Author Archives: Scalper1

Comcast, Verizon Seen As ‘Willing, Aggressive’ Yahoo Buyers

Comcast ( CMCSA ), Verizon ( VZ ) and AT&T ( T ) would make perfect buyers for sagging  Yahoo ( YHOO ), says investment bank Mizuho Securities. All three companies “would be willing to bid aggressively for Yahoo in order to gain access to Yahoo’s user base and online advertising assets,” wrote Mizuho analyst Neil Doshi in a research note Thursday. “There is no shame in selling the core business to a strategic buyer. Tim Armstrong sold AOL to Verizon for $4.4 billion, an impressive outcome for most parties involved.” Yahoo’s board also “seems to be at odds” with Yahoo CEO Marissa Mayer and the two-year strategic plan that she recently proposed, Doshi said. “This rift could be exacerbated if the board gets compelling offers that Ms. Mayer is not willing to accept. We haven’t come across many investors that are thrilled about Mayer’s two-year strategic plan, so we’re not optimistic that she will have success on this front.” Almost all of Yahoo’s current value stems from its stake in China Internet powerhouse Alibaba Group ( BABA ). The company’s turnaround plan includes continued investment in what the company calls “Mavens,”  an acronym for Yahoo’s mobile, video, native advertising and social businesses, where its ad revenue is growing. Mayer said the Web portal will narrow its focus to four areas — news, sports, finance and lifestyle.  “A simplified Yahoo will yield better focus, execution and increase shareholder value,” she said in the company’s Q4 earnings conference call. Mayer reportedly will further  outline her turnaround plan  before two major hedge funds that are major Yahoo shareholders, Millennium Partners and Mason Capital, according to a report Wednesday in the New York Post. That news report comes on the heels of Mayer’s hiring of Manhattan-based Innisfree M&A to help recruit investor support, as activist investor Jeff Smith of Starboard Value pushes for Mayer to leave. Yahoo this month said it would cut 15% of its workforce, close five non-U.S. offices and look to sell non-core divisions and assets, such as patents and real estate, as part of a strategic plan to return the company to modest-though-accelerating growth in 2017 and 2018. By year-end, Yahoo said it anticipates having about 9,000 employees and fewer than 1,000 contractors, representing a workforce that is 42% smaller than it was in 2012. It expects to save $400 million a year in short-term operating expenses from these cuts. Yahoo stock, up a fraction in afternoon trading in the stock market today , near 31, has tumbled nearly 40% since the start of 2015.

Best Buy Posts Better-Than-Expected Q4, Ups Dividends

Consumer electronics retailer Best Bu y ( BBY ) reported better-than-expected fiscal fourth-quarter results early Thursday, but it continues to face declining sales overall and in key categories, and its guidance missed Wall Street estimates. Best Buy stock was up 2%, above 32, in afternoon trading on the stock market today , as investors cheered the announcement of a special cash dividend and higher quarterly dividend. Best Buy said it will pay a special dividend of 45 cents a share, or about $145 million, related to the net after-tax proceeds of certain legal settlements and asset disposals. The retailer also boosted its regular quarterly dividend by 22% to 28 cents a share. Plus, Best Buy announced a new $1 billion share-repurchase plan expected to be completed over the next two years. Best Buy CEO Hubert Joly said the company aims to be a “premium dividend payer,” with a non-GAAP dividend payout ratio between 35% to 45%. In its fourth quarter ended Jan. 30, the Richfield, Minn.-based company earned $1.53 a share excluding items on sales of $13.62 billion. Analysts polled by Thomson Reuters expected Best Buy to earn $1.39 a share on sales of $13.61 billion. On a year-over-year basis, EPS rose 3% and sales fell 4%. Under generally accepted accounting principles (GAAP), Best Buy’s earnings per share fell 5% to $1.39. Best Buy’s same-store sales slipped 1.8% in Q4. But the company’s e-commerce sales jumped  nearly 14% to $1.95 billion, accounting for 15.6% of total U.S. revenue. In its online sales segment, Best Buy competes with industry powerhouse Amazon.com ( AMZN ). Growth in health and wearables, home theater and major appliances was more than offset by “significant declines” in mobile phones, tablets and digital cameras, Best Buy said in a press release . For the current quarter, Best Buy expects to earn 31 to 35 cents a share, vs. 37 cents a year earlier. The midpoint of 33 cents a share would represent a year-over-year decline of 11%. It sees sales falling 3% to $8.3 billion based on the midpoint of guidance. Best Buy Sees Growth Later In Year Analysts polled by Thomson Reuters were modeling for Best Buy to earn 38 cents a share on sales of $8.4 billion. Best Buy Chief Financial Officer Sharon McCollam said the retailer expects to see sales decline in the first half of the fiscal year, followed by growth in the back half. Best Buy is targeting flat domestic revenue for the full year. Appliances, home theater and connected home products are likely to be the top growth categories, she said. Best Buy said it will counter soft overall-sales growth in consumer electronics by focusing on market share gains and by making operational improvements to boost profits. On a conference call with analysts, Joly spoke about the product categories that will drive Best Buy sales. Household appliances, connected home products and large-screen ultra HD or 4K televisions are bright spots, he said. Virtual reality headsets are a new category that Best Buy is “very excited about,” Joly said. “This is an interesting category,” he said. “It will be small this year. It may help in the computing category with (sales of) higher-end computers because you’re going to need that computing power. But from a financial perspective, it’s going to be limited.” Three VR platforms are coming to market this year: Facebook ’s ( FB ) Oculus Rift, HTC Vive and Sony ’s ( SNE ) PlayStation VR.

Wayfair Nowhere Near Size Of Amazon, But Notches Earnings Milestone

Though Wayfair ( W ) is nowhere near the size of mighty e-commerce leader  Amazon.com ( AMZN ), its swing to EBITDA profitability and its Q4 beat on both the top and bottom lines has analysts optimistic about its future. Wayfair, an online seller of furniture and other products mostly for the home, early Thursday handily beat expectations, posting adjusted Q4 EBIDTA of $2.8 million. Analysts polled by Thomson Reuters had estimated a $2.1 million loss on adjusted earnings before interest, taxes, deductions and amortization. Fourth-quarter sales jumped 80% from the year-earlier quarter, to $740 million. Wayfair lost 7 cents per share minus items, the company reported . Wall Street had estimated a 15-cent per-share loss, and revenue of $678 million. “Due to the exceptional growth of our business throughout 2015, we’re able to achieve and exceed this goal much faster than previously anticipated,” CEO Niraj Shah said on the company’s earnings call with analysts. “And importantly, this positive adjusted EBITDA was generated while we maintained our ongoing investment into the business” Wayfair stock was up 7%, near 43, in afternoon trading on the stock market today . The company has an IBD Composite Rating of 72, where 99 is the highest. Its stock chart is a fuzzy one, but there is a double-bottom base forming, with a buy point at 47.78. “Wayfair delivered another outstanding quarter with a solid revenue and adjusted EBITDA beat,” Wells Fargo analyst Matt Nemer said in a research note. Goldman Sachs analyst Debra Schwartz this month upgraded Wayfair stock to a buy. Earlier this week, e-commerce company Etsy ( ETSY ) saw its stock pop after its Q4 earnings beat .