Alibaba Climbs Ahead of Earnings, Sapient Soars on Buyout: Tech Winners & Losers

SAN FRANCISCO (TheStreet) – Sapient (SAPE) shot up more than 40% on Monday, after Publicis Groupe announced it planned to acquire the large Boston-based digital advertising firm for $3.7 billion in cash. Alibaba Group (BABA) and Sprint (S) , meanwhile, also rose during the session ahead of their earnings announcements.

Sapient rose42% to close at $24.60, after Publicis said it would purchase the company for $25 a share. In the past month, Sapient's stock had been trading around $14 a share, near its 52-week low of $12.85. 

In making a play for Sapient, the Paris-based Publicis Groupe is aiming to bolster its digital advertising capabilities, a move it was hoping to make when it tried to acquire Omnicom Group (OMC) in a $35 billion merger earlier this year. That Publicis-Omnicom deal, however, imploded in May.

The deal, of course, is subject to shareholder and regulatory approvals. Publicis investors apparently aren't huge fans of the Sapient acquisition, even though it carries a cheaper price tag than Omnicom. 


Alibaba Group closed up 3.3% to $101.80.

The Chinese ecommerce behemoth is expected to report its third quarter results before the markets open Tuesday, with Wall Street expecting to see earnings of 36 cents a share on revenue of $2.7 billion.

Several analysts have initiated coverage on the company over the past week, including JP Morgan, RBC Capital Markets and Deutsche Bank. These banks initiated coverage with favorable recommendations ranging from "overweight" to "outperform," with price targets of $112 to $120.

Alibaba has performed well since its massive IPO in September, in which it raised $25 billion -- making it the world's largest offering.


Sprint closed up 4.6% to $6.20  at the end of the session, prior to its earnings report, but in after-hours trading it fell 6.3% to $5.84.

Sprint reported a loss of 19 cents a share on revenue of $8.49 billion, substantially less than Wall Street's expectations. Analysts polled by Thomson Reuters had expected a loss of 6 cents a share on revenue of $8.59 billion. 

The telecom carrier attributed the less than stellar performance to the fact that it is a "transitional quarter" for the company. In August, Sprint appointed Marcelo Claure as its new CEO.

"We have started a transformational journey," said Claure, in a statement. "While the company continues to face headwinds, we have begun the first phase of our plan and are encouraged with the early results. Every day we are focused on improving our standing with consumers, improving our network and controlling our costs."

In its forecast, Sprint said it expects to see continued pressure on its wireless service revenue in the next quarter, given the significant loss of postpaid cellular customers over the past few quarters.

 

At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.


TheStreet Ratings team rates SAPIENT CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate SAPIENT CORP (SAPE) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

You can view the full analysis from the report here: SAPE Ratings Report

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