Tag Archive | "morgan-stanley"

LinkedIn: IPO Pop Was Undewriters’ Mistake, Says FT

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And you thought LinkedIn (LNKD) was fantastically overpriced?

The Financial Times’s April Dembosky yesterday wrote that Facebook investor and PayPal co-founder Peter Thiel thinks LinkedIn’s underwriters, Morgan Stanley, Merrill Lynch, and JP Morgan drastically underpriced the company’s IPO two weeks ago, which seems plainly evident given the stock price today is at $85.80, 91% above the $45 IPO price the banks set.

That means LinkedIn left a lot of money on the table for the rich clients of the banks to scoop up in the after-market.

Thiel predicts Facebook, and others, when and if they go public, will drive a much harder bargain to prevent the Street from such terrible under-valuation of their shares.

Granted, there’s a complaint here — no one likes to leave money on the table — but who’s to say the shares are worth what they trade for today — about 20 times this year’s likely revenue?

Article courtesy of Tech Trader Daily

CRM: Morgan Stanley Says Buy, $200 Target

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Shares of software vendor Salesforce.com (CRM) are up $3.45, or 2.4%, at $148.75 after Morgan Stanley’s Adam Holt this morning raised his rating on the stock to Overweight from Equal Weight, with a $200 price target, writing that workloads on “cloud” computing facilities, such as the company’s “Force.com” online platform, is going to rise 50% per annum, compounded, through the next three years, based on Morgan Stanley’s survey of 300 IT executives.

Usage of cloud-based applications will increase from 51% of companies today to 80%, Holt says the data show.

Salesforce should be the biggest beneficiary, Holt thinks, and he believes consensus estimates for the company don’t reflect the rate of growth, instead modeling something like 20% cloud industry growth.

Based on an expectation Salesforce will garner an increasing share of the “software-as-a-service” pie, not to mention “platform-as-a-service” business, Holt raised his estimates for the company for fiscal 2013 and 2014. He sees $2.17 billion in revenue for this year, the same as his prior estimate, but for 2013 he sees revenue of $2.57 billion, from a prior estimate of $2.53 billion, and for 2014, he sees revenue of $3.23 billion, up from $3.082 billion previously.

That should produce non-GAAP EPS next year of $1.90, rather than the $1.80 he’d previously expected, and EPS of $2.43 in 2014, rather than the $2.31 he’d previously modeled. Holt models Salesforce earning $1.32 this year.

Holt’s $200 target is based on a 47 multiple of his projected free cash flow per share of $4.11 next year, which he suggests is a 1.3 times growth multiple.

Article courtesy of Tech Trader Daily

CRM: Morgan Stanley Says Buy, $200 Target

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Shares of software vendor Salesforce.com (CRM) are up $3.45, or 2.4%, at $148.75 after Morgan Stanley’s Adam Holt this morning raised his rating on the stock to Overweight from Equal Weight, with a $200 price target, writing that workloads on “cloud” computing facilities, such as the company’s “Force.com” online platform, is going to rise 50% per annum, compounded, through the next three years, based on Morgan Stanley’s survey of 300 IT executives.

Usage of cloud-based applications will increase from 51% of companies today to 80%, Holt says the data show.

Salesforce should be the biggest beneficiary, Holt thinks, and he believes consensus estimates for the company don’t reflect the rate of growth, instead modeling something like 20% cloud industry growth.

Based on an expectation Salesforce will garner an increasing share of the “software-as-a-service” pie, not to mention “platform-as-a-service” business, Holt raised his estimates for the company for fiscal 2013 and 2014. He sees $2.17 billion in revenue for this year, the same as his prior estimate, but for 2013 he sees revenue of $2.57 billion, from a prior estimate of $2.53 billion, and for 2014, he sees revenue of $3.23 billion, up from $3.082 billion previously.

That should produce non-GAAP EPS next year of $1.90, rather than the $1.80 he’d previously expected, and EPS of $2.43 in 2014, rather than the $2.31 he’d previously modeled. Holt models Salesforce earning $1.32 this year.

Holt’s $200 target is based on a 47 multiple of his projected free cash flow per share of $4.11 next year, which he suggests is a 1.3 times growth multiple.

Article courtesy of Tech Trader Daily

CRM: Morgan Stanley Says Buy, $200 Target

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Shares of software vendor Salesforce.com (CRM) are up $3.45, or 2.4%, at $148.75 after Morgan Stanley’s Adam Holt this morning raised his rating on the stock to Overweight from Equal Weight, with a $200 price target, writing that workloads on “cloud” computing facilities, such as the company’s “Force.com” online platform, is going to rise 50% per annum, compounded, through the next three years, based on Morgan Stanley’s survey of 300 IT executives.

Usage of cloud-based applications will increase from 51% of companies today to 80%, Holt says the data show.

Salesforce should be the biggest beneficiary, Holt thinks, and he believes consensus estimates for the company don’t reflect the rate of growth, instead modeling something like 20% cloud industry growth.

Based on an expectation Salesforce will garner an increasing share of the “software-as-a-service” pie, not to mention “platform-as-a-service” business, Holt raised his estimates for the company for fiscal 2013 and 2014. He sees $2.17 billion in revenue for this year, the same as his prior estimate, but for 2013 he sees revenue of $2.57 billion, from a prior estimate of $2.53 billion, and for 2014, he sees revenue of $3.23 billion, up from $3.082 billion previously.

That should produce non-GAAP EPS next year of $1.90, rather than the $1.80 he’d previously expected, and EPS of $2.43 in 2014, rather than the $2.31 he’d previously modeled. Holt models Salesforce earning $1.32 this year.

Holt’s $200 target is based on a 47 multiple of his projected free cash flow per share of $4.11 next year, which he suggests is a 1.3 times growth multiple.

Article courtesy of Tech Trader Daily

CRM: Morgan Stanley Says Buy, $200 Target

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Shares of software vendor Salesforce.com (CRM) are up $3.45, or 2.4%, at $148.75 after Morgan Stanley’s Adam Holt this morning raised his rating on the stock to Overweight from Equal Weight, with a $200 price target, writing that workloads on “cloud” computing facilities, such as the company’s “Force.com” online platform, is going to rise 50% per annum, compounded, through the next three years, based on Morgan Stanley’s survey of 300 IT executives.

Usage of cloud-based applications will increase from 51% of companies today to 80%, Holt says the data show.

Salesforce should be the biggest beneficiary, Holt thinks, and he believes consensus estimates for the company don’t reflect the rate of growth, instead modeling something like 20% cloud industry growth.

Based on an expectation Salesforce will garner an increasing share of the “software-as-a-service” pie, not to mention “platform-as-a-service” business, Holt raised his estimates for the company for fiscal 2013 and 2014. He sees $2.17 billion in revenue for this year, the same as his prior estimate, but for 2013 he sees revenue of $2.57 billion, from a prior estimate of $2.53 billion, and for 2014, he sees revenue of $3.23 billion, up from $3.082 billion previously.

That should produce non-GAAP EPS next year of $1.90, rather than the $1.80 he’d previously expected, and EPS of $2.43 in 2014, rather than the $2.31 he’d previously modeled. Holt models Salesforce earning $1.32 this year.

Holt’s $200 target is based on a 47 multiple of his projected free cash flow per share of $4.11 next year, which he suggests is a 1.3 times growth multiple.

Article courtesy of Tech Trader Daily

HP: Morgan Stanley Says Hold, ‘Clouds’ Gathering In Server Land

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Morgan Stanley’s Katy Huberty today cut her rating on shares of Hewlett-Packard (HPQ) to Equal Weight from a prior Overweight, writing that the shift to “cloudcomputing, where more units of servers are sold into hosted data centers, rather than enterprise offices, means a 1% decline in server units sold over the next three years.

That’s bad for both HP, and Dell (DELL), because the trend in hosted data centers is to buy from “lower cost Asian vendors,” a trend she expects to continue.

Huberty cut her estimates: she was previously modeling 3.2% revenue growth for HP in the fiscal year ending October of 2012, but now that’s looking like just 2.9%. Similarly, she cut her 2013 estimate to $133.1 billion, down from $135.6 billion previously, for growth of just 1.6%, versus a prior 1.9% estimate.

HP will now have higher levels of operating expense “distributed across a slow growth revenue base,” writes Huberty. In addition to the server shift, HP has to contend with challenges to PCs from tablets, less IT services business as companies simply move everything to the cloud, and a general decline in pages printed by enterprise customers.

Huberty suggests the company would, “offer investors a better revenue growth and margin story without PCs,” with perhaps $44 per share in value for the enterprise business on a standalone basis. And she thinks the stock won’t work until HP outlines how it will “limit downside risk in PCs and printers.”

Huberty’s “base case” on the stock is a $42 share price, for an 8 times forward P/E on her fiscal 2012 estimate of $5.30.

HP shares today are up 11 cents at $35.92.

Previously: HP: Debt’s Cheap, Do A $10B Buyback Now, Says Bernstein, May 24th, 2011.

Article courtesy of Tech Trader Daily

LinkedIn Prices At $45, Above Recent Private Transactions

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Professional networking site LinkedIn this afternoon priced its initial public offering, set to trade tomorrow, at $45, above an expected range of $42 to $45, and well above some recent private transactions in the stock at around $30.

LinkedIn plans to sell a total of 4.8 million shares, with some selling shareholders offering a total of 3 million shares. There’s also an over-allotment option for another 1.2 million shares. The offering is underwritten by Morgan Stanley, Merrill Lynch, JP Morgan, UBS, and Allen & Co. The stock is expected to trade under the symbol LNKD.

According to data from the private, secondary market SharesPost, LinkedIn shares were trading as recently as March 21st at a price of $30.79, on average. LinkedIn is among the first companies going public after having already seen its shares trade hands in the private exchanges such as SharesPost and Second Market. As such, it may be an interesting barometer of what kind of payoff investors in those private markets, who are high-net worth, “professional” investors, can expect when they go to unload their shares on the broader public.

In its amended prospectus filed yesterday, LinkedIn recorded $93 million in revenue for the first quarter of this year, roughly double what it racked up a year earlier. The company made most of that from “hiring solutions,”  basically letting companies mine the LinkedIn database of over 100 million members for prospects.

Cost of revenue also doubled, the company said, as it hired more people, as did general and administrative costs. Net income of $2.1 million rose 14%, year over year, while Ebitda rose by almost half to $13.3 million.

Article courtesy of Tech Trader Daily

Opening Bell: 05.18.11

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For States, a Glimmer of Hope on Deficits (NYT)
From stronger-than-expected tax collections in deficit-ridden California to projected surpluses in struggling states like Michigan and Pennsylvania, a growing number of recession-weary states are finally announcing a bit of good budget news for the first time since the downturn began. But it would probably be premature to pop the Champagne, or even the prosecco — or to otherwise declare the fiscal crisis that has hammered states to be over.

Howard Marks’ Oaktree Capital sows seeds for listing on NYSE (FT)
Oaktree Capital Management is planning to list its shares on the New York Stock Exchange in a deal that would value the asset manager at between $8bn and $9bn, people familiar with the matter said. Oaktree, which manages $85bn, mostly in debt investments, listed shares four years ago on a quasi-public exchange set up by Goldman Sachs.

DSK Accuser Is ‘Afraid,’ ‘Overwhelmed’ (WSJ)
Investigators swabbed a sink and removed a section of carpet from the hotel suite where International Monetary Fund chief Dominique Strauss-Kahn allegedly assaulted a hotel housekeeper, a New York law-enforcement official said Tuesday, as a clearer profile began to emerge of the alleged victim. Her attorney [Jeffrey Shapiro] characterized her as a “simple woman, with little education” who is a single mother from Guinea. Mr. Shapiro said his client, a 32-year-old widowed mother of a 15-year-old girl, was granted asylum in the United States seven years ago from her native country of Guinea.

Fed seeks annual US bank stress tests (FT)
The Federal Reserve wants to subject US banks to annual capital tests, reserving the right to veto dividend pay-outs if they do not pass.

‘Gang of Six’ on verge of collapse as Republican Sen. Coburn withdraws (WaPo)
Since January, six senators have engaged in difficult negotiations and made painful concessions in a politically dangerous quest for something that has long eluded Washington: a bipartisan compromise to control the nation’s mounting debt. By Tuesday evening, however, the “Gang of Six” was on the verge of collapse. Sen. Tom Coburn (R-Okla.) withdrew from the bipartisan working group, saying the senators simply could not overcome the polarizing political pressure that each faces.

Senate rejects measure to end subsidies for big oil companies (WaPo)
A Democratic measure that would have repealed tax subsidies for the five biggest oil companies failed to clear the Senate on Tuesday, falling short of the 60-vote threshold needed to advance in a near-party-line vote.

Geithner Warns On Debt Ceiling, Talks IMF Crisis (DJ via WSJ)
In his first public comments since International Monetary Fund Managing Director Dominique Strauss-Kahn was jailed on sexual-assault charges, [Treasury Secretary Timothy] Geithner added that the institution should establish a plan to fill its leadership vacuum on an interim basis, given that the IMF chief was “not in the position” to make decisions during a critical time. In remarks to the Harvard Club here, Geithner cautioned the GOP leadership against tying their budget blueprint to the contentious talks to lift the U.S.’s $14.3 trillion debt ceiling.

Citigroup’s Gain on Mortgage Hedge Fund Jumps as Volcker Trading Ban Looms (Bloomberg)
Citigroup’s Mortgage/Credit Opportunity Fund climbed 16 percent in the first four months of 2011, almost doubling its pace last year, according to internal reports obtained by Bloomberg News. About 90 percent of the $395 million invested in the fund is the bank’s own capital, said a person with direct knowledge of the matter.

Dan Zwirn Seeks Comeback With Alda Three Years After Shutting Hedge Fund (Bloomberg)
Daniel Zwirn, the New York investor forced to shut a $4 billion hedge fund because of client withdrawals, is starting over with a new publicly traded fund that will be safe from redemptions. Zwirn will help manage a closed-end fund for Alda Capital Corp. that will lend to small and medium-sized companies, the Chicago-based firm disclosed in a regulatory filing this month with the Securities and Exchange Commission. Alda plans to raise about $50 million for the fund, according to the filing.

Morgan Stanley Sets Up Yuan Fund (WSJ)
Morgan Stanley said Wednesday it has set up a private-equity joint venture in the affluent eastern Chinese city of Hangzhou, launching its first yuan-denominated fund that aims to raise 1.5 billion yuan ($231 million).

Oyster Herpes in France Ravages Harvest (Bloomberg)
A deadly virus is stalking France’s coastline, killing at least 60 percent of the young oysters there since 2008…The virus is not just a blow to France, Europe’s biggest producer. The global industry, worth at least $3.3 billion in 2009, has been plagued by OsHV-1 in Ireland, England and Australia.



Article courtesy of Dealbreaker

Sina: Morgan Stanley, Stifel Split On Appeal Of ‘Weibo’ Microblog

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Morgan Stanley Asia Internet analyst Richard Ji today cut his rating on shares of Sina (SINA) to Equalweight from Overweight,  after the company last night beat analysts’ Q1 revenue estimate but missed EPS estimates, and offered a disappointing Q2 outlook.

The debate today is all about how the Street views “Weibo,” the company’s microblogging service.

To recap: The company saw Q1 revenue rise 18%, year over year, to $100.2 million, beating the average $95.4 million estimate, yielding EPS of 25 cents per share, two cents worse than expected. CEO Charles Chao said the quarter’s results were “strong” and noted that Weibo has surpassed 140 million registered users.

For the current quarter, the company forecast revenue of $112 million to $115 million, below the average $116 million estimate.

In his note today, Ji is concerned about the escalating costs to promote Weibo: the company’s operating profit was down 57% from the prior quarter, and down 21% from a year earlier, despite the increase in revenue. The soft revenue outlook for the current quarter suggests to him that the revenue payoff from Weibo is uncertain, even as costs escalate, with the company spending perhaps $100 million on it this year.

In contrast to Ji, Stifel Nicolaus analyst George Askew reiterated a Buy recommendation today, and actually raised his target price to $140 from $130, writing, “Sina is increasing its investment in Sina Weibo — and it is working. The company’s microblog service has 140 million-plus users (100 million just 60 days ago),” and the company is adding 667,000 users to Weibo per day.

“We believe the value creation within Sina Weibo, the “Twitter Of China,” is significant, and the primary reason to own shares of Sina.

Sina shares today are down $3.74, or 3%, at $116.06. I would note that other China investments are also under pressure, with Sohu.com (SOHU) down $4.91, or 5%, at $87.43, Baidu (BIDU) down 92 cents, or 0.7%, at $137.98, and Youku (YOKU), sometimes called the “YouTube of China,” down $2.23, or 4.4%, at $48.95.

Article courtesy of Tech Trader Daily

Microsoft In $7B Skype Deal? Oh, How They Laughed When eBay Paid $2.6B

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The Microsoft (MSFT) -for-Skype rumor is gaining ground.

GigaOm’s Om Malik earlier today offered a recap of rumors that “have been swirling around Skype” for a week now, with Reuters having written that Google (GOOG) and Facebook were looking for a deal with the Internet calling firm, or maybe looking to buy it. Malik wrote that Microsoft “has entered the mix.”

And tonight, The Wall Street Journal’s Anupreeta Das and Nick Wingfield are writing that Microsoft is “close to a deal to buy Internet phone company Skype Technologies SA for more than $7 billion,” citing anonymous sources.

Negotiations have been “wrapping up” this evening, they write.

eBay (EBAY), which bought Skype for $2.6 billion in October of 2005,  later sold the company in November of 2005 for $1.9 billion in cash, for a net gain of $1.4 billion, and a 30% stake in Skype to private equity shop Silver Lake, the Canada Pension Plan Investment Board, and venture firm Andreessen Horowitz in a leveraged buyout.

eBay listed its 30% stake at $620 million in last year’s 10-K filing, implying a value of roughly $2 billion for Skype.

Obviously, then, a Microsoft bid of this size would represent not just a premium t0 recent valuation, but multiples of the 2009 buyout, if it happens.

Some people thought eBay was crazy when they paid $2.6 billion in 2005, and there were also stories from Silicon Valley that some Skype backers at the time thought they should have asked for much more.

Microsoft ended the fiscal Q3 in March with $50 billion of cash, cash equivalents and short-term investments, and long-term debt of $12 billion.

Remember that bidding for Skype has been a spectator sport for some time. Back in August of last year, TechCrunch reported Cisco Systems (CSCO) was interested, which was then refuted by sources, Eric reported the next day.

Malik himself proposed back in September that Facebook should buy the company, and that it might have to pay $7 billion to $7.5 billion.

Remember, too, that Skype filed for a $100 million public offering last August, led by Goldman Sachs, JP Morgan, and Morgan Stanley, which has since been amended multiple times. The latest version, filed last month, lists $860 million in revenue for all of 2010. That would represent 20% revenue growth from the $719 million the company reported in 2009.

Effectively, then, Microsoft would be paying on the order of seven or so times trailing revenue. Skype had a pre-tax loss of $57 million in 2010, according to the filing.

The prospectus from April also records $690 million in long-term debt that was racked up to facilitate the leveraged buyout in 2009, against $142.5 million in cash and equivalents.

Microsoft shares ended the day down 4 cents at $25.83.

Article courtesy of Tech Trader Daily