Weekly Tech Biz Recap: Facebook’s Tepid IPO, Yahoo CEO Drama Shift
Yahoo’s (NASDAQ:YHOO) first post-Scott Thompson trading day has its shares moving up a bit, but not only because Thompson was removed from his contentious tenure as CEO. The company is now claiming ‘cause’ for his dismissal, says All Things D, which implies that he won’t get a large separation package. The burning issue of Thompson’s missing computer science degree is now devolved to a dispute between him and headhunter Heidrick & Struggles, as to which resume was provided to them, and by whom. However, Yahoo is quickly moving forward by replacing Thompson with Ross Levinsohn as interim CEO, and also accepting Third Point’s board nominations, all of which has prompted Henry Blodget to remark that “This is the best thing to happen to Yahoo in years.”. Also on Monday, Yahoo launches Genome, an ad technology solution that leverages the Interclick purchase, and Yahoo’s ad-inventory deal with Microsoft and AOL. Genome will also try to better utilize one of Thompson’s pet projects, the company’s customer data stores.
Stronger than expected response of retail investors to Facebook’s (NASDAQ:FB) initial public offering, is allowing it to cease accepting orders on Tuesday, which is two days ahead of schedule. Institutional demand has been soft but retail investors are more than making up the deficit, according to IPO Boutique’s Scott Sweet, who remarked that “Early channel checks just completed, are revealing huge retail interest…many with extremely large orders”. On the other hand, BTIG’s Richard Greenfield and Forrester’s Nate Elliott express worries concerning Facebook’s advertising monetization ability. Elliott contends that Facebook “still hasn’t stumbled upon a model that’s proven consistently successful for marketers”, and that it ‘simply isn’t as focused on serving advertisers as it is consumers’.
Best Buy’s (NYSE:BBY) founder and Chairman Richard Schulze failed to inform his board’s audit committee regarding what he learned in December about allegations against former CEO Brian Dunn, and is now resigning. An independent inquiry found that Dunn “violated company policy by engaging in an extremely close personal relationship with a female employee” but didn’t misuse company resources. Director Hatim Tyabji will replace Schulze. In the meantime, the company’s independent directors have changes their positions about annual elections for the board and now recommend that shareholders approve the proposal. Overall, the board also supports the change as “an additional demonstration of our commitment to strong corporate governance practices”.
Investing Insights: Are These Signs Of A Groupon Recovery?
Shares of Groupon (NASDAQ:GRPN) soar, waiting for the first quarter report due later Monday. The company’s short ratio of 5.8 (as of April 30) isn’t exactly hurting the rally, either. Further, Benchmark bullishly remarked that Groupon should get a “big rally” from the Facebook initial public offering, and that the former will “meet or beat” first quarter estimates and will post improving cash conversion figures, though the second quarter guidance could be a bit problematic.
Cisco (NASDAQ:CSCO) chief John Chambers is here to stay, says a former executive, who reports that Chambers terminates anyone who challenges him, and that he has loaded the board with his own picks, such as ex-Yahoo officers Carol Bartz and Jerry Yang. Shares have remained in-range for more than 8 years, despite large repurchases.
Interim Yahoo (NASDAQ:YHOO) Ross Levinsohn has been invited to stay on as the permanent chief executive by the new CEO Fred Amoroso, according to sources. Levinsohn spoke to employees on Monday, when he remarked that it’s too early to discuss strategy, but ruled out major changes subsequent to the recent Scott Thompson reorganization.
Apple (NASDAQ:AAPL) is trying to adjust expectations for its third fiscal quarter, which will be the runup to its next iPhone intro, and also to deal with a high channel inventory. To that effect, the firm has dramatically reduced its phone orders by 20 to 25 percent from the previous quarter levels, says Sterne Agee’s Shaw Wu, who conducted supplier checks. The order cutback could signal a third quarter sales range of only 26 to 28 million, which would miss consensus of 30 to 31 million, but Wu also thinks that iPad orders will be increased. In the meantime, other indications are that Apple could experience a significant pickup in orders during the second half. According to Digitimes, the company has secured half the mobile dynamic random access memory capacity at an Elpida plant, in order to support upcoming intros, the news coming one month following an announcement by Cirrus Logic (NASDAQ:CRUS) that reported it was taking out a $100 million credit line to help finance product launches that are widely believed to be Apple’s.
Shares of A123 Systems (NASDAQ:AONE), are jumping post-earnings, after languishing during the last year from a slew of problems. Even though the firm’s quarter results seriously missed estimates, and it cut its 2012 guidance on Friday, the news that the battery defect that led to a devastating recall has been solved, and that its Federal grant worth $120 million, has been extended for two years seems to be the silver lining.
Wireless customer satisfaction towards AT&T (NYSE:T) increased by 5 points to 69, says the ACSI’s annual survey, which puts the communications giant almost on par with Verizon Wireless (NYSE:VZ), whose score of 70 represents a 3-point slide. Meanwhile, Sprint (NYSE:S) lost a point which brought it down to 71, and Apple (NASDAQ:AAPL) logged the top score among cell phone vendors at 83, while Research In Motion (NASDAQ:RIMM) hit the bottom with a 69.
New directors are in Facebook’s (NASDAQ:FB) future, as the company works with a recruiting firm to find them. It’s hoped that at least one woman will join the board, says Bloomberg, that currently includes Mark Zuckerberg, Washington Post CEO Donald Graham, VCs Jim Breyer and Peter Thiel, Netflix CEO Reed Hastings, and UNC president emiritus Erskine Bowles. Insiders note, however, that the board has little practical power, given Zuckerberg’s preferences for doing what he wants. At the same time, General Motors (NYSE:GM) says it will cease advertising on Facebook, after finding scant influence on consumers coming from its paid ads. The auto company spends approximately $40 million on its Facebook presence, and around a quarter of that goes to advertising.
Shares of Micron (NASDAQ:MU) move up, after Raymond James interpret’s Apple’s obtaining mobile dynamic random access memory from the bankrupt Elpida, as an ‘implied endorsement’ for Micron’s offer for that company. Further, the analyst believes that such a purchase could result in a “more strategic relationship” between Apple and Micron, as the former is not in a good relationship with Samsung, which is the current premier DRAM provider.
Google (NASDAQ:GOOG) launches its Knowledge Graph, which opens on the right side of search results, and features a plethora of data that is relevant to the query. The company estimates that the database for the new feature contains information of about approximately 500 million people, places and objects, gleaned from several web sources. The intro parallels that offered by Bing (NASDAQ:MSFT), which consists of a semantic search overhaul that focuses on social media content.
More woes for First Solar (NASDAQ:FSLR), as shares plummet to new all-time lows on Wednesday, following David Einhorn’s word that he liquidated his position in the first quarter. As if to confirm Einhorn’s importance in the world of stocks, Expedia (NASDAQ:EXPE), in which Einhorn established a position, moved up quite nicely.
Rumors that Apple’s (NASDAQ:AAPL) next iPhone will feature displays of at least four inches, seem to be given credibility following a Wall Street Journal report that the company has ordered displays that match that size criterion. Most of Apple’s competitors now provide high-end phones that contain displays larger that 4 inches, so chatter had it that the company would rise to the challenge. However, Samsung’s (SSNLF.PK) recently-announced Galaxy S III will boast a 4.8 inch display.
The enlargement of Facebook’s (NASDAQ:FB) initial public offering and the boosting of its share price range, is inducing institutional investors to cash out, as VC backer Accel Partners will sell as much as 28 percent of its investment, while Peter Thiel, Goldman Sachs, and Tiger Global each intend to sell up to 50 percent. Moreover, the insider sell-off dwarfs that seen at the time of LinkedIn, Groupon, and Zynga’s IPOs, and could be a red flag for buyers who are thinking of chasing the shares after trading begins in earnest. Meanwhile, Facebook is boosting the available number of shares at the end of its lockup period of 91 days, by 96 million to 268 million.
PayPal (NASDAQ:EBAY) intends to announce additional retail partners for its payment solutions next week. The company already has agreements with Home Depot (NYSE:HD) and Office Depot (NYSE:ODP), involving a method that enables customers to pay by either swiping a PayPal card, or typing in their phone number and a PIN. Also, PayPal is experimenting with NFC, and app-based mobile payment platforms, along with Square competitor, PayPal Here.
MEMC Electronic Materials, Inc. (NYSE:WFR) shares have fallen Thursday to levels last visited in 2001. Last week’s poor guidance released by the solar wafer/polysilicon supplier, that accompanied its first quarter post, has ignited new worries concerning the firm’s long term survival.
There is ambiguity surrounding Hewlett-Packard’s (NYSE:HPQ) intentions to cut jobs out of its workforce. Prior projections had the range at between 10 and 15 percent, but on Thursday a Bloomberg report said that 25,000 positions would be slashed, which represents a bit over 7 percent.
Shares of First Solar (NASDAQ:FSLR) and SunPower (NASDAQ:SPWR) pop following word that the United States government has smacked solar imports from China with anti-dumping tariffs of 31 to 250 percent, according to a source to Bloomberg. The duties derive from an inquiry into whether companies in China, using government subsidies, sold their mobiles below cost to eliminate competition. In the meantime, news comes from Reuters that Apple will utilize SunPower solar modules to power its data center in Maiden NC, outside of Charlotte. Apple’s solar farm, which also uses renewable systems from startup Bloom Energy, will supply some 84 million kilowatt hours of energy per year.
Electronic Arts (NASDAQ:EA) hired two executives who had connections to Activision’s (NASDAQ:ATVI) Call of Duty franchise, and was sued by the latter for $400 million. A settlement has now been reached, although the terms have not been announced as of yet.
Shares of Universal Display (NASDAQ:PANL) plummet on the news that the broadest of one of the company’s patents has be invalidated by the Japan Patent Office. However, certain claims were upheld, but a local court sides with an earlier ruling by the agency that invalidated the broadest claims of another of PANL’s patents. Meanwhile, KeyBanc weighs in, says that the decisions in Japan will have “little to no impact” on the firm’s financials, and that the patents in question were also issued in the United States. Moreover, the analyst notes that patent laws are stricter in Japan, anyway.
Investing Insights: Will Facebook Measure Up to These Internet Titan IPOs?
As Facebook’s (NASDAQ:FB) runup to its initial public offering continues, the price will be $38, which would represent a market cap of $104 billion. At the same time it should be noted that FB is also likely to sell its entire over-allotment option, which means that $18.4 billion worth of shares will be sold in the offering. Indeed, rumors abound that NASDAQ index funds are selling, to provide room for Facebook and its enormous market cap, which is not good news for Apple (NASDAQ:AAPL) whose shares are down, perhaps in relation to the hubbub over the former’s media frenzy.
Yahoo (NASDAQ:YHOO) shares are moving up, following Kara Swisher’s report that it’s divesting one half of its Alibaba (ALBCF.PK) investment back to that company, in a complex transaction that involves a multibillion-dollar share repurchase to YHOO shareholders and eventually an Alibaba initial public offering. The deal could reach the amount of approximately $7 billion, and might be announced as early as Monday. In the meantime, interim CEO Ross Levinsohn has issed a memo that says that Scott Thompson hire Sam Shrauger, who headed the firm’s global media & commerce division, has been replaced by Americas media chief Mickie Rosen. Others involved in the shakeup include CMO Penny Baldwin, who will be replaced by e-commerce executive Mollie Spillman.
Nokia’s (NYSE:NOK) excessive cash expenditures are raising more eyebrows, as its revenues plummet and share losses add up. Over the past 5 quarters, NOK has burned through $2.7 billion, and if that spending rate were to continue, the $4.9 billion in its remaining reserves would be gone in less than 2 years. To add to the worries, Nokia currently has €1.25 billion ($1.59 billion) in 5.5 percent bonds that come due in 2014. Uncertainty over the company’s liquidity has led to its credit rating being downgraded to junk status, and its 5-year CDS gap widening to 749 basis points.
Friday Facebook’s (NASDAQ:FB) IPO failed to impress. Retail investors who bought at the morning highs of $45 are down 15%, and the stock closed only 0.6% above the underwritten $38 initial offering.
Shares of Zynga (NASDAQ:ZNGA) were halted and resumed twice, and are decidedly lower. The cause is likely disappointment that Facebook’s big day hasn’t so far equaled (some) expectations.
Apple (NASDAQ:AAPL) was in the dumps, as speculation over Facebook’s IPO was taking all the oxygen out of the room, but shares of the former are up modestly on Friday, after a series of selloffs. A bullish comment from Morgan Stanley’s Katy Huberty, forecasting that average U.S. household spending on Apple gear will rise from $444 in 2011 to $635 in 2013, and possibly hit $888 in 2015, hasn’t exactly hurt. Also, BMO had heard chatter that carriers cutting iPhone subsidies would be harder to do than would be expected.
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