The model is predicated on a mid-C16 close and a muted macroeconomic backdrop but suggests EPS could essentially double from C16’s $1.12 to C20’s $2.17. Assumptions include 2.7% blended post-C17 yy sales growth, gross margin expansion to 37.0%, at target cost synergies capture, and debt pay-down at 60% of NI to retire deal debt which we now believe will bear a 5.5% interest rate (up ~125 bps from prior). Our basis has both up and downside risks but in our view is not a stretch. ON has recently outperformed the SOX and market but we see 38% upside to our ON-only C16-based $13.0 PT and 59% upside to $15.0 if shares discount C17 Newco EPS at a 12.5x P/E.
Shares of wireless chip vendor Skyworks Solutions (SWKS), a prominent supplier to Apple (AAPL) and Samsung Electronics (005930KS) in mobile devices, are down $1.55, or 2%, at $75.37, after Citigroup’s Atif Malik cut his rating on the shares to Neutral from Buy this morning, while maintaining a $78 price target, writing that the 41% bounce in the stock upward from its February low price means it’s already priced in a recovery in its market this year.
“We remain believers in SWKS execution and $ content share gains in China/Apple led by low-mid band and diversity receive modules,” writes Malik, but he would like to see the company
Shares of solar energy system installation firm SunEdison (SUNE) are down 52 cents, or 41%, at 75 cents, on the combined effect of a Securities & Exchange Commission investigation and one its YieldCos. warning SunEdison could go bankrupt.
On the first matter, The Wall Street Journal’s Liz Hoffman and Aurn Viswanatha late yesterday wrote that the SEC is “investigating SunEdison Inc.’s disclosures to investors about how much cash the solar-power company had on hand as its stock price collapsed last year,” citing multiple unnamed sources.
At issue is how much the company actually had on hand in the fall when it told investors it had more than a billion dollars in cash, the authors write.
Shares of Micron Technology (MU) are down 20 cents, or 2%, at $10.18, in early trading, after the stock got a downgrade from Hold to Underperform from Needham & Co.’s Rajvindra Gill, and a bunch of other mixed coverage in advance of the company’ s fiscal Q2 report tomorrow, after market close.
The bulls, while admitting a weak personal computer market continues to hamper chip prices, think much of that is priced into the stock at this point.
Gill writes that the Street numbers are too high for Q2, given weakness in personal computers continues to pressure average selling price, and there is a potential problem with NAND pricing as well.
“We continue to see a weak PC market adversely affecting DRAM pricing, and checks pointing to vulnerabilities in mobile DRAM,” writes Gill. “We believe a similar dynamic could be developing in NAND.”
Shares of Yahoo! (YHOO) are up 7 cents at $35.30, in early trading, following an article early this morning by The Wall Street Journal’s Douglas MacMillan claiming the company has set a deadline to bidders for its “core” advertising business of April 11th, citing multiple unnamed sources.
MacMillan writes that the company sent letters asking potentials buyers to specify assets and prices, including not just for the core, but also for Yahoo!’s minority assets, Alibaba Group Holding (BABA) and Yahoo! Japan (4689JP). The letter asks for details on financing and tax assumptions, writes MacMillan.
The article also said Yahoo!’s bankers have been contacting potential bidders such as Verizon Communications (VZ), although “the process is in the early stages.”
Shares of Apple (AAPL) are down 24 cents at $104.95, after the U.S attorneys last night said in a filing with the District Court of the Central District of California that they had gained access to the data on a phone used by the San Bernardino, California shooters in December, and that they no longer required Apple to unlock the phone for them.
The filing confirmed a report earlier in the evening by USA Today.
In a filing with the court by attorney Eileen M. Decker, assistant U.S. attorney Patricia A. Donahue, and Tracy L. Wilkison, Chief, National Security Division, the three said the “government hereby requests that the Order Compelling Apple Inc. to Assist Agents in Search dated February 16, 2016 be vacated.”
Decker also issued a statement on the matter, posted on the DOJ Web site.
The Federal Bureau of Investigation had last month obtained a court order for Apple to assist in unlocking the iPhone. Apple had refused. Apple and the Department of Justice were set to go to court last week when the the Department requested the hearing be put on hold to try ou the method of unlocking the phone using help from a third party.
In an article by Devlin Barrett and Daisuke Wakabayashi of The Wall Street Journal, a spokeswoman for the Justice Department is quoted saying that “it remains a priority for the government to ensure that law enforcement can obtain crucial digital information to protect national security and public safety, either through the cooperation from relevant parties, or through the court system when cooperation fails.”
Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: [email protected].