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Synacor shares soar on services deal; Amazon's Bezos takes home profits


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Synacor shares soar on services deal; Amazon's Bezos takes home profits

Synacor Inc.shares got a major boost during the week ended May 6 with a deal that representedan upset for a legacy internet company.

Synacor won an agreementto offer portal services to AT&TInc. customers in a deal that CEO Himesh Bhise called a game-changerfor the company, putting it on track for a new goal to nearly triple its annualrevenues in three years.

"Our new contract win with AT&T is not only validationof our transformation but is also an indicator and accelerator of our future growthpotential," Bhise said during a May 5 conferencecall.

"In three years, that's 2019, we will generate $30 millionof EBITDA on annual revenues of $300 million," Bhise said. "It is achievableand we are already working hard towards it."

By comparison, in 2015, the company recorded $110.2 million inrevenues and $7.6 million in adjusted EBITDA. The AT&T deal alone is expectedto generate $100 million a year in revenues after the full deployment of productsin 2017. Under the terms of the agreement, Synacor will develop and manage desktopand mobile portal services to drive user engagement and monetize them via searchand advertising.

Notably, Synacor's victory came at the expense of a much largercompany: Yahoo! Inc. Accordingto The Wall Street Journal, the Synacordeal represents the unraveling of a 15-year relationship between AT&T and Yahoo.A person familiar with the matter told the Journalthat although Yahoo will continue to host email for AT&T customers, this representsonly a fraction of their prior relationship.

In the wake of the news, which came after market close May 4,Synacor's shares rocketed in afterhours trading from a closing price of $1.41. OnMay 5, shares opened at $3.81 before settling down just a hair to close at $3.64.

SNL Image

SNL Image

Yahoo's shares seemingly saw no impact from the news, closingMay 5 at $36.94, up from a May 4 close at $36.00. Inc.,meanwhile, also had a wild week. The company started off on a strong note, ridingthe wave of bullish sentimentgenerated by its first-quarter earnings beat on April 28. The company opened May2 at $663.92 and closed the day up at $683.85.

From there, the stock began to fall and by May 5, it had settleddown to close at $659.09. Of course, this was still higher than a week earlier,when the stock on April 28 closed at $602.00. Amazon CEOJeffrey Bezos netted nearly $671.3 million personally when he sold off more than1 million shares in the company in a series of transactions that took place betweenMay 3 and May 5, according to a Form4 filed with the SEC on May 5.

Bezos' transactions were executed pursuant to a Rule 10b5-1 tradingplan, where executives and other company insiders can set up a trading plan forselling stocks they own. The plan, which allows major holders to sell a predeterminednumber of shares at a predetermined time, help executives avoid accusations of insidertrading.

Other major companies that saw significant movement during theweek were CBS Corp. andDISH Network Corp.

CBS Corp. on May 3 reported strong first-quarter earnings, boostedby a 31% year over year jump in advertising revenue. All told, quarterly revenuejumped 10% year over year to $3.85 billion, the highest first-quarter revenue inthe company's history.

Speaking during a May 3 earnings conference call, CBS Corp. CEOand President Les Moonves said the company's results were a testament to the powerand value of broadcast. "Marketers are realizing once again that they get theirbest returns with broadcast television advertising," he said. "This isa big part of why you are seeing the kind of results we are talking about today."

After the company reported earnings, shares in CBS closed onMay 4 at $56.53, up from a May 3 close of $55.66.

As for DISH, the company saw its stock price dip in the middleof the week as a report surfaced that it would be a target of a lengthy report fromthe short seller Kerrisdale Capital Management LLC. Kerrisdaleconfirmed it was working on such a report with a May 6 tweet: "Weare indeed short $DISH. We haven't chosen to discuss it publicly yet. When we do,we'll have a lot to say."

In a pair of May 5 tweets, Kerrisdale seemingly tried to bothdampen the flames and stoke the fire. While the firm said it was"still weeks — perhaps many weeks — away from publication," it also noted, "We'reworking on a $10bn+ company that we believe is worth 60% to 80% less than its currenttrading value."

In a statement to Bloomberg News, a DISH spokesman said the companywas aware of the purported report but remained focused on driving long-term valuefor shareholders.

After a May 2 close of $48.92, DISH shares had fallen to closeMay 5 at $44.09. On May 6, however, they rebounded to close at $46.70.