24/7 Wall St. » RAX

After Taleo, Looking at Other Cloud M&A ‘Hopefuls’ (SKYY, TLEO, ORCL, EQIX, AKAM, RAX, TDC, NTAP, CRM)

Administrator — Thu, 09 Feb 2012 16:03:57 +0000

It is a bit surprising that First Trust ISE Cloud Computing (NASDAQ: SKYY) is not trading higher than it is after a ‘cloud acquisition’ even if it is a thinly traded ETF compared to other technology funds. After the Taleo Corporation (NASDAQ: TLEO) acquisition by Oracle Corporation (NASDAQ: ORCL) and with the market still holding gains, it would seem likely that investors and speculators would say “more cloud mergers and buyouts are coming this way.”

What is interesting is that Taleo was not even part of this cloud ETF, and many of the ETFs components are not exactly all cloud space players. Is it fair to lump in all cloud players as targets when one is software and one is hardware? Be advised, there are some stocks which have had buyout rumors in the past listed below but there are no current rumors we have heard.

Here is the weighting of the cloud ETF’s more cloud-centric companies, with the most recent weightings and some commentary on some of the names:

Equinix, Inc. (NASDAQ: EQIX) 3.80%…probably too expensive to acquire now on valuation metrics and with a $6.1 billion market cap.

Akamai Technologies, Inc. (NASDAQ:: AKAM) 3.72%… surged after earnings, now unlikely to be bought on the cheap by would be acquirers.

Rackspace Hosting, Inc. (NYSE: RAX) 3.39%… has been called a buyout candidate before but the company’s line is that it wants to remain independent.

Teradata Corporation (NYSE: TDC) 3.35%… still considered a special situation by some investors but no buyout rumors have proven true, and shares are up big after earnings.

NetApp, Inc. (NASDAQ: NTAP) 3.22%… “The one that got away.” This used to be a buyout dream stock, but valuation got in the way. Now at over $14 billion the time may have come and gone.

Salesforce.com, Inc. (NYSE: CRM) 3.08%… way too expensive to acquire on a valuation basis. Cloud is everywhere here in effect as a great benefit, but this one is diversified into CRM and SaaS.

Where this gets interesting is that Taleo is a human resources software maker and perhaps not just cloud software as some of the media headlines would have suggested. The 18% premium also suggests that paying up for the cloud players is only a limited value.

Just because one buyer buys a loose cloud play in software does not translate to buyouts in hardware.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Mergers and Buy Outs, Rumors, Software Tagged: AKAM, CRM, EQIX, NTAP, ORCL, RAX, SKYY, TDC, TLEO

Top Analyst Upgrades & Downgrades (AMGN, AON, EQT, EXEL, IPI, ERIC, MDVN, NKE, NIHD, NYX, POT, RAX, RRC, SYMC, TSLA, UA, UNH)

Administrator — Tue, 31 Jan 2012 13:27:50 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street brokerage and research firms this Tuesday morning.

Amgen Inc. (NASDAQ: AMGN) Reiterated Buy and Raised target to $80 at Argus.
AON Corporation (NYSE: AON) Raised to Neutral from Underperform at Credit Suisse.
EQT Corporation (NYSE: EQT) Raised to Hold from Sell with $50 target at Canaccord Genuity.
Exelixis, Inc. (NASDAQ: EXEL) Started as Outperform at Credit Suisse.
Intrepid Potash (NYSE: IPI) Cut to Sell at Goldman Sachs.
LM Ericsson Telephone Co. (NASDAQ: ERIC) Maintained Buy but target now at $14 from $19 at Argus.
Medivation, Inc. (NASDAQ: MDVN) Started as Outperform at Credit Suisse.
Nike Inc. (NYSE: NKE) Raised to Buy at Argus.
NII Holdings, Inc. (NASDAQ: NIHD) named as Bear of the Day at Zacks.
NYSE Euronext (NYSE: NYX) Cut to Sector Perform at RBC Capital.
Potash Corp. of Saskatchewan (NYSE: POT) Cut to Neutral at Goldman Sachs.
Rackspace Hosting Inc. (NYSE: RAX) named Momentum stock of the day at Zacks.
Range Resources Corporation (NYSE: RRC) Raised to Hold from Sell with $59 target at Canaccord Genuity.
Symantec Corporation (NASDAQ: SYMC) Reiterated Buy and $24.00 price target at Argus.
Tesla Motors, Inc. (NASDAQ: TSLA) Started as Buy at Jefferies.
Under Armour, Inc. (NYSE: UA) Raised to Buy at Needham.
UnitedHealth Group (NYSE: UNH) named as Bull of the Day at Zacks.

If you enjoyed the top analyst calls, you can sign up in the box below to join our morning email list to receive news directly in your inbox each morning. We include major analyst upgrades and downgrades, IPO and M&A news, special situation developments, observations on Warren Buffett and key market gurus, as well as special exclusive feature stories.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Analyst Calls Tagged: AMGN, AON, EQT, ERIC, EXEL, IPI, MDVN, NIHD, NKE, NYX, POT, RAX, RRC, SYMC, TSLA, UA, UNH

Top Analyst Upgrades & Downgrades (AIXG, ALU, AZN, CXW, EMR, GSK, HON, HUM, KEX, MCHP, OVTI, PAA, RAX, STJ, TEVA, TRMB, VRTX, WFM)

Administrator — Tue, 08 Nov 2011 13:10:26 +0000

These are some of Tuesday’s top analyst upgrades, downgrades, and initiations seen from Wall Street research calls.

Aixtron SE (NASDAQ: AIXG) Raised to Equalweight at Morgan Stanley.
Alcatel-Lucent SA (NYSE: ALU) Cut to Neutral at BofA/ML.
AstraZeneca PLC (NYSE: AZN) Cut to Underweight at Morgan Stanley.
Corrections Corporation of America (NYSE:CXW) named as Value stock of the day at Zacks.
Emerson Electric Co. (NYSE: EMR) Raised to Buy at Citigroup.
GlaxoSmithKline plc (NYSE: GSK) Raised to Equal-Weight at Morgan Stanley.
Honeywell International (NYSE: HON) Raised to Buy at Citigroup.
Humana Inc. (NYSE: HUM) Reiterated Buy and raised target to $95 at Argus.
Kirby Corporation (NYSE: KEX) Started as Outperform at Credit Suisse.
Microchip Technology (NASDAQ: MCHP) named as Bear of the Day at Zacks.
OmniVision Technologies Inc. (NASDAQ: OVTI) Cut to Perform at Oppenheimer.
Plains All American Pipeline, L.P. (NYSE: PAA) Raised to Outperform at Wells Fargo.
Rackspace Hosting, Inc. (NYSE: RAX) Raised to Buy at Kaufman Bros.
St. Jude Medical (NYSE: STJ) Raised to Outperform at Credit Suisse.
Teva Pharmaceutical Industries (NASDAQ: TEVA) Reinstated as Outperform at Credit Suisse.
Trimble Navigation Limited (NASDAQ: TRMB) Started as Buy at Janney.
Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) Cut to Neutral at R. W. Baird.
Whole Foods Market Inc. (NYSE: WFM) named Bull of the Day at Zacks.

JON C. OGG

Filed under: Analyst Calls Tagged: AIXG, ALU, AZN, CXW, EMR, GSK, HON, HUM, KEX, MCHP, OVTI, PAA, RAX, STJ, TEVA, TRMB, VRTX, WFM

24/7 Wall St. Top Analyst Calls of the Week (BK, BEAM, CTIC, CSCO, DMD, FSLR, GE, GS, RAX, S, VPRT, AAPL)

Administrator — Sat, 15 Oct 2011 12:54:35 +0000

Each morning 24/7 Wall St. compiles a summary of the analyst upgrades, downgrades and initiations seen from Wall St. research firms that are having an impact on stocks. At the end of the week we review these calls to see which ones stand out the most. Some are great calls that were greatly insightful, some are long-term and far-reaching in nature that may be relevant well into the future, and some manage to be just awful. After filtering these calls out, these become the top analyst calls of the week.

This weeks top analyst calls were in the following stocks: Bank of New York Mellon (NYSE: BK); Beam (NYSE: BEAM); Cell Therapeutics (NASDAQ: CTIC); Cisco Systems (NASDAQ: CSCO); Demand Media (NYSE: DMD); First Solar (NASDAQ: FSLR); General Electric (NYSE: GE); Goldman Sachs Group (NYSE: GS); Rackspace Hosting (NYSE: RAX); Sprint Nextel (NYSE: S); and Vistaprint (NASDAQ: VPRT). We also have a rivaling look at Apple (NASDAQ: AAPL) as we look for upside elsewhere.

We have added in summaries, links to more details of these calls, and added in color where applicable.

Bank of New York Mellon (NYSE: BK) has already been punished hard with banks and fiduciary banks. This last Thursday came a call from Zacks, calling it the Bear of the Day due to overhanging issues ahead. Keep in mind that this one has earnings this coming week.

Beam (NYSE: BEAM) is now on its own and we saw in the first week of October that the alcohol producer had been given an Overweight by Barclays and been put on the Conviction Buy List at Goldman Sachs. Now this last week came a more cautious report from Argus, who only gave a Hold rating. We will be tracking this one as Argus often looks at metrics that many other analyst reports do not take into consideration.

Cell Therapeutics (NASDAQ: CTIC) was given a highly unusual call from Zacks as the Bull of the Day on Friday with full details at BiohealthInvestor.com. This was actually a raise to Outperform based on a likely approval of pixantrone. Analysts often shy away from covering low-priced small cap stocks of this nature.

Cisco Systems (NASDAQ: CSCO) is well off of its lows and the company is in the middle of its restructuring. A firm called ISI Group started Cisco with a Buy rating and a $20.00 price target this last Friday.

Demand Media (NYSE: DMD) managed to come back strong on Friday, but on this last Wednesday (and the afternoon before) its shares were being hit hard. The controversial online content site was downgraded to Neutral at Goldman Sachs. The new price target was taken down to $8.20 as this one trades at about 33-times consensus earnings estimates for 2011.

Filed under: Analyst Calls, Research, The Week Tagged: AAPL, BEAM, BK, CSCO, CTIC, DMD, FSLR, GE, GS, JPM, RAX, S, VPRT

Top Analyst Upgrades & Downgrades (ALTR, BK, BRCM, CTIC, CLWR, COP, DG, GFI, HTS, KR, NTES, NVAX, RAX)

Administrator — Thu, 13 Oct 2011 12:26:23 +0000

These are some of this Thursday’s top analyst upgrades, downgrades, and initiations seen having an impact from Wall Street research calls.

Altera Corporation (NASDAQ: ALTR) Cut to Neutral at Baird.
Bank of New York-Mellon (NYSE: BK) named as Bear of the Day at Zacks.
Broadcom Corporation (NASDAQ: BRCM) Raised to Outperform at Baird.
Cell Therapeutics, Inc. (NASDAQ: CTIC) named as Bull of the Day at Zacks.
Clearwire Corporation (NASDAQ: CLWR) was Underperform and has been dropped from coverage by BofA/ML as fundamentals are not driving the shares.
ConocoPhillips (NYSE: COP) Reiterated Buy with $85 target on Focus List at Argus.
Dollar General Corporation (NYSE: DG) reiterated strong buy as Momentum stock of the day at Zacks.
Gold Fields Limited (NYSE: GFI) named as Value stock of the day at Zacks.
Hatteras Financial Corporation (NYSE: HTS) Cut to Neutral at Macquarie.
The Kroger Co. (NYSE: KR) Cut to Hold at Jefferies.
NetEase.com, Inc. (NASDAQ: NTES) Raised to Overweight at Piper Jaffray.
Novavax, Inc. (NASDAQ: NVAX) Started as Buy at Ladenburg Thalmann.
Rackspace Hosting, Inc (NYSE: RAX) Raised to Buy at Goldman Sachs, but reportedly Downgraded to Hold at a firm called Benchmark.

JON C. OGG

Filed under: Analyst Calls Tagged: ALTR, BK, BRCM, CLWR, COP, CTIC, DG, GFI, HTS, KR, NTES, NVAX, RAX

Are You Ready… The Cloud ETF Arrives (SKYY, NFLX, RNOW, OTEX, RAX, TIBX, INFA, APKT, TDC, ARUN, EQIX)

Administrator — Wed, 06 Jul 2011 14:14:33 +0000

The new saying in investing is “There’s an ETF for that!” Now you can count THE CLOUD in there. First Trust has just launched its Cloud-ETF, called the First Trust ISE Cloud Computing Index Fund (NASDAQ: SKYY). The expense ratio is probably not going to be considered outrageous but is higher than many ETF products with its 0.60% expense ratio.

The top components are as follows: NetFlix Inc. (NASDAQ: NFLX) 4.46%; RightNow Technologies Inc. (NASDAQ: RNOW) 4.15%; Open Text Corp. (NASDAQ: OTEX) 4.13%; Rackspace Hosting Inc. (NYSE: RAX) 4.11%; TIBCO Software Inc. (NASDAQ: TIBX) 3.91%; Informatica Corp. (NASDAQ: INFA) 3.89%; Acme Packet Inc. (NASDAQ: APKT) 3.87%; Teradata Corp. (NYSE: TDC) 3.80%; Aruba Networks Inc. (NASDAQ: ARUN) 3.78%; and Equinix Inc. (NASDAQ: EQIX) 3.70%. The classification stresses software at 32.53%, Internet software & services as 22.61%, communications equipment at 16.75%, and computer & peripherals at 11.15%.

The index tracks the ISE Cloud Computing™ Index and is said to be modified in equal-dollar weightings and is meant to track the cumulative performance of companies “actively involved in the cloud computing industry.” Minimum participation requires being engaged in a business activity supporting or utilizing the cloud computing space, as well as a share listing on an index-eligible global stock exchange, and finally a minimum market capitalization rate of $100 million.

The three segments in the index are the following:

pure-play cloud computing companies: direct service providers for the cloud or companies that deliver goods and services that utilize cloud computing technology;
non-pure-play cloud computing companies: companies that focus outside the cloud computing space, but those which provide goods and services in support of the cloud computing space;
Technology Conglomerate Cloud Computing Companies: These are large broad-based companies that indirectly utilize or support the use of cloud computing technology.

The overall weight by segment is 10% allocated to technology conglomerate companies. The rest is stated as, “The index weight that is allocated to non pure play companies is calculated by dividing the non pure play companies’ market capitalization by the sum of the pure play, non pure play and technology conglomerate market capitalizations. The remainder of the index weight is allocated to pure play companies.” Stocks are equally weighted within each of the three classifications and the index is reconstituted semi-annually and rebalanced quarterly.

After looking at the fact sheet, here are more details. The minimum constituent market cap is $863 million, the median market cap is $9.65 billion, and the highest market cap is $321 billion. The average P/E ratio is 33.37, the average price/book ratio is 5.10, the average price-to-cash flow ratio is 17.75, and the average Price/sales ratio is 4.20.

It is up to you as to decide whether or not you are a believer in an ETF with modified weightings such as this. When we hear “There is an ETF for that!” the question that always comes to mind is “Should there be?”

JON C. OGG

Filed under: Business Services, Consumer Electronics, Corporate Governance, Editor's Picks, ETF, Infrastructure, Internet, IPOs, Media, Mutual Funds, PC Companies, Software, Technology Companies Tagged: APKT, ARUN, EQIX, INFA, NFLX, OTEX, RAX, RNOW, SKYY, TDC, TIBX

Top Earnings Previews For The Week Ahead (ATVI, HL, LDK, RAX, SLW, TSN, CSIQ, DF, HELE, JASO, MCP, STEC, DIS, WEN, MT, CSCO, M, SYMC, TEVA, TM, JWN, NVDA, SPWRA, URBN)

Administrator — Fri, 06 May 2011 19:35:59 +0000

Earnings season is slowing down as we have over 80% of the S&P 500 companies having reported earnings for the first quarter of 2011. We do still have key companies reporting earnings and we wanted to highlight these with detailed previews. You will notice at the end that many solar companies are reporting earnings as well.

Our key earnings previews are in the following: Activision Blizzard Inc. (NASDAQ: ATVI); Hecla Mining Co. (NYSE: HL); LDK Solar Co., Ltd. (NYSE: LDK); Rackspace Hosting Inc. (NYSE: RAX); Silver Wheaton Corporation (NYSE: SLW); Tyson Food, Inc. (NYSE: TSN); Canadian Solar Inc. (NASDAQ: CSIQ); Dean Foods Co. (NYSE: DF); Helen of Troy Corporation (NASDAQ: HELE); JA Solar Holdings Co. Ltd. (NASDAQ: JASO); Molycorp Inc. (NYSE: MCP); STEC Inc. (NASDAQ: STEC); The Walt Disney Co. (NYSE: DIS); Wendy’s/Arby’s Group Inc. (NYSE: WEN); ArcelorMittal SA (NYSE: MT); Cisco Systems, Inc. (NASDAQ: CSCO); Macy’s Inc. (NYSE: M); Symantec Corporation (NASDAQ: SYMC); Teva Pharmaceutical Industries Ltd. (NASDAQ: TEVA); Toyota Motor Corporation (NYSE: TM); Nordstrom Inc. (NYSE: JWN); NVIDIA Corporation (NASDAQ: NVDA); SunPower Corporation (NASDAQ: SPWRA); and Urban Outfitters Inc. (NASDAQ: URBN).

We have provided more detailed previews on the major stocks and the sector-moving stocks and just added in color on the rest. Included on all are price action and Thomson Reuters estimates.

Activision Blizzard Inc. (NASDAQ: ATVI) follows EA and expectations will be high now that EA performed well this last week. It reports on Monday after the Close of trading. Thomson Reuters has estimates of -$0.36 EPS and $515.06 million in revenues; next quarter estimates are $0.15 EPS and $925.93 million in revenues. With shares at $21.78 late Friday the 52-week range is $14.06 to $22.17 and that $22.17 high was hit on Friday.

Hecla Mining Co. (NYSE: HL) will be key to watch after its big drop this last week. It is due to report Monday morning. Thomson Reuters has estimates of $0.13 EPS and $118.57 million in revenues; next quarter estimates are $0.14 EPS and $124.43 million in revenues.

LDK Solar Co., Ltd. (NYSE: LDK) reports Thomson Reuters has estimates of $0.85 EPS and $783.87 million in revenues; next quarter estimates are $0.70 EPS and $801.64 million in revenues. Shares were at $10.34 late Friday against a 52-week range of $4.97 to $15.10.

Rackspace Hosting Inc. (NYSE: RAX) reports Monday and Thomson Reuters has estimates of $0.12 EPS and $226.26 million in revenues; next quarter estimates are $0.13 EPS and $238.62 million in revenues. This will be one more high-flying cloud play on deck and with shares close to $43 late Friday its 52-week range is $15.15 to $46.49. With a super-high earnings multiple and a very strong performance, we think it has to beat estimates and raise guidance. If not, look out below. Also the company has said it wants to remain independent.

Silver Wheaton Corporation (NYSE: SLW) reports Monday and it has been very volatile with silver this last week. Thomson Reuters has estimates of $0.42 EPS and $199.23 million in revenues; next quarter estimates are $0.51 EPS and $233.93 million in revenues. Shares were close to $36.00 late on Friday and the 52-week range is $17.00 to $47.60.

Tyson Foods, Inc. (NYSE: TSN) reports Monday and Thomson Reuters has estimates of $0.43 EPS and $7.52 billion in revenues; next quarter estimates are $0.47 EPS and $8.05 billion in revenues. With flooding this last week and a tornado swarm the prior week, investors will want to know more on its outlook. SHares were around $19.00 late Friday and the 52-week range is $14.59 to $20.12.

Canadian Solar Inc. (NASDAQ: CSIQ) reports Tuesday. Thomson Reuters has estimates of $0.41 EPS and $423.49 million in revenues; next quarter estimates are $0.39 EPS and $437.31 million in revenues. Shares were at $9.75 late Friday against a 52-week range of $8.99 to $17.63.

Filed under: Calendar, Earnings, The Week Tagged: ATVI, CSCO, CSIQ, DF, DIS, HELE, HL, JASO, JWN, LDK, M, MCP, MT, NVDA, RAX, SLW, SPWRA, STEC, SYMC, TEVA, TM, TSN, URBN, WEN

Major Earnings Due Early Next Week (CHK, CIM, DNDN, HIG, JKS, RAX, USU, ADM, CMCSA, FSLR, LVS, MA, OPEN, PFE, SIRI, YOKU)

Administrator — Fri, 29 Apr 2011 16:40:06 +0000

Next week will mark the third week of the full daily earnings onslaught in what is really the fourth week of earnings season. There are many market-moving companies and sector-moving companies reporting earnings, but there are also some high-flying stocks to consider that could see significant earnings reactions.

We have compiled previews and added in appropriate color for investors and traders alike in the following: Chesapeake Energy Corporation (NYSE: CHK); Chimera Investment Corporation (NYSE: CIM); Dendreon Corporation (NASDAQ: DNDN); Hartford Financial Services Group Inc. (NYSE: HIG); Jinkosolar Holding Co., Ltd. (NYSE: JKS); Rackspace Hosting Inc. (NYSE: RAX); USEC Inc. (NYSE: USU); Archer Daniels Midland Company (NYSE: ADM); Comcast Corporation (NASDAQ: CMCSA); First Solar Inc. (NASDAQ: FSLR); Las Vegas Sands Corporation (NYSE: LVS); Mastercard Inc. (NYSE: MA); OpenTable Inc. (NASDAQ: OPEN); Pfizer Inc. (NYSE: PFE); Sirius XM Radio Inc. (NASDAQ: SIRI); and Youku.com Inc. (NASDAQ: YOKU).

This is actually just the first list and only the reports due early in the week on Monday and Tuesday. The full detailed previews are below…

Chesapeake Energy Corporation (NYSE: CHK) is due to report earnings on Monday and will set the tone for how natural gas properties get treated. Thomson Reuters has estimates of $0.70 EPS and $2.68 billion in revenues; next quarter estimates are $0.71 EPS and $2.66 billion in revenues. Shares are trading around $33.20 and the 52-week trading range is $19.62 to $35.95.

Chimera Investment Corporation (NYSE: CIM) is not a market mover nor a sector mover, but this real estate investment trust is a vulture bond investing fund and it has one of the highest dividends in Wall Street at about 14%. Thomson Reuters has estimates of $0.15 EPS and $174.51 million in revenues; next quarter estimates are $0.16 EPS and $180.51 million in revenues. Shares are trading around $4.03 and its 52-week range $3.50 to $4.36.

Dendreon Corporation (NASDAQ: DNDN) is due Monday and this is still a story around guidance for late-2011 and into 2012 than it is an earnings story. Provenge sales are just getting going and Thomson Reuters has estimates of -$0.70 EPS and $28.86 million in revenues; next quarter estimates are -$0.69 EPS and $58.3 million in revenues. The 2011 estimates are -$2.24 EPS and $369.7 million in revenues, but the 2012 estimates are $0.30 EPS and about $860.5 million in revenues. Shares are trading around $42.50 and the 52-week trading range is $25.78 to $57.67.

Hartford Financial Services Group Inc. (NYSE: HIG) is due Monday for its insurance and financial services earnings. Thomson Reuters has estimates of $0.95 EPS and $2.47 billion in revenues; next quarter estimates are $0.95 EPS and $2.45 billion in revenues. Shares are trading around $28.50 and the 52-week range is $18.81 to $31.08, and keep in mind that this is trading at just under 8-times expected earnings for 2011.

Jinkosolar Holding Co., Ltd. (NYSE: JKS) is also due Monday and we have not seen much from solar earnings yet. This one is also up from the Total-SunPower majority stake deal and it was one we gave a Vale Stock Alert in earlier this month when shares were around $26.50 or so. Thomson Reuters has estimates of $1.50 EPS and $289.78 million in revenues; next quarter estimates are $1.81 EPS and $346.29 million in revenues. Shares are trading around $26.85 and the 52-week range is $8.23 to $41.75.

Rackspace Hosting Inc. (NYSE: RAX) is due Monday and we’ll get one more cloud related earnings story and it held up fine during the Akamai blowup this week. Thomson Reuters has estimates of $0.12 EPS and $226.41 million in revenues; next quarter estimates are $0.13 EPS and $238.8 million in revenues. Shares are trading around $46.23 and the 52-week range is $15.15 to $46.28.

USEC Inc. (NYSE: USU) is another one that is not a market mover. It is, however a nuclear mover and this uranium enrichment outfit may offer more insight into what the REAl impact on nuclear power will be for the next two years or so after the Japan incident. Thomson Reuters has estimates of -$0.12 EPS and $403.4 million in revenues; next quarter estimates are -$0.07 EPS and $399.5 million in revenues. Shares are trading around $4.45 and the 52-week range is $3.90 to $6.35.

Filed under: Calendar, Earnings, The Week Tagged: ADM, CHK, CIM, CMCSA, DNDN, FSLR, HIG, JKS, LVS, MA, OPEN, PFE, RAX, SIRI, USU, YOKU

CenturyLink Buys into the Cloud (CTL, SVVS, VZ, T, RAX)

Administrator — Wed, 27 Apr 2011 15:30:10 +0000

Just last month CenturyLink, Inc. (NYSE: CTL) complete its $12.2 billion acquisition of Qwest. At the time the deal was announced, it seemed to make little sense because neither Qwest nor CenturyLink had any significant presence in wireless cellular service, and that their landline businesses were losing customers.

This morning, CenturyLink has said that it will acquire Internet infrastructure provider Savvis Inc. (NASDAQ: SVVS) for around $2.5 billion in cash and stock. The deal follows the acquisition of Terremark Worldwide, Inc. by Verizon Communications, Inc. (NYSE: VZ) in January for about $1.4 billion. This deal makes somewhat more sense because it gives CenturyLink a foothold in the cloud computing business.

CenturyLink primarily offers communications services to mostly underserved rural parts of the US. These areas are largely overlooked by the big companies like Verizon and AT&T (NYSE: T) because there’s a lot of empty space between customers, space that needs to have expensive cable laid that doesn’t offer much return.

The same situation obtains for CenturyLink, but the company must be thinking that there is some profit to be mined there from the more than $7 billion that the Obama administration included in the stimulus bill to expand broadband access to rural America. While all of the funds have been allocated, so far only about $400 million of that amount has actually been spent. There’s still opportunity there and that must be what CenturyLink is looking for with its bid for Savvis.

Savvis shares posted a new 52-week high when Verizon bought Terremark, as did another player in its sector, Rackspace Hosting, Inc. (NYSE: RAX). Rackspace came within pennies of another 52-week high today, hitting $45.25 in its 52-week range of $15.15-$45.41. Savvis is up nearly 9%, to $39.21 on the $40/share offer from CenturyLink. CenturyLink itself is off about -0.72%, at $40.03, within a 52-week range of $14.16-$46.87.

Paul Ausick

Filed under: Infrastructure, Internet, Mergers and Buy Outs, Telecom Tagged: CTL, RAX, SVVS, T, VZ

Verizon & Terremark: The Value of the Cloud Rises (VZ, TMRK, VMW, AMZN, MSFT, RAX, SVVS)

Administrator — Fri, 28 Jan 2011 15:21:00 +0000

Verizon Communications, Inc. (NYSE: VZ) has agreed to acquire Terremark Worldwide, Inc. (NASDAQ: TMRK) in an all-cash deal worth about $1.4 billion. Verizon will pay $19/share for Terremark, which is no doubt good news for VMWare, Inc. (NYSE: VMW), which purchased 4 million shares of Terremark stock in 2009 for $5/share.

The deal will help Verizon expand its cloud-computing strategy, which the company calls ‘everything-as-a-service.’ That may be what the companies are saying now, but that is unlikely to be Verizon’s long-term strategy to replace its declining landline business. Terremark is on course to post a bigger net loss in its 2011 fiscal year than it did in 2009 and 2010. And Verizon is supposed to be counting on Terremark to make up for the phone giant’s own losses?

Terremark provides what is known as infrastructure-as-a-service (IaaS), that includes servers, data storage, and network bandwidth. These services are central to private cloud computing solutions, and Terremark, with a market cap of less than $1 billion, competes with the likes of Amazon.com (NASDAQ: AMZN) and Microsoft Corp. (NASDAQ: MSFT).

Verizon plans to keep Terremark’s management team intact, which is a surprise by itself. The company posted a net loss in 2010 of -$32 million. The year before that, the company lost -$11 million. So far in its 2011 fiscal year, which began in April 2010, the company has lost -$18 million. Why keep the management team that led to such sorry performance?

Just about the only good reason that comes to mind is that Terramark’s real estate is both valuable in its own right and an asset that Verizon can wring some profit out of once it dumps Terremark’s money-losing management.

Terremark owns 13 data centers around the world with a total of more than half-a-million square feet of space. Verizon gains data centers that can be used to provide cloud services, or to offer as co-location facilities to pump more data through the network. Data like streaming video.

Now that’s mere speculation at this point, but it’s hard to see why Verizon would buy Terremark just to keep things the way they are. Something else is happening here.

Terremark shares have jumped about 35%, to around $19 share, a new 52-week high. Terremark’s smaller competitors, like Rackspace Hosting, Inc. (NYSE: RAX) and Savvis, Inc. (NASDAQ: SVVS) have also set new 52-week highs this morning.

Paul Ausick

Filed under: Infrastructure, Internet, Mergers and Buy Outs, Telecom Tagged: AMZN, MSFT, RAX, SVVS, TMRK, VMW, VZ