Monday, March 10, 2014
- Document Security Systems (DSS) is suing Samsung, TSMC, and NEC in the Eastern District of Texas for allegedly infringing patents related to chip manufacturing. (PR)
- DSS says it bought the patents in question in 2013 to support hardware/peripherals development, including for devices using its AuthentiGuard anti-counterfeiting tech.
- Vringo (VRNG) had 2013 revenue of $1.1M, and a net loss of $52.4M ($0.63/share). $41.7M of the net loss was from continuing ops, and the remainder from discontinued ops.
- Legal costs totaled $20M, G&A and other expenses $6.3M, equity compensation $12M, and patent amortization costs $3.4M.
- Vringo ended 2013 with $33.6M in cash/equivalents. Average 2013 operational cash burn was $2M/month, yielding full-year cash burn of $24M.
- The company expects its burn rate to decrease in 2014, and thinks its year-end funds "will be sufficient" to support its 2014/2015 operations, even if there's no "significant revenue event."
- Press release
- Activist investor Elliott Management discloses it owns 5.38M Boyd (BYD) shares, good for a 4.99% stake. The firm also says it has "economic exposure to approximately 2.05% of the shares of Common Stock outstanding pursuant to Derivative Agreements." (13D)
- Elliott has a long track record of mounting activist campaigns in which it calls for a company to make big changes and/or put itself on sale.
- La Jolla's (LJPC) Phase 2 trial of its GCS-100 chronic kidney disease drug "met its primary efficacy endpoint of a statistically significant improvement in kidney function." A 1.5 mg/m2 dose led to a statistically significant increase in estimated glomerular filtration rate relative to a a placebo. (PR)
- Secondary endpoints were also achieved, and 117 out of 121 enrolled patients completed treatment.
- La Jolla: "We hope to use these results as a platform for further investigation not only in chronic kidney disease but also in other diseases where tissue fibrosis plays a central role."
- CC tomorrow at 8:30AM ET. Ahead of the CC, management is presenting at a Roth conference at 5:30PM ET today (webcast).
- Wedbush launched coverage with an Outperform last month, arguing there was a "70% probability of a positive outcome" for the trial.
5:03 PM| Comment!
- As part of a broader coverage launch of networking hardware vendors, Bernstein has started Ruckus Wireless (RKUS) with an Underperform. Its PT is a mere $7 (over 50% below current levels).
- The launch comes with Ruckus shares close to their 2014 highs (but still well below early 2013 levels) following a February Q4 beat.
- American Eagle Energy (AMZG) -5.9% AH on news of the company's plans for a public offering of 10M common shares after giving effect to a one-for-four reverse stock split that will occur concurrently with pricing of the offering.
- AMZG says it plans to use the proceeds to fund the exercise of its purchase option to acquire a portion of its joint venture partner's interests in its existing acreage and wells in the Spyglass Area, to fund part of its 2014 capital budget, and for general corporate purposes.
4:28 PM| Comment!
- Chinese Internet and solar names, many of them among the standouts of the 2013/2014 tech rally, are heading into the close with steep losses after the Chinese government reported exports fell 18.1% Y/Y in February (much worse than expected).
- Internet decliners: WUBA -10.7%. YOKU -7.3%. ATHM -7.2%. QUNR -6.4%. NQ -6%. RENN -5.2%. CTRP -5.2%. YY -4.4%. WBAI -4.4%. KONG -5.5%.
- Solar decliners: JKS -6.3%. YGE -5.8%. TSL -6.7%. CSUN -4.9%. CSIQ -4.5%. DQ -4.2%. HSOL -4.5%.
- Solar ETFs: KWT, TAN
- Boeing (BA -1.1%) shares recover some of the day's sizable earlier losses as COO Dennis Muilenburg says he expects the company to meet 2014 guidance; he sees 20% of annual revenues to be booked in Q1, and strong revenue and cash performance in the years ahead.
- The COO remains "very confident" about Boeing's estimated $25B in deferred costs for its 787 Dreamliner, and that the deferred cost balance will begin to decline as the company hits a 12/month production rate for the jet, which Boeing has said it expects to reach in mid-2016.
- Says BA is in the "second or third inning" of its cost-cutting program, and the company's efforts to lower prices it pays suppliers is likely to generate double-digit reductions in supply chain costs.
- Shares of Cliffs Natural Resources (CLF -4.2%) can't withstand today's news of plunging spot iron ore prices prompted by weak Chinese export data; adding insult to injury, Axiom Capital initiates coverage of CLF with a Sell rating, saying the iron ore and coal miner is "living on a prayer."
- The firm thinks CLF likely will blow through its debt covenants in 2014, further cut its dividend, and likely need to do a very large dilutive equity deal - with "acute liquidity risk" if the company is not able to execute these options; $114 iron ore suggests bankruptcy is a growing reality.
- It didn’t have to be this way, the analysts lament; CLF once had a steady business selling iron to non-coastal companies, but it wanted to get in on the China play, so it purchased other mines - now it’s paying for it.
- Walter Energy (WLT -10.7%) plunges more than 10% after revealing it is negotiating an amendment to its credit agreement to refinance debt, according to an 8-K filing.
- WLT is seeking lender permission to repay its $407M loan and refinance the debt with looser restrictions, pushing to carry out the transaction without making repayments on the $978M term loan B as mandated by the current agreement.
- The amendment should be viewed as a short-term positive since it gives WLT some "much needed runway," UBS credit analysts say, but met coal fundamentals remain weak, possibly heading towards "the lowest quarterly benchmark settlement on record."
- Boeing (BA -2.2%) is the Dow's biggest decliner thanks mostly to the latest production setback for the 787 Dreamliner as hairline cracks were discovered in the wings of ~40 of the company's newest jets; the presumed crash of the Malaysian airliner made by Boeing and the emergency landing of a 787 in Hawaii during the weekend aren't helping.
- Shares have corrected ~13% since their Jan. 17 high, and some analysts think the move has gone too far; the 787 is "the best international plane ever built - it's got an impeccable track record after 20 years and over 1,200 deliveries," says one.
- Sterne Agee cuts its Q1 delivery assumption by 16 aircraft to 148 reflecting 10 fewer 787 deliveries and cuts its Q1 revenue assumption by $1.8B to $19.6B, but does not change its annual delivery assumption of 722 aircraft or its 2014 EPS estimate of $7.40; the firm says significant upside remains in BA in 2014 and would take advantage if shares are weak given the headlines.
- Raymond James is suspending coverage of NeoPhotonics (NPTN -3.5%), previously rated Outperform, until the optical component vendor updates its financials.
- RJ: "The company has not filed with the SEC on a timely basis and it has disengaged with the investment community. NeoPhotonics has not filed a 10-Q for its September quarter, will soon be late filing its 10-K for 2013, and we have no clear indication of when the new auditors will complete the financial review."
- NeoPhotonics announced last November it's restating its Q1 and Q2 2013 results. The company recently amended its credit facility to extend the deadline for the filing of its Q1-Q3 reports to April 7. Its 2013 10-K needs to arrive by May 1.
- Camtek (CAMT +4.3%) states customers have begun evaluating its next-gen chip inspection/metrology platform, which is aimed at advanced chip packaging applications (including the packaging of chips featuring 3D circuits).
- Sales are expected to start in 2H14. Camtek shares are recouping some of the losses they saw last week after the company filed a $50M shelf registration.
- Leon Cooperman tells CNBC he backs fellow eBay (EBAY -1%) shareholder Carl Icahn's call for a PayPal spinoff. Cooperman's Omega Advisors owned 855K eBay shares (less than a .1% stake) at the end of Q4.
- Meanwhile, Icahn (2%+ stake) has fired a fresh broadside at eBay CEO John Donahoe over his handling of the Skype sale (previous), declaring his "inexcusable incompetence" cost shareholders over $4B.
- The letter comes shortly after eBay (as expected) rejected Icahn's board nominees. Both Icahn and Donahoe claim to have strong shareholder support for their PayPal stances.
- ArcelorMittal (MT -2.2%) CEO Lakshmi Mittal says the political crisis in Ukraine has caused domestic steel demand to drop because people weren't investing, though costs have fallen because the local currency has weakened against the dollar.
- Steel sales to customers in Ukraine from MT's Kryvyi Riy steel plant will but cut in half as a result of the crisis, Mittal says, adding that the material is being diverted to different markets.
- The Kryvyi Riy plant, one of Ukraine's largest, produced 6.4M metric tons of crude steel in 2013.
- Barron's touted high-yield energy plays CVR Refining (CVRR +4.6%) and Northern Tier Energy (NTI +0.9%) over the weekend as looking attractive on a long-term perspective after both currently go for just 6x this year's projected earnings.
- Wall Street analysts estimate NTI will pay out 44% of its unit price in total over three years through 2016; for CVRR, estimated payments over three years work out to 37% of its recent price.
- Average analyst price targets suggest 13% upside for NTI over the next year and 19% for CVRR; add that to projected yields this year of 15% for each, and the result is potential for returns of more than 30%.