BMC to Acquire Numara Software – Analyst Blog
The Software-as-a-Service (SaaS) major BMC Software. (BMC) recently announced that it is set to acquire Numara Software, a provider of integrated IT management solutions for medium-sized businesses. The transaction is expected to be closed by BMC’s fiscal fourth quarter, which ends on March 31. However, the terms of the deal were not disclosed.
Post acquisition, Numara will offer different BMC products like FootPrints and Track-It!, which also complement BMC’s existing portfolio. We believe that this strategic move on the company’s part will supplement BMC’s Software-as-a-Service (SaaS) business, and also provide BMC the access to more than 13,000 service and asset management solution providers that enable IT organizations to improve the services they offer end users.
BMC has taken the acquisition route for growth. Earlier this month, BMC acquired I/O Concepts, a leader in the ioEnterprise line of mainframe console security, automation and consolidation solutions.
The acquisition is expected to allow BMC to improve the productivity of its customers by reducing their staff requirements and also enhancing systems availability for its Main View Solutions.
Previously, the company also acquired Phurnace Software, an automation software developer that helps to reduce the cost, complexity and risk of deploying and configuring Java-based applications on physical, virtual and cloud computing environments.
Acquisitions may help the company to diversify its businesses but growth remains impacted by weaker expenditure from different government and private customers. Moreover, concern over IT spending growth may have a dampening effect. The recent European economic turmoil will also remain a headwind for the next few quarters.
BMC is focusing on acquisitions after reporting modest second quarter results. The company is expected to see the negative impact of currency on total revenue and bookings. Moreover, no real growth in deal activity and low business prospects in the European region are factors working against it.
Moreover, we are a bit apprehensive about growing competition from big players such as International Business Machines Inc. (IBM), Hewlett-Packard Company (HPQ), EMC Corp. (EMC) and CA Inc. (CA), which bundle hardware and software offerings.
BMC currently holds a Zacks #4 Rank, which implies a short-term Sell rating.
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Starbucks in India This Summer – Analyst Blog
Starbucks Corporation (SBUX) is slated to make its way into India by the end of August. Starbucks, along with Asia’s largest publicly traded coffee grower, Tata Coffee Ltd, is planning to open 50 stores, which will spread its Frappuccino aromas either in Mumbai or in the capital, Delhi, the two largest cities of the country.
A year back, Seattle-based Starbucks entered into an agreement with Tata Coffee Ltd. Per the agreement, Starbucks got the right to procure coffee beans from India and engage in sourcing and roasting of beans while exploring the possibility of opening outlets in the country.
Although the Indian law allows 100% foreign ownership of single-brand retail, the coffee maker opted for a 50-50 joint venture with Tata Coffee, to avoid the skyrocketing real estate costs in India.
Starbucks has promised that the coffee served at the stores in India will be 100% locally sourced. The food items served at the stores will also be locally sourced. Tata will use the brand name of Starbucks and serve its lesser popular items like Tazo Tea and Himalaya drinking water through future Starbucks stores.
Moreover, for the first time in Starbucks’ history, the white and green logo of the coffee giant will have another brands’ name along with it. The stores will be branded as "Starbucks Coffee - ‘A Tata Alliance.'"
Reportedly, the coffee outlets are about to open in shopping malls, office parks, universities, airports and train stations. The joint venture states that stores will also be opened at properties owned by Tata group of companies, for example the Taj chain of luxury hotels.
The Tata-Starbucks joint venture will aim for the fast growing nouveau riche of the country and Starbucks hopes to capitalize on the rising aspirations and fattening wallets of many Indians.
India is better known as a country of tea lovers. The average Indians mostly crowd at the road side tea stalls for a cup of chai. For the newly minted urban Indian bourgeoisie, Starbucks can be a status symbol like a European fashion label. However, although the coffee giant plans to target the top-end of the Indian market initially, its expansion plans also target the B and C towns later.
Café Coffee Day, a local chain, currently dominates the Indian market. Barista, owned by the Italian company Lavazza Spa, also has numerous outlets in the fast growing coffee market of India. Coffee exports to India shot up by 56% last year.
The joint venture will help Starbucks to nurture its aggressive plans for the Asian region. Starbucks management also revealed that it plans to open 3,000 stores in the near future in the Asia-Pacific region and to support that it will undertake an intense marketing plan for India.
Many other food chains have eyed the Asian subcontinent for long. Although these companies are ruling their respective markets in U.S., they are exploring these emerging markets as the American market has become saturated.
McDonald's Corp. (MCD) and Yum Brands Inc.'s (YUM) KFC and Taco Bell, have been expanding their presence across the country, thanks to the growing international tastes of India's young people.
Currently, we prefer to be Neutral on Starbucks’ stock. Starbucks holds a Zacks #2 Rank, which translates into a short-term Buy rating.
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BIOLASE Makes Strategic Tie-in – Analyst Blog
Dental laser maker BIOLASE Technology (BLTI) has inked a sales and marketing pact with Kirkland, Washington-based leading dental education group Seattle Study Club (“SSC”).
SSC, a global organization of dentists, is among the most advanced dental education groups. Dentists and dental specialists, who are the members of the group, are dedicated to maintaining the highest level of knowledge in dentistry and share new techniques/technology and means to better serve their patients.
Under the agreement, BIOLASE will gain access to SSC's 8,000 members and over 350 study clubs globally to educate them on how to make the best use of the company’s products and services.
The program will involve a number of activities including the demonstration of BIOLASE's laser technology at SSC's national symposiums, advertising in SSC publications, cooperative web marketing and direct promotions to members through SSC's newsletters, webcasts and journal. The partnership is among a series of new marketing initiatives which BIOLASE plans to introduce this year.
BIOLASE develops and markets lasers and related products for applications in medicine and dentistry. Its key products are dental laser systems that perform a broad spectrum of dental procedures, including cosmetic and complex surgical applications.
The company’s sales more than doubled year over year in third-quarter 2011 to $13.1 million. The healthy growth was mainly attributable to its exit from an exclusive distribution arrangement with Henry Schein (HSIC) and return to a direct sales and multi-distributor model.
The company’s WaterLase all-tissue dental lasers accounted for roughly 63% of total sales in the quarter with the Waterlase iPlus laser contributing the most. BIOLASE, during the third quarter, won regulatory approvals in Canada and Russia to market the WaterLase iPlus laser.
Moreover, the company clinched regulatory approval for the device in South Korea in November 2011. Waterlase iPlus was launched in the U.S. in early 2011.
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Earnings Scorecard: Altera Corp. – Analyst Blog
Earnings estimates for Altera Corporation (ALTR) have declined considerably in the last seven days after the company provided weak guidance for the first quarter of 2012.
Although fourth-quarter results beat the Zacks Consensus Estimate by $0.04, the guidance was disappointing.
Altera expects sales to be down 5% – 9% sequentially. This implies a revenue guidance of $416.5 million – $434.9 million. Management stated that the program timing in the Military business will account for half of the decline. The company expects revenues from wireless segment to be down across multiple geographies due to continued inventory depletion and softening of demand in the second half of 2011.
Consequently, out of twenty-three analysts covering the stock, eighteen have lowered their estimates in the last seven days leading to a sharp decline in the Zacks Consensus Estimate for 2012.
In contrast, the company's rival Xilinx Inc (XLNX) provided a positive guidance expecting sales to increase sequentially.
Most analysts believe that Altera will lose market share to Xilinx in the first half of 2012. As per the analysts, XLNX likely benefited from a higher exposure to Cisco (CSCO) and LTE at Ericsson, while ALTR was disproportionately impacted by weakness in China/wireless.
Altera has a large exposure to the telecommunications industry, in particular China. The recent slowdown in China has adversely impacted the company’s business with no respite, at least in the forthcoming quarter. Moreover, margins have already peaked recently and might not be sustainable in the long run. We expect a decline in margins going forward.
Therefore, we downgrade our recommendation to Underperform from Neutral. Our recommendation is supported by Zacks #5 Rank, which translates into a short-term Sell rating.
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Covidien’s Solitaire Ok’d for Trial – Analyst Blog
International health care products major Covidien’s (COV) Solitaire FR revascularization device has been cleared for investigational use in the Interventional Management of Stroke (“IMS III”) trial.
The Ireland-based company said that the device was approved by the IMS III Executive Committee in the thrombectomy arm of the study and was included in a recently approved amendment submitted to the U.S. Food and Drug Administration (FDA).
The Solitaire FR device is approved outside the U.S. for the endovascular treatment of acute ischemic stroke, offering physicians with an innovative treatment technology over the existing therapy options. The device’s inclusion in the IMS III trial has been triggered by its high success rate, rapid procedure time and ease of use experienced by physicians in Europe and other areas.
The IMS III study has been designed to compare a combined intravenous and intra-arterial treatment approach to restoring blood flow to the brain to the current standard FDA-approved treatment approach of giving intravenous recombinant tissue plasminogen activator (rTPA) therapy alone.
An estimated 900 patients with moderate to severe ischemic stroke will be enrolled in the trial at over 50 centers across the U.S., Canada, Australia and potentially Europe. The Executive Committee cleared Solitaire FR to make sure that the trial and patients have the most advanced technologies to help assess the role of endovascular therapy in acute ischemic stroke.
Covidien is a leading global health care products company with a rich history of developing high-quality products in a cost-effective manner. It competes with Johnson & Johnson (JNJ), Becton Dickinson (BDX) and C.R. Bard (BCR), among others.
Revenues from Covidien’s core Medical Devices segment climbed 6% year over year to $1.98 billion in the most recent quarter, powered by double-digit growth across Vascular and Energy Devices product-lines.
The Vascular business had another strong quarter with revenues soaring 17% to $387 million, spurred by double-digit growth of venous insufficiency and neurovascular products. Our long-term Neutral recommendation on Covidien is supported by a short-term Zacks #3 Rank (Hold).
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Healthways, Gallup Determine "Well-Being" – Analyst Blog
Healthways (HWAY), the well-being enhancement company, and statistical research services provider Gallup, recently announced the results of the monthly Gallup-Healthways Well-Being Index (“WBI”) for December 2011. The overarching WBI measure remained stagnant at a score of 65.8. This was the fourth consecutive month with a score under 66.
The Emotional Health Index stood at 79.2 and resisted its fall to the typical annual low achieved in December each year. Americans enjoyed lower stress in December 2011 with 59.7% of participants reporting that they were without stress for a major portion of the previous day. Respondents also reported less sadness in December than in the corresponding year-ago period.
The Work Environment Index continued to languish at 47.7. It has not picked up since September 2009. The Physical Health Index was unmoved at 76.6, in December. Obesity was flat at 26.6% reflecting a flattening out of this metric.
Among the other indices, the Healthy Behavior declined 1.6 points to 61 with a rise in the proportion of smokers to 21.7%. The Basic Access Index continued to languish in December with a score of 81.8 which is in line with record lows set in the preceding 3 months.
Healthways is a prominent vendor of specialized and composite solutions, enabling recipients to maintain or improve their well-being, while consequently reducing systemic healthcare costs. The company’s solutions are intended to keep people healthy and mitigate lifestyle risk factors that can cause disease and optimize care for those with chronic illness. Healthways competes with Express Scripts (ESRX) among others.
Gallup is known for providing timely and pertinent research on opinion. The company employs scientists in discipline such as economics, sociology, management and psychology. Its consultants identify and monitor behavioral economic indicators on a worldwide basis, thereby enabling companies to increase organic growth.
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U.S. Rig Count Remains in Check – Analyst Blog
In its weekly release, Houston-based oilfield services company Baker Hughes Inc. (BHI) reported an unchanged U.S. rig count (number of rigs searching for oil and gas in the country), as an increase in the number of oil and miscellaneous rigs was offset by a fall in the gas rig count.
The Baker Hughes rig count, issued since 1944, acts as an important yardstick for drilling contractors such as Transocean Inc. (RIG), Diamond Offshore (DO), Noble Corp. (NE), Nabors Industries (NBR), Patterson-UTI Energy (PTEN), Helmerich & Payne (HP), etc. in gauging the overall business environment of the oil and gas industry.
Analysis of the Data
Weekly Summary: Rigs engaged in exploration and production in the U.S. totaled 2,008 for the week ended January 27, 2012, same as the previous week’s count.
The current nationwide rig count is more than double that of the 6-year low of 876 (in the week ended June 12, 2009) and significantly exceeds the prior-year level of 1,732. It rose to a 22-year high in 2008, peaking at 2,031 in the weeks ending August 29 and September 12.
Rigs engaged in land operations climbed by 2 to 1,949, inland waters activity increased by 1 to 17, while offshore drilling was down by 3 to 42 rigs.
Natural Gas Rig Count: The natural gas rig count decreased for the third week in a row to 777 (a drop of 3 rigs from the previous week). As per the most recent report, the number of gas-directed rigs is at their lowest level since December 31, 2009 and is down almost 17% from its 2011 peak of 936, reached during mid-October.
The current natural gas rig count remains 52% below its all-time high of 1,606 reached in late summer 2008, but has rebounded strongly after bottoming out to a 7-year low of 665 on July 17, 2009. In the year-ago period, there were 913 active natural gas rigs.
Oil Rig Count: The oil rig count was up by 2 to 1,225. The current tally – the highest since Baker Hughes started breaking up oil and natural gas rig counts in 1987 – is way above the previous year’s rig count of 809. It has recovered strongly from a low of 179 in June 2009, rising roughly 6.8 times.
Miscellaneous Rig Count: The miscellaneous rig count (primarily drilling for geothermal energy) at 6 was up by 1 from the previous week.
Rig Count by Type: The number of vertical drilling rigs fell by 13 to 606, while the horizontal/directional rig count (encompassing new drilling technology that has the ability to drill and extract gas from dense rock formations, also known as shale formations) was up by 13 at 1,402. In particular, horizontal rig units rose by 2 in the latest week to hit a new all-time high of 1,185.
To Conclude
As mentioned above, the natural gas rig count has been falling since the last few weeks, 157 rigs in fact (or 17%) from the recent highs of 934 in October 28. Is this bullish for natural gas fundamentals? The answer is "no," if we look at the U.S. production and the shift in rig composition.
With horizontal rig count – the technology responsible for the abundant gas drilling in domestic shale basins – currently at its all-time high, output from these fields remains robust. As a result, gas inventories still remain at elevated levels – 21.4% above the 5-year average and 20.7% higher than the same period last year.
In fact, natural gas prices have dropped approximately 47% from last year’s peak of about $5.00 per million Btu (MMBtu) in June to the current level of around $2.65 (referring to spot prices at the Henry Hub, the benchmark supply point in Louisiana).
In the absence of major production cuts or a stronger economy to boost industrial demand, which is responsible for almost a third of gas consumption, we do not expect much upside in gas prices in the near term. This has prompted some companies to alter their spending patterns, away from gas to the more profitable liquids-rich projects.
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Godfather Media Announces the Acquisition of a Professional Baseball Team
MISSION VIEJO, CA--(Marketwire - Jan 31, 2012) - Godfather Media, Inc. (
Earnings Scorecard: 3M Company – Analyst Blog
3M Company (MMM) posted encouraging results for the fourth quarter of fiscal 2011, with earnings growth of 5.5% year over year. Earnings per share beat the Zacks Consensus Estimate by 4 cents.
For full-year 2011, earnings per share increased by 5.9% year over year, outpacing the Zacks Consensus Estimate by 3 cents.
Fourth Quarter Highlights
Total revenue in the quarter increased by 3.3% year over year to $7.1 billion. Acquisitions contributed 2.3% to total growth, foreign exchange added 0.1%, organic volume growth 1.3% and higher year-on-year selling prices added 2.0%. Sales growth of 9.7% in Latin America/Canada was strongest in the quarter and US sales increased by 7.4%.
For 2011, total revenue was $29.6 billion, an increase of 11.1% year over year. Sales in the year were driven by growth in five out of six business segments of the company.
Sales in the quarter increased in all the company’s segments, except Display and Graphics and Electro and Communication segments. Display and Graphics sales dropped 8.8% to $823 million, primarily due to declined sales of optical systems.
The Industrial and Transportation segment witnessed the highest growth of 14.3% amounting to $2.4 billion, resulting from double-digit sales growth of abrasives, aerospace, industrial adhesives and tapes, energy and advanced materials and automotive.
Operating income, for the quarter, was $1.36 billion compared with $1.31 billion in the prior-year quarter. Selling and general expense was $1.52 billion compared with $1.45 billion in the prior-year quarter and research and development expense was $379 million compared with $388 million in the prior-year comparable quarter.
Agreement of Analysts
Of the analysts covering the stock, one increased while two decreased their first quarter 2012 estimate in the last 7 days. While in the last 30 days, one each decreased and increased atheir estimate for the quarter. For the second quarter, three increased their estimate and one decreased the same. However, in the last 30 days, two analysts increased while one decreased their estimate for the quarter.
For fiscal 2012 also, three analysts have increased their estimate and one decreased, while in the last 30 days, only one analyst increased its estimate. For fiscal 2013, there was no upward revision witnessed in the last 7 or 30 days, while one each decreased its estimate in the last 7 or 30 days.
3M reaffirmed its full-year 2012 guidance, expecting organic sales growth of 2% – 5% and earnings per share in the range of $6.25 – $6.50. Operating income margins are expected to be between 21% – 22.5%.
The company expects to see a sluggish growth in the first half of 2012, as weakening economies continue to challenge business growth. Investments in research and development (“R&D”), sales and manufacturing are targeted by the company to achieve accelerated growth.
Magnitude of Estimate Revisions
The Zacks Consensus Estimate for the upcoming first quarter increased from $1.53 to $1.51 and for the second quarter of 2012 remained stagnant at $1.64 in the last 7 days.
Again, the Zacks Consensus Estimate for fiscal 2012 increased from $6.29 to $6.31 and for fiscal 2013 decreased from $6.89 to $6.87.
Earnings Surprises
The fourth quarter earnings surprise for 3M was positive 4 cents or (3.05%). The surprise percentage over the last four quarters is indicative of a positive trend.
Summary
3M is globally recognized for its innovations, which are supported by some of its well-known brands, such as Nexcare, Post-it, Scotch, Scotch-Brite, and Scotchgard. We believe that continued capital expenditure with new product launches should bolster its prospects across most end markets.
However, the company’s growth objectives are largely dependent on timing and market acceptance of its new product offerings, including its ability to continually renew its pipeline of new offerings and bring those to the market at acceptable price points. Further, the results have been impacted by worldwide economic and capital market conditions.
3M Company, together with its subsidiaries, operates as a diversified technology company with manufacturing operations spread over 60 countries worldwide. It has more than 35 business units organized into six segments: Consumer and Office, Display and Graphics, Electro and Communications, Healthcare, Industrial and Transportation, and Safety, Security and Protection Services Business. The major competitors of 3M are Avery Dennison Corporation (AVY), EI DuPont de Nemours & Co. (DD) and Johnson & Johnson (JNJ).
We continue to maintain a Neutral rating on 3M Company for the long term and a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.
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Amazon Misses 2nd Straight Quarter – Analyst Blog
E-commerce giant Amazon.com (AMZN) brought in lower revenues than expected for the second quarter in a row. The company's $17.43 billion marked a 35% increase year over year, but it was well off the $18.25 billion expected in the Zacks Consensus.
As a result, AMZN shares tumbled 10% in the after-market almost immediately, after seeing a 1.2% gain in the regular trading session Tuesday. Traders have eased up a bit on selling the stock since the initial impact. Share are currently down around 8% from its Tuesday closing price.
In Amazon's fiscal 4th quarter, both Media and International segments underperformed. In the company's previous quarter, higher costs were cited as responsible for its 39% miss on the bottom line.
Analysts ahead of earnings had been lowering estimates, with 3 downward revisions made on the stock in the past 30 days, 1 of which came in the past week. But in Tuesday trading, after hitting a sub-$190 per share price, investors began to turn a bit more hopeful and set a steady uptrend from about 2pm Eastern until the closing bell. The stock finished the regular trading day at $194 and change, still well back from AMZN's 52-week high.
Electronics and merchandise -- which includes the Kindle Fire tablet that was rolled out for last year's holiday shopping season -- brought in $10.9 billion, which was in-line with analysts' expectations. Clearly, however, retail sales were not enough to make up for the lagging International and Media businesses this time around.
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