A roundup of some of the North American equities making moves in both directions today
On the rise
B.C.-based Sierra Wireless Inc. (SW-T) soared on Friday after it said its expects revenue to exceed the consensus projections on the Street of US$116.5-million in the fourth quarter of 2020 and US$110-million in the first quarter of 2021.
The company also expects to report approximately US$170-million in cash and no debt at the end of 2020.
Concurrently, the Internet of Things solutions company announced CEO Kent Thexton plans to retire on June 30.
It has commenced a search for the successor of Mr. Thexton, who has been in the role since May of 2018.
Northern Dynasty Minerals Ltd. (NDM-T) rose after announcing late Thursday its unit Pebble Limited Partnership has filed an appeal with U.S. Army Corps of Engineers (USACE) over its decision to deny a key water permit for contentious Pebble Mine in Alaska.
In November, USACE said the proposed gold and copper mine is “not in the public interest.” It added a mitigation plan recently submitted by the company to address concerns about water usage was “non-compliant.”
Enthusiast Gaming Holdings Inc. (EGLX-T) in the wake of announcing before the bell it’s exercising its option to convert $9-million in debentures, which were set to mature on Dec. 31, into approximately 2.967 million common shares..
On Wednesday, it announced an agreement with a syndicate of underwriters, led by Canaccord Genuity Corp., to sell up to 7,383,000 common shares on a bought deal basis for proceeds of $42.5-million.
“This week we took a major step to add a sizeable amount of growth capital, while also significantly reducing our borrowings and interest costs,” said CEO Adrian Montgomery. “These two actions will strengthen our balance sheet ahead of our proposed Nasdaq listing, while we push forward with the execution of our growth strategy, which includes acquiring accretive properties which we can integrate into our platform.”
The offering of 2.013 million common shares was set at a price to the public of US$49.67 per share for aggregate gross proceeds of US$100-million.
Shares of Schlumberger NV (SLB-N), the world’s largest oilfield services provider, closed up with its fourth-quarter revenue and adjusted profit growing compared to the previous quarter, aided by cost cuts and a recovery in demand for oilfield services and equipment after a pandemic-driven slump in drilling.
Easing COVID-related restrictions has helped reverse the decline in oil demand and prices, which remain steady since a late-2020 rebound from historic lows.
Like its rivals Halliburton Co. (HAL-N) and Baker Hughes Co. (BKR-N) noted earlier this week, Schlumberger Chief Executive Officer Olivier Le Peuch said on Friday he was optimistic about demand recovery through this year, giving investors hope that the oil downturn is nearing an end.
Mr. Le Peuch added that the stage is set for oil demand to recover to 2019 levels by 2023 or even earlier as some analysts have noted.
Schlumberger posted total fourth quarter revenue of US$5.53-billion, 5.2 per cent above the third quarter and its first quarter-over quarter increase since the third quarter of 2019.
It reported net income excluding charges and credits of US$309 -million, or 22 US cents per share, in the fourth quarter ended Dec. 31, compared with an income of US$228-million, or 16 US cents, in the prior quarter.
On the decline
Endeavour Mining Corp. (EDV-T) slipped after announcing the sale of its 85-per-cent interest in its non-core Agbaou mine in Côte d’Ivoire to Australia’s Allied Gold Corp. (QMX-X) for a consideration of up to $80 million with further upside through its equity exposure and a Net Smelter Return royalty.
“The sale of our interest in the Agbaou mine to Allied Gold is in line with our strategy of actively managing our portfolio to focus management efforts on high margin, long-life core assets,” said president and CEO Sébastien de Montessus.
In a research note, PI Financial analyst Justin Stevens said: “We see the ‘hard’ components of US$20-million cash and US$40-million in equity (which can be sold back to Allied Gold at issue until YE2022) as reasonable consideration for an asset which we only model having two years of mine life remaining. While our current NAV [net asset value] estimate represents a forward-looking value from Sept 30, 2020 onward (last reported financials), a comparable value (Mar 1, 2021 onward) NAV from our model is US$91-million. Agbaou represents a negligible component of our NAV, and the divestment allows Endeavour to focus on fully integrating the Teranga assets into its portfolio. We note recent shareholder votes for the Teranga acquisition were overwhelmingly supportive, and closing is expected in mid-February.”
The Jacksonville-based railway company earned US$1.04 per share, topping the Street’s projection by 3 US cents, buoyed by intermodal traffic growth.
In a research note, Credit Suisse analyst Allison Landry said: “The company is positioned to see above industry average growth in 2021, supported by its continued success in converting highway volumes in the profitable merchandise sector (including forest products, pulp, metals, chems, etc), as well as inorganic growth opportunities such as its recent acquisition of the PanAm. And while lower rated (and historically less profitable) IM traffic is expected to see the strongest growth this year (in part bc it is the smallest segment), mix headwinds should begin to abate given the acceleration in merch vols and year-over-year improvement in coal. Importantly, CSX saw the greatest contribution from intermodal growth in Q4 and still generated a record O.R. – a testament to the sweeping structural changes to what was previously a hub-and-spoke network – which are now proving to bear fruit. With all of this in mind, we see a case for a CN/CP like revenue case emerging at CSX – which remains our Top Rail Pick.”
IBM Corp. (IBM-N) fell after it missed Wall Street estimates for quarterly revenue on Thursday, hurt by a rare sales decline in its software unit as clients shied away from longer-term deals due to pandemic-induced economic uncertainty.
The 109-year-old firm is preparing to split itself into two public companies and the namesake firm will focus on the so-called hybrid cloud, where companies use a combination of their own datacenters and leased resources to manage and process data.
Revenue from its cloud-computing business rose 10 per cent to a record US$7.5-billion in the fourth quarter, with IBM saying it is confident of returning to sales growth in 2021 and expected revenue to grow in mid-single digits after the separation.
That was not enough to convince investors, however, after IBM’s fourth consecutive quarter of sales decline.
“Our performance reflects the fact that our clients continue to deal with the effects of the pandemic and broader uncertainty of the macro environment,” said Chief Executive Officer Arvind Krishna, who took helm last April.
“This puts additional pressure on larger software transactions this quarter and project delays in some services engagements.”
Sales from cloud and cognitive, which houses IBM’s software offerings and its biggest unit, declined 4.5 per cent to US$6.8-billion after two years of growth.
Total revenue fell 6.5 per cent to US$20.37-billion, missing analysts’ average estimate of US$20.67-billion, according to IBES data from Refinitiv.
Excluding items, IBM earned US$2.07 per share, above estimates of US$1.79.
The incoming chief executive of Intel Corp. (INTC-Q) said on Thursday that most of the company’s 2023 products will be made in Intel factories but he sketched a dual-track future in which it will lean more heavily on outside factories.
The lack of a strong embrace of outsourcing from new CEO Pat Gelsinger drove shares down. Shares rose 6.5 per cent during regular trade on Thursday, when the results were released ahead of the close. The company said it was investigating “non-authorized” access to some of the results, with the Financial Times quoting its chief financial officer as saying the microchip maker had been hacked.
Intel also forecast first-quarter revenue and profit above Wall Street expectations, continuing to benefit from pandemic demand for laptops and PCs that have powered the shift to working and playing from home.
Mr. Gelsinger said he was “confident that the majority of our 2023 products will be manufactured internally” though he also said the use of outside chip factories is likely to increase “for certain technologies and products.”
Intel has been considering since last July whether to drop its decades-old strategy of both designing and making chips by turning for help on its central processing units, or CPUS, to “foundry” manufacturers. Those partners could be Taiwan Semiconductor Manufacturing Co and Samsung Electronics. Intel’s manufacturing technology, called a 7-nanometer process, is expected in 2023.
With files from staff and wires