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March 8, 2022

Google buys Mandiant for $5.4B

Google to acquire Mandiant for $23.00 per share in cash

Alphabet’s Google (GOOGL) announced that it has signed a definitive agreement to acquire Mandiant (MNDT) for $23.00 per share, in an all-cash transaction valued at approximately $5.4B, inclusive of Mandiant’s net cash.

Upon the close of the acquisition, Mandiant will join Google Cloud.

With the addition of Mandiant, Google Cloud will enhance offerings to deliver an end-to-end security operations suite with even greater capabilities to support customers across their cloud and on-premise environments.

The acquisition of Mandiant is subject to customary closing conditions, including the receipt of Mandiant stockholder and regulatory approvals, and is expected to close later this year.

Piper Sandler

Piper Sandler analyst Thomas Champion said he thinks the deal makes strategic sense given Google’s move further into the Enterprise. The Mandiant acquisition should complement Google Cloud Platform’s current security offerings, which include BeyondCorp Enterprise and VirusTotal, said Champion, who reiterates his Overweight rating and $3,475 price target on Alphabet shares.

Wedbush

Wedbush analyst Daniel Ives notes that this deal is all about Mandiant being further integrated into Google Cloud with more cyber threats facing enterprises/governments on the transformational shift to cloud and Mandiant establishing itself as “the Navy Seals of cyber security” over the last decade, the analyst contends.

#Ives believes this deal will have a major ripple impact across the cyber security space as cloud stalwarts Amazon (AMZN) and Microsoft (MSFT) will now be pressured into M&A and further bulk up its cloud platforms.

The analyst thinks cyber names such as Varonis (VRNS), Tenable (TENB), CyberArk (CYBR), Qualys (QLYS), Rapid7 (RPD), SailPoint (SAIL), and Ping (PING) standout as potential M&A candidates in cyber security given these vendors laser focus on protecting next generation cloud workloads from cyberattacks.

MNDT is down 50 cents to $21.99.

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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

August 24, 2020

TikTok suing Trump Administration

TikTok suing Trump Administration over efforts to ban TikTok in U.S.

TikTok stated in a post to its corporate website:

“Today we are filing a complaint in federal court challenging the Administration’s efforts to ban TikTok in the US…

Today, 100 million Americans turn to TikTok for entertainment, inspiration, and connection; countless creators rely on our platform to express their creativity, reach broad audiences, and generate income; our more than 1,500 employees across the US pour their hearts into building this platform every day, with 10,000 more jobs planned in California, Texas, New York, Tennessee, Florida, Michigan, Illinois, and Washington State; and

On August 6th, Trump issued an executive order giving TikTok 90 days to sell

many of the country’s leading brands are on TikTok to connect with consumers more authentically and directly than they can elsewhere.

Put simply, we have a thriving community and we are grateful – and responsible – to them.

The Executive Order issued by the Administration on August 6, 2020 has the potential to strip the rights of that community without any evidence to justify such an extreme action, and without any due process.

We strongly disagree with the Administration’s position that TikTok is a national security threat and we have articulated these objections previously.”

ByteDance has reportedly been making progress in talks with potential acquirers of the U.S. operations of the short video app, including Microsoft (MSFT) and Oracle (ORCL), media reports have indicated. Reports have also indicated that Twitter (TWTR) is exploring a bid for TikTok.

Other publicly traded companies in the social media space include Facebook (FB) and Snap (SNAP).

TikTok/Douyin is a Chinese video-sharing social networking service owned by ByteDance, a Beijing-based Internet technology company founded in 2012 by Zhang Yiming.

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August 12, 2020

Stein Mart files for Chapter 11 bankruptcy

Stein Mart voluntarily files Chapter 11 bankruptcy protection

Stein Mart (SMRT) announced that it and its subsidiaries have filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Middle District of Florida – Jacksonville Division.

Stein Mart files for bankruptcy protection

Stein Mart offers designer and name-brand fashion apparels, home decor merchandise, accessories, and shoes at everyday discount prices in the United States. As of June 3, 2020, it operated 281 stores in 30 states. The company was founded in 1908 and is headquartered in Jacksonville, Florida.

The Company has filed customary motions with the Bankruptcy Court that will authorize, upon Bankruptcy Court approval, the Company’s ability to maintain operations in the ordinary course of business, including, among other things, the payment of employee wages and benefits without interruption, payment of suppliers and vendors in the normal course of business, and the use of cash collateral.

Too much savings caused Stein Mart’s demise

These motions are typical in the Chapter 11 process and the Company anticipates that they will be approved shortly after the commencement of its Chapter 11 case.

Details on the Company’s Chapter 11 process and go-forward strategy are as follows:

The Company expects to close a significant portion, if not all, of its brick-and-mortar stores and, in connection therewith, the Company has launched a store closing and liquidation process.

The Company, however, will continue to operate its business in the ordinary course in the near term; and the Company is evaluating any and all strategic alternatives, including the potential sale of its eCommerce business and related intellectual property.

SMRT last traded at $0.18.

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August 3, 2020

FTC to fine Twitter over misuse of data

Twitter faces FTC fine of up to $250M over alleged misuse of email, phone data

On July 28, 2020, Twitter (TWTR) received a draft complaint from the Federal Trade Commission alleging violations of the company’s 2011 consent order with the FTC and the FTC Act, the company said in a regulatory filing.

Twitter books a $150M charge., Stockwinners

The allegations relate to the company’s use of phone number and/or email address data provided for safety and security purposes for targeted advertising during periods between 2013 and 2019.

The company estimates that the range of probable loss in this matter is $150M to $250M and has recorded an accrual of $150M.

The accrual is included in accrued and other current liabilities in the consolidated balance sheet and in general and administrative expenses in the consolidated statements of operations.

FTC complaint relates to misuse of phone number and email addresses

The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.

The company is also currently involved in, and may in the future be involved in, legal proceedings, claims, investigations, and government inquiries and investigations arising in the ordinary course of business.

These proceedings, which include both individual and class action litigation and administrative proceedings, have included, but are not limited to matters involving content on the platform, intellectual property, privacy, data protection, securities, employment and contractual rights.

Class Action suits have been filed against Twitter

Legal fees and other costs associated with such actions are expensed as incurred.

The company assesses, in conjunction with its legal counsel, the need to record a liability for litigation and contingencies.

Litigation accruals are recorded when and if it is determined that a loss related matter is both probable and reasonably estimable.

Material loss contingencies that are reasonably possible of occurrence, if any, are subject to disclosure.

Twitter used customer phone numbers for marketing purposes, Stockwinners

As of June 30, 2020, except for the referenced class actions, derivative actions and FTC matter, there was no litigation or contingency with at least a reasonable possibility of a material loss.

Except for the aforementioned accrual of $150M recorded in relation to the FTC matter, no other material losses were recorded during the three and six months ended June 30, 2020 and 2019 with respect to litigation or loss contingencies.

TWTR closed at $36.39.

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June 19, 2020June 18, 2020

AMC Theatres to open in July

AMC to reopen 450 U.S. theaters on July 15

Beginning July 15, AMC will resume operations of 450 U.S. theatres as part of a phased plan that is expected to bring the 600-plus U.S. theatre circuit to nearly full operation leading into the opening of MULAN on July 24 and TENET on July 31.

Adam Aron, CEO & President, AMC Theatres, said, “After a painful almost four-month hiatus due to the coronavirus, we are delighted to announce that movies are coming back to the big screen at AMC.

Our next 100 years of making smiles happen officially begin at approximately 450 theatres across the United States on July 15. I cannot emphasize enough how much care and attention to detail we have taken in developing AMC Safe & Clean, our absolute commitment to optimizing the health and safety of our theatres for our guests and associates.

Remember that there is a rumor that Amazon may buy AMC

Developed along with The Clorox Company, and current and former faculty of Harvard University’s School of Public Health, AMC Safe & Clean represents a comprehensive commitment with a broad array of tools being used in sanitizing our theatres.

Social distancing, reduced seat capacity, greatly intensified cleaning regimens, new employee health protocols, contactless ticketing and mobile food & beverage ordering are all part of AMC Safe & Clean.

So too is a new multimillion-dollar commitment to implementing high tech solutions in making AMC theatres safe, including deploying electrostatic sprayers, HEPA vacuums and upgraded MERV 13 ventilation filters.

All this is being put into motion because at AMC our single highest priority is the health and safety of our guests and associates. Both personally and professionally, I couldn’t be more excited for what this means for movie lovers.”

In the coming weeks, theatre teams will begin returning to their theatres for training on AMC’s new, enhanced cleaning and safety procedures.

AMC expects that almost all its 600-plus U.S. locations will be open and in operation for the launch of MULAN on July 24 and TENET on July 31.

The resumption of AMC operations may be adjusted if there are changes to the current theatrical release schedule, or as needed in response to local or regional conditions.

To facilitate proper social distancing within theatre auditoriums, AMC will approach seat capacity limitations in four distinct phases. But AMC will always follow all federal, state and local directives, including those that mandate a maximum capacity if lower than those envisioned in AMC’s four phases as now planned.

The reopening schedule for specific theatres will be communicated in early July. During the weeks leading up to new major theatrical releases, AMC will be showing popular repertory titles made available from its studio partners. Those titles and ticket price information will be announced prior to reopening.

AMC closed at $5.63.

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May 11, 2020

Amazon may buy AMC Movie Theatres

As AMC considers bankruptcy, Amazon may snap up the company

Amazon.com (AMZN) has held talks to acquire the troubled movie chain AMC Entertainment Holdings (AMC), but it is unclear if the discussions are still active, Jamie Nimmo of Daily Mail reports, citing sources.

The companies are thought to have held talks about a potential takeover of AMC by Amazon, the sources said.

Buying a cinema chain would enable Amazon to control the screening of films, giving it greater dominance of the industry. Amazon’s interest in cinemas is not new.

In 2018, Amazon looked at buying American arthouse cinema chain Landmark Theatres, but lost out to the eventual buyer, Cohen Media Group. Netflix was also reportedly in the running to buy Landmark.

Amazon.com is in talks to buy AMC, Stockwinners

However, a takeover of AMC would be on a different scale as Landmark only had about 250 screens in the US, while AMC has about 1,000 around the world.

Amazon certainly has the means to buy AMC, whose stock market value has collapsed in recent years to just $420million.

In a sign of bad times in the movie business, earlier this month AMC Theatres (AMC) sent a letter to Universal Studios (CMCSA) chairman Donna Langley, saying that, going forward, AMC will not license any Universal films in any of its 1,000 globally effective immediately.

Amazon bought supermarket chain Whole Foods Market in 2017 in a sign that the company was willing to spend money buying non-web-based companies.

Stockwinners offers stocks to buy, stocks to watch, upgrades, stock downgrades, earnings, Stocks to Avoid — Amazon bought Wholefoods in 2017

AMC was bought by Chinese conglomerate Dalian Wanda for $2.6 billion in 2012, but it bought back $600 million worth of shares in 2018 after Beijing cracked down on overseas investments by Chinese companies.

Under Wanda, AMC launched a major expansion plan, and in 2016 bought Odeon in the UK for £920 million from British financier Guy Hands’ private equity firm, Terra Firma, and US group Carmike Cinemas for $1.1 billion.

The deals turned AMC into the world’s largest cinema company, with 1,000 outlets and 10,000 screens around the world.

However, the expansion plan backfired and left AMC saddled with debts that are now close to $ 5billion. Last month, AMC raised $500 million from bond investors in an effort to stay afloat during the crisis.

However, investors still questioned whether AMC could avoid bankruptcy, given its parlous financial state.

A group of AMC’s lenders reportedly hired lawyers to advise on restructuring options last month, underlining AMC’s financial strife.

In Monday’s pre-market trading, AMC shares are up 70% to $7.00. AMZN closed at $2379.61.

Read our blog about AMC.

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April 15, 2020

Department of Defense back’s Microsoft cloud contract

DOD issues report on JEDI contract, sees award to Microsoft as proper

The Department of Defense Office of Inspector General has issued a report on the Joint Enterprise Defense Infrastructure Cloud Procurement.

“On June 11, 2019, the Department of Defense Office of Inspector General initiated a review of the DoD Joint Enterprise Defense Infrastructure Cloud procurement, and an investigation into allegations that former DoD officials engaged in ethical misconduct related to the JEDI Cloud procurement,” the Department of Defense Office of Inspector General said in a statement.

DOD OIG says JEDI contract was handled correctly

According to the report, the DoD OIG concluded that “the DoD’s decision to award the JEDI Cloud contract to a single contractor was consistent with applicable law and acquisition standards. […] We concluded that the procuring contracting officer’s determination to use a single-award contract was in accordance with the Federal Acquisition Regulation and was reasonable.

Amazon sued to overturn the contract , Stockwinners

We also concluded that the Undersecretary of Defense for Acquisition and Sustainment’s authorization for a single-award contract was consistent with applicable law.

DOD awarded the contract to Microsoft, Stockwinners

In addition, we concluded that the JEDI Cloud requirements in the Request for Proposal were reasonable and based on approved requirements, essential cloud capabilities, DoD cloud security policy, and the Federal Risk and Authorization Management Program guidance.

In addition, we concluded that the DoD’s inclusion of gate requirements was reasonable and did not overly restrict competition. We also concluded that the DoD conducted the JEDI Cloud source selection in compliance with the FAR, the DoD Source Selection Procedures, the JEDI Cloud Source Selection Plan, and the Request for Proposals, Sections M1 – Basis for Award and M2 – Evaluation Process.

We concluded that the source selection team’s evaluation of the contractors’ proposals was consistent with established DoD and Federal source selection standards. We also note that on February 13, 2020, the U.S. Court of Federal Claims issued an opinion and order which granted Amazon’s request for a preliminary injunction and stopped the DoD from proceeding with JEDI Cloud contract activities until further order of the court.

The court concluded that Amazon is likely to demonstrate in the course of their bid protest that the DoD erred in its evaluation of a discrete portion of Microsoft’s proposal for the JEDI Cloud contract. The court’s decision was not inconsistent with our conclusion that the source selection process used by the DoD was in compliance with the FAR, the DoD Source Selection Procedures, the JEDI Cloud Source Selection Plan, and the Request for Proposals, Sections M1 – Basis for Award and M2 – Evaluation Process.

In this report, we do not draw a conclusion regarding whether the DoD appropriately awarded the JEDI Cloud contract to Microsoft rather than Amazon Web Services.

We did not assess the merits of the contractors’ proposals or DoD’s technical or price evaluations; rather we reviewed the source selection process and determined that it was in compliance with applicable statutes, policies, and the evaluation process described in the Request for Proposals. In addition, however, we concluded that after the JEDI Cloud Contract award, the DoD improperly disclosed source selection and proprietary Microsoft information to Amazon.

In addition, the DoD failed to properly redact names of DoD source selection team members in the source selection reports that were disclosed to Amazon and Microsoft. […] we believe the evidence we received showed that the DoD personnel who evaluated the contract proposals and awarded Microsoft the JEDI Cloud contract were not pressured regarding their decision on the award of the contract by any DoD leaders more senior to them, who may have communicated with the White House.”

AMZN last traded at $2308. MSFT last changed hands at $172.44.

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January 2, 2020

RBC Capital’s predictions for 2020

Accelerating Netflix subs, Uber profitability among RBC’s top 10 surprise list

RBC Capital analyst Mark Mahaney compiled a broader research note titled “Top Ten Internet Surprises for 2020” list, in which he assigns a “reasonable chance” of 30% or more for the following to occur against the “average internet investor” expectations of the event being improbable.

Disney loss having minimal impact on Netflix subscribers. See Stockwinners.com Market Radar to read more — RBC expects subs accelerating in 2020, Stockwinners

1) Netflix (NFLX) subscriber additions may accelerate because the company will be comping 2019’s “material price increase and a dramatic slowdown in marketing spending.
2) Google’s (GOOGL) operating margins may be flat to up as its Google Cloud becomes a smaller margin drag and the company’s Other Bets division gets greater investment after the resignation of its founders.
3) Uber (UBER) and Lyft (LYFT) achieve EBITDA profitability thanks “insurance expense leverage, driver and rider subsidies rationalization, pricing actions, and growth leverage”.
4) Amazon’s (AMZN) profitability plummets as the company continues its “aggressive investment” in shipping and fulfillment, particularly internationally, while continuing the build-out of AWS salesforce.
5) Maturing growth rates and large cash piles may see Google, Facebook (FB), and Booking.com (BKNG) become dividend payers in the internet sector.
6) Spotify (SPOT) gross margins may expand as the company concludes its music label negotiations.

RBC Capital Markets is a global investment bank providing services in banking, finance and capital markets to corporations, institutional investors, asset managers and governments globally. Locations span 70 offices in 15 countries across North America, the UK, Europe and the Asia-Pacific region.

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July 19, 2019August 7, 2019

Netflix, a battle of bulls and bears!

Netflix lost more than $18 billion in market capitalization in 2 days

On Wednesday, Netflix (NFLX) reported 2nd Quarter June 2019 earnings of $0.60 per share on revenue of $4.9 billion. The consensus earnings estimate was $0.56 per share on revenue of $4.9 billion. Revenue grew 26.0% on a year-over-year basis.

The company said in its shareholders letter it expects third quarter earnings of approximately $1.04 per share on revenue of approximately $5.25 billion. The current consensus earnings estimate is $1.04 per share on revenue of $5.25 billion for the quarter ending September 30, 2019.

The company saw its first loss in US subscribers last quarter, and a 2.7 million paid customers added globally, nearly half of what was forecast.

Competition

At the same time, the company is facing a steeper path than ever in the United States. Netflix lost subscribers this quarter for the first time in years, a combination of the price hike and a content loss. As the US market becomes oversaturated with streaming services — with WarnerMedia, Disney, and Apple all launching streaming services — the only way to ensure growth is going outside the United States. Netflix currently has 60 million paying domestic subscribers, and company believes they can get to 90 million, but the risk of market saturation is real, and raises difficult questions for the company’s content strategy.

BMO Capital

BMO Capital analyst Daniel Salmon lowered his price target on Netflix (NFLX) to $440 after its reported shortfall on subscriber addition in Q2, which he expects to “fuel the debate” about the company’s pricing power and the role of new content. Given the sequential decline in its U.S. markets and the approaching launch of Disney+ (DIS), the analyst contends that this may be a “more than just the usual” earnings-miss driven debate. Longer term however, Salmon believes that the company’s revenue trend remains on track, keeping his Outperform rating on the stock and recommending Netflix, Amazon (AMZN), and Disney as a “collective investment” in the global streaming race.

Credit Suisse

Credit Suisse analyst Douglas Mitchelson lowered his price target for Netflix to $440 from $450 after the company posted its worst subscriber miss ever, short by 2.3M net adds, while revenue was in line and EBIT well ahead. The analyst reiterates an Outperform rating on the shares.

Disney to end Netflix distribution agreement in 2019. See Stockwinners.com Market Radar for details — Disney ended Netflix distribution agreement this year. See Stockwinners.com

Deutsche Bank

Deutsche Bank analyst Bryan Kraft views post-earnings selloff in shares of Netflix as a buying opportunity. The analyst keeps a Buy rating on the streaming service.

KeyBanc

KeyBanc analyst Andy Hargreaves says that despite soft Q2 results, he believes Netflix retains competitive advantages that should support excellent revenue and profit growth well into the future. The likely decline in the stock price improves the risk/reward, but increased confidence in the potential for upside to his estimates is likely needed for a more positive view of the shares, he contends. Hargreaves reiterates a Sector Weight rating on the shares.

WarnerMedia streaming service hurts Netflix, Stockwinners

JPMorgan

JPMorgan analyst Doug Anmuth to $425 from $450 while keeping an Overweight rating on the shares. The Q2 net adds miss was meaningful, but the company’s Q2 results are often volatile and this quarter contained a number of moving pieces, Anmuth tells investors in a research note. Netflix’s back half of the year content slate is strong and the company is seeing significantly better trends quarter-to-date, adds the analyst. History suggests that Q2 is a “difficult quarter from which to extrapolate NFLX’s trajectory,” says Anmuth.

Stifel

Stifel analyst Scott Devitt said Netflix shares may be range bound until the company reports Q3 earnings following its miss in Q2 on its domestic and international paid net sub add guidance. He believes management’s explanations for the current quarter miss “appear reasonable,” though Netflix “will have to prove, as it has done many times, that its value proposition remains one of the best,” Devitt tells investors in a post-earnings research note. Following last night’s report, Devitt lowered his price target on Netflix shares to $400 from $425 and keeps a Buy rating on the stock.

Wedbush

Wedbush analyst Michael Pachter raised his price target for Netflix to $188 from $183, while reiterating an Underperform rating on the shares after the company reported quarterly results. The analyst expects content spending to trigger substantial cash burn for many years, and notwithstanding four Netflix price increases in the last five years, he notes that cash burn continues to grow. Content migration and price hikes could cause a deceleration in subscriber growth, and consistently negative free cash flow makes DCF valuation impossible, he adds.

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May 8, 2019

Zayo Group sold for $35 per share

Zayo Group to be acquired by Digital Colony, EQT in deal valued at $14.3B

Zayo Group Holdings (ZAYO) announced that it has signed a definitive merger agreement to be acquired by affiliates of Digital Colony Partners and the EQT Infrastructure IV fund.

Zayo sold for $14.3 billion, Stockwinners

The transaction would result in Zayo transitioning from a public company to a private company.

Zayo Group Holdings, Inc. provides bandwidth infrastructure solutions for the communications industry in the United States, Canada, and Europe.

Under the new ownership, the Zayo team would continue to execute the Company’s strategy and remain headquartered in Boulder, Colorado.

Under the terms of the agreement, which was unanimously approved by Zayo’s Board of Directors, shareholders will receive $35.00 in cash per share of Zayo’s common stock in a transaction valued at $14.3 billion, including the assumption of $5.9 billion of Zayo’s net debt obligations.

The offer price represents a 32% premium to the volume-weighted price average of the last six months of $26.44. Dan Caruso, Zayo’s Chairman and CEO, said, “Digital Colony and EQT share our vision that Zayo’s Fiber Fuels Global Innovation.

Both are experienced global investors in the communications infrastructure space, and they appreciate our extraordinary fiber infrastructure assets, our highly talented team and our strong customer base. I am confident this partnership with EQT and Digital Colony will empower Zayo to accelerate its growth and strengthen its industry leadership.”

“Following a comprehensive review of strategic alternatives, the Zayo Board of Directors concluded that the sale of Zayo to Digital Colony and EQT Infrastructure is in the best interest of Zayo and all its stakeholders,” said Yancey Spruill, Zayo’s Lead Independent Director. “

The transaction delivers immediate and substantial value to shareholders and will strengthen Zayo’s financial flexibility, enabling the company to increase investments and better position itself for long-term growth and profitability.”

The closing of the deal is subject to customary conditions, including regulatory clearance and Zayo shareholder approvals.

The transaction is expected to close in the first half of calendar 2020.

Goldman Sachs and J.P. Morgan are serving as financial advisors to Zayo Group in connection with the transaction and Skadden Arps is serving as legal counsel.

Morgan Stanley and Deutsche Bank are acting as financial advisors to Digital Colony and EQT Infrastructure, and Simpson Thacher is serving as legal advisor.

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May 3, 2019May 3, 2019

Sinclair scores a homerun!

Sinclair Broadcast to acquire 21 Regional Sports Networks from Disney at valuation of $10.6B

Sinclair Broadcast buys Fox College Sports from Disney, Stockwinners

Sinclair Broadcast (SBGI) and The Walt Disney Company (DIS) announced that they have entered into a definitive agreement under which Sinclair will acquire the equity interests in 21 Regional Sports Networks and Fox College Sports, which were acquired by Disney in its acquisition of Twenty-First Century Fox.

Sinclair scores a home run by this purchase, Stockwinners

The transaction ascribes a total enterprise value to the RSNs equal to $10.6B, reflecting a purchase price of $9.6B, after adjusting for minority equity interests.

That’s far cheaper than the $15 billion to $25 billion range most analysts had predicted Disney could get.

Disney assets do not fetch the price that was expected for the assets, Stockwinners

Completion of the transaction is subject to customary closing conditions, including the approval of the U.S. Department of Justice.

The RSN portfolio, which excludes the YES Network, is the largest collection of RSNs in the marketplace today, with an extensive footprint that includes exclusive local rights to 42 professional teams consisting of 14 Major League Baseball teams, 16 National Basketball Association teams, and 12 National Hockey League teams.

In calendar year 2018, the RSN portfolio delivered a combined $3.8B in revenue across 74M subscribers.

The RSNs will be acquired via a newly formed indirect wholly-owned subsidiary of Sinclair, Diamond Sports Group.

Byron Allen has agreed to become an equity and content partner in a newly formed indirect wholly-owned subsidiary of Sinclair and an indirect parent of Diamond.

Allen, who bought The Weather Channel in 2018, is the Founder, Chairman, and CEO of Entertainment Studios, a global media, content and technology company.

Byron Allen who bought the Weather Channel in 2018 invests in the transaction, Stockwinners

Sinclair expects to capitalize Diamond with $1.4B in cash equity, comprised of a combination of approximately $0.7B of cash on hand and a contribution of $0.7B in the form of new fully committed debt at Sinclair Television Group.

In addition, the purchase price will be funded with $1B of fully committed privately-placed preferred equity of a newly-formed indirect wholly-owned subsidiary of Sinclair and direct parent of RSN Holding Company.

The remainder of the purchase price is being funded by $8.2B of fully committed secured and unsecured debt incurred by Diamond.

The transaction will be treated as an asset sale for tax purposes, with Sinclair receiving a full step-up in basis.

The transaction has been unanimously approved by the Board of Directors of both Sinclair and Disney.

In March, Sinclair, Blackstone and Amazon backed the New York Yankees’ $3 billion re-purchase of the 80% of YES Network the team had sold to Fox in 2014. YES Network was the 22nd channel in the former Fox portfolio, and was seen as the crown jewel.

And back in February, Sinclair partnered with the Chicago Cubs to create a new RSN in Chicago, to be called Marquee Sports Network, that will air all local Cubs games beginning in 2020.

Sinclair is the largest owner of local television stations (it owns 200) in the country. SBG also owns the Tennis Channel. (It is also a partner in the joint venture sports streaming platform Stadium.) By 2020, it will operate 22 regional sports networks, plus a minority ownership stake in YES.

SBGI closed at $44.95. DIS closed at $134.33.

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February 15, 2019February 15, 2019

WalMart Earnings Outlook

Walmart (WMT) is scheduled to report results of its fourth quarter before the market open on Tuesday, February 19, with a conference call scheduled for 8:00 am EDT.

Wal-Mart reports next week. See Stockwinners.com for the report

What to watch for:

1. OUTLOOK: Walmart previously raised its fiscal 2019 EPS view to $4.90-$5.05 and narrowed its net sales view to up about 2%, but cut its EPS outlook at its investor meeting in October to $4.65-$4.80.

In its November earnings report, Walmart again raised its FY19 EPS outlook to $4.75-$4.85. The current Street forecast for FY19 EPS stands at $4.84 on revenue of $514.33B.

The company previously said it was moving to an annual guidance framework with its quarterly updates, and that while there may be fluctuations within the quarters, “we believe EPS growth will be relatively consistent across the year.”

Baird analyst Peter Benedict said he expects Walmart’s Q4 earnings to be solid, and expects guidance to remain intact, although he recognizes the uncertainty with Flipkart as the result of new regulations in India.

2. HOLIDAY SEASON:

Jet.com’s holiday weekend was “truly horrible,” with sales down 6% on Thanksgiving and Black Friday and a 39% plunge on Cyber Monday vs. last year, BuzzFeed News reported, citing data from market research firm Edison Trends.

According to the data, Target.com (TGT) sales increased 48% on Thanksgiving and Black Friday and 19% on Cyber Monday, Amazon (AMZN) increased by 25% on Black Friday and Thanksgiving and 17% on Cyber Monday, and Jet.com parent Walmart.com increased sales revenue by 23% on Thanksgiving and Black Friday and 32% on Cyber Monday.

In late December, Amazon said that it had a “record-breaking” holiday season with more items ordered worldwide than ever before. Amazon customers shopped at record levels from a wide selection of products across every department, it said.

3. COMPETITION:

Retailers like Walmart have been hurt by an increase in online shopping on sites like Amazon rather than at brick-and-mortar stores. Walmart is seeking to create a big ad business to rival that of Amazon, Bloomberg reported, adding that it has hired executives from NBC (CMCSA) and CBS (CBS) to help bolster its advertising business.

Walmart has also launched a private-label furniture brand, called MoDRN, which is “a direct hit to big furniture retailers” such as Wayfair (W) and Ikea and a challenge to rival Amazon, Erica Pandey wrote for Axios.

4. FLIPKART:

Bernstein analyst Brandon Fletcher said that India has been bandying about restrictive e-commerce regulations this past year, and finally pulled the trigger despite protestations from both Walmart and Amazon.

Walmart to pay about $16B for initial stake of about 77% in India's Flipkart, Stockwinners — Walmart to pay about $16B for initial stake of about 77% in India’s Flipkart, Stockwinners

The new rules put a damper on 1P selling models, pricing discounts, supplier exclusives, and supplier shares of sales above 25%, all of which are important to both companies’ planned models.

While not significant to Walmart’s total revenues, the analyst believes it does put a damper on its long-term growth potential in the market through Flipkart and raises the question of where Walmart will make up that growth.

Morgan Stanley analyst Simeon Gutman said Flipkart’s losses will likely rise due to new e-commerce regulations in India and Walmart investors “can’t ignore Flipkart” as it once again becomes a bigger part of the retailer’s investment narrative.

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November 28, 2018

Cinedigm to acquire ComicBlitz

Cinedigm (CIDM) announced an agreement to acquire the digital comic book service ComicBlitz, which will provide access to approximately 10,000 digital comic books, with more than 175,000 pages of content from a growing network of 30 or more publishers.

#ComicBlitz content will be distributed globally as a licensed offering for mobile carriers, OTT providers and other media companies.

It will also be integrated with Cinedigm’s existing and planned OTT services, including the fandom lifestyle network CONtv.

Cinedigm expects that the acquisition will close before the end of the year. Cinedigm plans on rapidly enhancing ComicBlitz’s content and services offering by leveraging Cinedigm’s forthcoming, next-generation technology platform and expects to service global distribution of the ComicBlitz content and platform offerings alongside Cinedigm’s existing footprint of nine OTT channel offerings.

From a business perspective, the transaction is expected to generate revenues through content licensing, subscription and advertising revenues, new distribution platform partnerships and by accelerating global expansion of Cinedigm’s OTT business.

Cinedigm expects the acquisition will be accretive within the first quarter following closing, pending certain license deals currently in negotiation. The deal could be expected to generate more than $5M in incremental annual digital revenues within 18-24 months after closing, if new platform and licensing agreements related to this acquisition are consummated.

This deal will support Cinedigm’s strategy to provide high quality turn-key offerings to third party platforms on a global scale through acquisition and partnerships.

It will also provide a deep portfolio of quality comic book offerings that significantly broadens the company’s content portfolio for highly sought after fandom audiences worldwide.

The worldwide digital comic book and graphic novel market is estimated at over $1B in annual sales. Launched in 2015, ComicBlitz has a distribution footprint of over 133 countries, with key penetration in North America and major territories including the United Kingdom, Australia, India, Mexico, Brazil and Germany.

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November 13, 2018November 12, 2018

Pareteum to acquire iPass

Pareteum to acquire iPass in all-stock transaction

Pareteum (TEUM) and iPass (IPAS) announced that they have entered into a definitive agreement under which Pareteum will acquire iPass in an all-stock transaction whereby iPass shareholders will receive 1.17 shares of Pareteum common stock in an exchange offer.

With this accretive acquisition, Pareteum expects to gain a strategic position with new marquee brands and new markets including the enterprise, airline, hospitality, retail and internet of things sectors.

Pareteum expects to strengthen its established intellectual property portfolio with the addition of over 40 U.S. and international patents.

With more than 500 expected new customers and a global network of over 68M Wi-Fi hot spots, coupled with proven connection management technology, location services and Wi-Fi performance data, Pareteum is now poised to take its global communications software solutions to every market vertical.

The transaction is expected to be immediately accretive to Pareteum’s non-GAAP EPS and free cash ow after anticipated synergies.

Pareteum anticipates achieving more than $15 million in annual cost synergies with greater than $12 million of those expected to be realized in the rst full quarter of combined operations. Pareteum currently estimates approximately $2.0 million of GAAP earnings accretion and $5.5 million of non-GAAP earnings accretion in the rst full year after closing the transaction.

In addition, the acquisition will add new offices and talent in Silicon Valley, California and Bangalore, India, expanding Pareteum’s presence globally.

Under the terms of the acquisition agreement, a wholly-owned subsidiary of Pareteum will commence an exchange offer to acquire all of the outstanding shares of iPass common stock, offering 1.17 shares of Pareteum common stock in exchange for each share of iPass common stock tendered.

Upon satisfaction of the conditions to the exchange offer, and after the shares tendered in the exchange oer are accepted for payment, the agreement provides for the parties to effect, as promptly as practicable, a merger, which would not require a vote by iPass stockholders, and which would result in each share of iPass common stock not tendered in the exchange offer being converted into the right to receive 1.17 shares of Pareteum common stock.

The exchange offer is subject to customary conditions, including the tender of at least a majority of the outstanding shares of iPass common stock and certain regulatory approvals, and is expected to close in the rst quarter of calendar year 2019.

No approval of the stockholders of Pareteum is required in connection with the proposed transaction.

Terms of the agreement were approved by the board of directors for both Pareteum and iPass.

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November 12, 2018

Apptio sold for $1.94 billion

Apptio to be acquired by Vista Equity Partners for $38 per share

Apptio (APTI) announced that it has entered into a definitive agreement to be acquired by an affiliate of Vista Equity Partners.

Apptio, Inc. provides cloud-based technology business management (TBM) solutions to enterprises. Its cloud-based platform and SaaS applications enable IT leaders to analyze, optimize, and plan technology investments, as well as to benchmark financial and operational performance against peers.

Under the terms of the agreement, Vista will acquire all outstanding shares of Apptio common stock for a total value of approximately $1.94B.

Apptio shareholders will receive $38.00 in cash per share, representing a 53% premium to the unaffected closing price as of November 9, 2018.

Apptio’s board unanimously approved the deal and recommended that stockholders vote their shares in favor of the transaction.

Apptio’s headquarters will remain in Bellevue, with regional offices across the U.S., EMEA and APAC.

Closing of the deal is subject to customary closing conditions, including the approval of Apptio shareholders and antitrust approval in the United States.

The transaction is expected to close in Q1 2019 and is not subject to a financing condition.

The merger agreement includes a 30 day “go-shop” period, which permits Apptio’s Board and advisors to actively initiate, solicit, encourage, and potentially enter negotiations with parties that make alternative acquisition proposals.

Apptio will have the right to terminate the merger agreement to enter into a superior proposal subject to the terms and conditions of the merger agreement.

There can be no assurance that this 30 day “go-shop” will result in a superior proposal, and Apptio does not intend to disclose developments with respect to the solicitation process unless and until the Board makes a determination requiring further disclosure.

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