Jerusalem-based Mobileye, which makes camera systems that help cars detect and prevent potential accidents, sold 35.6 million shares priced at $25 a share during its Friday initial public offering, above the offered price of $21 to $23. The shares soared 48% to $37 that day. The IPO raised $890 million, the largest ever for an Israeli IPO. According to Mobileye’s prospectus, it will use some of the IPO net proceeds to purchase inventory.
In 2013, Mobileye earned $81.2 million, more than double the $40.3 million earned in 2012. The company said in its prospectus, however, that it has “a history of losses,” and “there is no assurance that we will become and remain profitable.” Additionally, the prospectus noted that Mobileye has “a material weakness in our internal control over financial reporting, which resulted in the restatement of our 2013 earnings per share.”
Mobileye’s investors include Goldman Sachs (GS), Fidelity Investments, and BlackRock (BLK). Its biggest client is General Motors (GM), which accounted for 29% of revenue from original equipment manufacturing (OEM) in 2013. Honda (HMC) accounted for 25% of OEM revenues, and BMW and Nissan each accounted for 15%. Tesla (TSLA) is also a Mobileye customer. OEM revenues make up more than three quarters of Mobileye's total revenues.
Groupon (GRPN - Get Report) shares spiked 6.8% to $6.90 ahead of the release of the company’s second quarter earnings. Analysts surveyed by Thomson Reuters expect Groupon to earn an adjusted 1 cent per share on revenues of $761.8 million. In the same quarter last year, Groupon earned 2 cents per share on revenues of $608.7 million, a 25% revenue increase year-over-year. For the third quarter, analysts expect $759 million in revenue and earnings of 5 cents per share. Analysts were largely bearish on Groupon. Ascendiant Capital Markets analyst Edward Woo who rates the stock a “sell” with a $5 price target, expects that Groupon’s results will be roughly in line with consensus and with his own estimates of $760 million in revenue and earnings of 2 cents per share. However, he expects third-quarter guidance will be lower than consensus due to “a weaker daily deals industry and continued investments.” Although Groupon has stabilized and improved its U.S. businesses, Woo believes that “uncertainties with Groupon remain due to competition, increased investments, and uncertain growth in its good business.” He added, “We are not yet convinced that Groupon is on a consistent path towards growth and profitability and believe its share price is likely to remain volatile and weak until it demonstrates it can grow both consistently.” Similarly, Mark Mahaney of RBC Capital Markets expects Groupon to match consensus, but still is pessimistic about Groupon’s long-term potential. Mahaney, who holds an “underperform” rating and a $6 price target, expects revenues of $772 million and flat earnings per share. Mahaney cites weak North America Local Billings of only 1% year-over-year last quarter and 2% year-over-year the previous quarter, which he views as Groupon’s key segment. He views Groupon’s attempt to transition into becoming the “starting point for (all) Mobile Commerce” as misguided, excessively ambitious and undermining of the firm’s potential to win the Local Commerce/Services market.” Groupon will release its earnings after the bell tomorrow, with a conference call at 5:00 pm EST.
Shares of Broadsoft (BSFT - Get Report) rose 8.1% to $25.65 following the release of strong quarterly earnings. In its second quarter, ending June 30, Broadsoft earned $52.5 million in revenue, a 19% increase year-over-year, and earned 31 cents per share. Analysts polled by Thomson Reuters predicted earnings of 25 cents per share on revenues of $49.86 million. Net income was $8.9 million, down from $9.2 million in the same quarter last year. Total revenues for the first two quarters rose 15% to $96.4 million from the same period in 2013. "We continue to see momentum for our UC-One offerings globally," said CEO Michael Tessler in the press release. "The growing demand by enterprises for richer communications options is creating significant opportunities for our service provider customers as they begin to introduce Unified Communications services that appeal to a broad range of market segments." Broadsoft issued third-quarter guidance of $48 million to $52 million in revenues and earnings of 17 cents to 30 cents per share. Its full-year revenue guidance is between $207 million and $213 million, while its full-year earnings are projected at between $1.26 and $1.46 per share. Broadsoft, an IP telecommunications software vendor, also announced today that it had acquired Systems Design & Development, which provides software and services to the hospitality industry. The acquisition will enable “a new, hosted Unified Communications offering for the hospitality industry, UC-One Hospitality.” Tessler said in a statement, "We believe the services capabilities of SDD, when integrated with our Unified Communications services, will unlock a sizable new vertical market opportunity for our service provider customers."
Apple (AAPL - Get Report) shares fell 1% to $95.21 after the release of a report that anticipates a new partnership. In a 27-page report written yesterday, Pacific Crest analysts Josh Beck, Andy Hargreaves, John Vinh, Evan Wilson, and Chad Bartley announced that they “think a partnership between Apple and Visa (V) would make strategic sense and believe an announcement could happen as early as this fall.” Because Visa is “opening up its network and will introduce a new security service,” an Apple-Visa partnership would “catalyze adoption of mobile payments.” The partnership would both “lower business-model obstacles” and allow Apple to leverage its affluent-skewed consumer base and credit card stockpile to add value via an improved in-store shopping experience.” The report suggests that the upcoming iPhone 6 will possess the technology to make such a partnership possible, given its “near-field communications (NFC) and secure element (SE) technologies.” Such an Apple-Visa partnership would hurt eBay (EBAY) because in mobile payments, “various Internet leaders, including PayPal, have seen little to no success.” PayPal, a subsidiary of eBay, is the leading supplier of e-commerce payments, with more than 150 million users constituting 20-25% of volume. While PayPal could also adopt the Apple-Visa innovations, so too could other Internet or technology companies. Visa shares were slightly higher, up 0.1% to $212.03.
--Written by Laura Berman in New York >Contact by Email.