Cloud Service Provider Fusion Strikes Again Lands $71.5M California Based Acquisition

New York City based Fusion (FSNN), a leading provider of cloud services, has signed a definitive agreement to acquire privately-held Pleasanton, California based MegaPath Holding Corporation (“MegaPath”). MegaPath is reported to provide a robust, fully-integrated suite of cloud services including Unified Communications as a Service (UCaaS), cloud computing, security, SD-WAN and cloud connectivity. The transaction is valued at under 5.0x pro forma Adjusted EBITDA including anticipated cost synergies realized within 12 months of closing.

Total consideration in the MegaPath transaction is $71.5M with up to $10M of the consideration is payable at Fusion’s election in unregistered shares of Fusion common stock priced at $5.78/share. Fusion intends to fund the cash portion of the consideration via borrowings under its First Lien Senior Secured Credit Facility, $62.0 million of which is currently held in escrow for this acquisition. The transaction is expected to close within the next 90 days, subject to receipt of certain regulatory approvals and other customary closing conditions. Bank Street Group served as the exclusive financial advisor to MegaPath in connection with this transaction.

Fusion reported that this MegaPath acqusition provides the following advantages:

  • Contributes additional financial scale with approximately $70 million in annual revenue, 95% of which consists of contracted monthly recurring revenue (MRR), and adjusted EBITDA of approximately $15 million including anticipated cost synergies
  • Adds more than 8,000 small and medium business and large enterprise customers, with an average monthly revenue per customer (ARPU) of $750 and 1.0% monthly churn
  • Provides a robust, customizable and highly scalable back office/OSS platform that is expected to be utilized across the full company to support enterprise customer needs and increase efficiency
  • Adds approximately 45 quota-bearing sales representatives across direct and indirect sales channels as well as a number of distribution partners, driving upselling and cross-selling opportunities and deepening Fusion’s strong relationships throughout the Channel Partner sales channel
  • Brings a highly capable staff of experienced cloud services professionals with expertise to facilitate more rapid integration of the businesses and execution of Fusion’s strategy

Matthew Rosen, Fusion’s Chairman and CEO, stated, “This transaction is further evidence that Fusion is rapidly building a cloud services industry leader around our unique and compelling single-source strategy. MegaPath is an ideal fit with our strategic objectives as it adds a diverse, high-value business customer base, a team of cloud services experts, and incremental financial scale, with a high percentage of MRR, high ARPU and low churn relative to industry averages. Given the similarities between our businesses, we expect the MegaPath acquisition to facilitate the customer, operational and financial integration of Birch, enabling us to drive Fusion’s strategy more efficiently across the entire organization.”

Craig Young, MegaPath’s CEO stated, “The Cloud Services market is recognizing the superior value of integrated solutions from a single-source provider. Fusion’s differentiated strategy, its high-quality integrated product suite and its scalable platform are therefore a natural fit with MegaPath’s business and culture. Our participation in the equity of Fusion through this transaction underscores our confidence that the combination of the two companies will create significant value for shareholders. Furthermore, our customers will continue to benefit from the same high levels of service quality, customer care and innovation from Fusion that they’ve come to expect from MegaPath.”

To learn more about Fusion (Nasdaq: FSNN) and to track its progress please visit the Vista Partners Fusion (FSNN) Coverage Page.

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.
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Fusion Announces Definitive Agreement to Acquire MegaPath

Fusion (FSNN), a leading provider of cloud services, announced today that it has signed a definitive agreement to acquire privately-held MegaPath Holding Corporation (“MegaPath”). Based in Pleasanton, California, MegaPath provides a robust, fully-integrated suite of cloud services including Unified..

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Fusion Closes Transformational Acquisition – Moves To Nasdaq Global Market

Fusion (NasdaqGM: FSNN), a leading provider of cloud services, announced Monday that on May 4, 2018, it closed its previously-announced acquisition of the Cloud and Business Services business of Birch Communications Holdings, Inc. (“Birch”). The acquisition was completed through a merger of a wholly-owned subsidiary of Fusion with and into Birch. The total enterprise value of this transaction was a ~$600 million, consisting of approximately 50 million shares of Fusion common stock and the refinancing of $444 million of Birch indebtedness.  Fusion also notified shareholders that its shares of common stock were approved for listing on The Nasdaq Global Market, effective with the open of the market on May 7, 2018. Fusion’s common stock continues to trade under its existing trading symbol “FSNN.” The structure of the transaction triggered a new listing application requirement according to Nasdaq’s rules, which includes a minimum bid price of $4.00 per share. In connection with the new listing, Fusion announced that it has effected a 1-for-1.50 reverse split of its common stock for stockholders of record as of the open of business on May 4, 2018.  Fusion further announced that on May 4, 2018, it completed the planned divestiture of all of its interests in its Carrier Services business.  As a result, Fusion’s sole focus is on the Cloud and Business Services market.

 

 

 

 

 

Fusion offered the following highlights regarding this acquisition:

  • Creates an industry-leading cloud and business services company with more than $500 million in pro forma annual revenue
  • Excludes Birch’s legacy consumer and single-line business customers, which have lower profitability and average revenue per customer (ARPU) as well as higher churn rates
  • Empowers Fusion to expand and accelerate its highly differentiated single-source strategy across a much larger platform and customer base consisting of more than 150,000 businesses
  • Adds considerable sales and distribution resources, for a total of approximately 75 direct, indirect and inside sales professionals and more than 800 active distribution partners
  • Capitalizes on Fusion’s robust intellectual property, go-to-market strategy, and brand awareness developed over the last several years as the Single Source for the Cloud
  • Combines both companies’ network infrastructure assets into one of the largest North American, 100% IP-based networks that is low cost and highly scalable, with approximately 31,000 route miles of fiber
  • Brings to Fusion a talented employee base of technology professionals, bound by a common vision for the future, a culture of innovation and a commitment to service excellence
  • The Birch acquisition was financed through borrowings under Fusion’s new $680 million Senior Secured Credit Facilities (the “Facilities”), which closed on May 4, 2018. The Facilities include $640 million in term loans and a $40 million revolving credit facility, which is currently undrawn. Including the revolving credit facility, the Facilities bear interest at a weighted-average rate of LIBOR plus 7.56%. Excluding the revolving credit facility, the Facilities bear interest at a weighted-average rate of 7.72%.

 

Matthew Rosen, Fusion’s Chairman and CEO, stated, “Today marks the beginning of an exciting new era for Fusion, as we now move forward to realize the tremendous potential of the combined company. In bringing the two businesses together, we have created a market-leading Cloud Services company that is positioned for further growth, both organically and through additional strategic acquisitions. We are confident that Fusion can create significant, long-term value for shareholders by extending our proven strategy as the single source for the cloud across our greatly expanded platform and customer base and leveraging our substantially greater scale and resources. Our new financing likewise represents another major step toward Fusion’s goal of becoming the industry’s leading single-source cloud services provider. We appreciate the support we received from Goldman Sachs, Morgan Stanley and MUFG as joint lead arrangers, as well as previous lenders to Fusion and Birch who participated in this financing along with a number of new lenders.”

To learn more about Fusion (Nasdaq: FSNN) and to track its progress please visit the Vista Partners Fusion (FSNN) Coverage Page.

 

 

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.
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Tech Giant Apple Exceeds Q2 Estimates

Dow 30 component Apple (AAPL) revolutionized personal technology with the introduction of the Macintosh in 1984. Today, Apple leads the world in innovation with iPhone, iPad, Mac, Apple Watch and Apple TV. Apple’s four software platforms — iOS, macOS, watchOS and tvOS — provide seamless experiences across all Apple devices and empower people with breakthrough services including the App Store, Apple Music, Apple Pay and iCloud. Apple’s more than 100,000 employees are dedicated to making the best products on earth, and to “leaving the world better than they found it.”

Market analysts predicted Apple to sell 52.3M iPhones, in the company’s Q2. The company kept in line with the estimate, selling 52.2M iPhones. Estimates also called for $2.64 earnings/share, and the technology company exceeded expectations with reported earnings of $2.73/share. Revenue was reported at $61.1B, beating analyst estimates of $60.9B.

Many investors who were concerned about the soft sales of iPhone X because of its high price can find relief in Apple’s quarter 2 earnings. While iPad sales were down this quarter, the YOY sales of the product were up. However, the Mac division of Apple saw sales decrease not only this quarter but in YOY comparison with only 4M sold in quarter two, less than the 5.1M from  Q1 and the 4.2M from Q2 2017.

Apple’s Board of Directors also approved a $100B share buyback as well as a 16% increase in its quarterly dividend.

Learn more about Apple and track its ongoing progress at Vista Partners Apple (AAPL) Coverage Page.

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Apple earnings beat, iPhone sales in-line, stock jumps

Apple has announced its Q2 2018 earnings…

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United Technologies Raises Outlook for 2018 After Topping Q1 Estimates

United Technologies Corporation (UTX) creates smart, sustainable solutions that are used to provide high-technology systems and services to both the building and aerospace industries.

United Technologies reported earnings per share of $1.77 for 2018 Q1, surpassing the estimates of $1.55 per share and increasing 20 percent from the year before. The technology company saw growth in adjusted operating profit across all four of its business units, as well as a raised sales and adjusted EPS outlook for the 2018 fiscal year.

Sales increased 10% from Q1 2017 to $15.2 billion that also included 6% organic growth.

Net income for the quarter was reported at $1.3 billion which was down 6% from Q1 2017. Capital expenditures totaled $337 million and cash flow from operations equaled $453 million.

“We are off to a solid start in 2018. Sales were up 10 percent, including 6 percent organic growth which represented our strongest first quarter organic growth rate since 2011, with all four businesses contributing. Our focus on innovation and execution is clearly paying off. Based on a strong first quarter performance and solid fundamentals at each of our businesses, we are raising our 2018 sales outlook to a range of $63 to $64.5 billion and raising our adjusted EPS outlook range to $6.95 to $7.15.* We remain committed to executing on our strategic priorities and are well positioned to deliver sustainable long-term shareowner value.” -UTC Chairman and Chief Executive Officer Gregory Hayes

To learn more about United Technologies Corp. (UTX) and to track its progress please visit the Vista Partners United Technologies Coverage Page.

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Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.
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Dow Receives Four Edison Awards for its Innovative Technology

The Dow Chemical Company is a part of the DowDupont Holding Company (DWDP), a business that is focused on agriculture, materials science and specialty product sectors that will lead their respective industries through productive, science-based innovation to meet the needs of customers and help solve global challenges.

Known for constant improvement and betterment, The Dow Chemical Company has been awarded the very prestigious Edison Award for not one, but four of their breakthrough technologies. The Edison Awards recognize excellence in new product and service development, marketing, human-centered design, and innovation. The winners are selected annually from thousands of nominees and are announced each year at the Edison Awards Gala in New York, New York.

In 2017, Dow was responsible for the granting of 789 U.S. patents, an all-time record high for the company.

Dow’s award-winning technologies include:

EA-4600 LV Hot Melt RTV Translucent Silicone Technology – Silver

Dow Performance Silicones Moldable Optical Silicone – Silver

EVOLV3D™ Universal Support Material – Bronze

Blue4est® with ROPAQUE™ NT-2900 Hollow Sphere Pigments – Bronze

The Awards were named for Thomas Alva Edison, an American inventor, and businessman who received 1,093 U.S. patents for his technologies and is best known for his inventions of the light bulb and phonograph.

Thomas Edison developed the industrial laboratory, focusing invention on well-defined market needs. It has been called research with a purpose.  Just like Edison, our research is customer focused, solving customer and societal needs and creating value for our shareholders. We are pleased to receive this recognition for our innovations and innovators.” -A.N. Sreeram , senior vice president, Research & Development, and chief technology officer for Dow

To learn more about Dow and DowDuPont (DWDP) and to continue to track its progress please visit the Vista Partners DowDuPont Coverage Page.

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Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.

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Dow Earns Four 2018 Edison Awards for Breakthrough Technologies

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The Home Depot Works Towards Strategic Investment Plan With 1,000 New Technology Professionals

The Home Depot, Inc. (HD) is the world’s largest home improvement retailer with retail stores all across North America. The Home Depot sells building materials and home improvement products, as well as lawn and garden supplies, and provides installation, home maintenance, and professional service programs.

The Home Depot is set to hire 1,000 new technology professionals at its centers in Atlanta, GA; Austin, TX; and Dallas, TX throughout 2018. The goal of this move is to support initiatives related to the company’s $11.1B 3-year strategic investment plan. With the company looking to improve its online shopping experience, as well as its supply chain and delivery capabilities, advanced software engineering will be required along with system engineering, and UX design and product management.

The Home Depot was recently named to Fast Company’s 50 Most Innovative Companies because of their technology team’s use of the latest modern development stacks and practices across both the public and private cloud platforms. They also help build award-winning experiences for their customers and associates through use of artificial intelligence, augmented reality, machine learning, and big data.

To learn more about The Home Depot, Inc. (HD) and to continue to track its progress please vista Partners The Home Depot, Inc. Coverage Page.

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Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.

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More on this story can be found at The Home Depot, Inc. company website.




How Would $1 Million Work for You This Year?

Bloomberg reported that a Japanese firm called Today Co., which operates a popular online fashion shopping site Zozotown, posted new job offerings recently seeking up to seven “genius” tech experts. What is amazing is that they are willing to pay nearly $1 million or 100 million yen for each tech expert per year in the fields of artificial intelligence, cryptography and robotics, according to a blog post.

This story hits close to home as I live in the San Francisco  Bay Area where tech workers are also in extremely high demand with the likes of Alphabet, Google, Apple, Facebook, etc. and countless startups continuously fighting for tech talent causing a similar escalation of income as well as real estate prices. Real estate prices in the bay area have gained value YOY for a record 70 straight months, according to real estate data firm CoreLogic.

It will be amazing to see how this race to acquire tech workers will play out over the next few years and what will be produced as well. What is clear is that all should be acquiring these skills and understanding in the tech field in these rapidly changing times and that you will be paid well. If you are not headed in this field of work, then it would seem smart to try and find good investments to capitalize on these trends from real estate to tech and back.

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.

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Japan Heads Toward $1 Million Salaries in Battle for Tech Talent

Japan is joining the global hiring frenzy for technology engineers, as the nation known for modest pay and lifetime employment competes for cutting-edge talent with China and the U.S…

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Cisco is Recipient of 2018 AT&T Supplier Award

Cisco Systems, Inc. (CSCO) is a global technology leader that designs, manufactures, and sells Internet Protocol based networking and other communications technology.

This year’s 2018 AT&T Supplier Award will be received by Cisco for its outstanding performance and service to AT&T affiliates throughout the past year.

Cisco will receive recognition for its exceptional contributions in all of the selection criteria. The Supplier Award is selected based on supplier diversity results, teamwork, creative cost management solution, customer service, sustainability, and product/service performance.

“Over the last year, Cisco aligned themselves with AT&T’s priorities and exceeded our expectations in helping provide for our customers.” – Susan Johnson, executive vice president – Global Connections Management and Supply Chain, AT&T Services, Inc.

Cisco stated that it also looks forward to continuing its long-standing relationship with AT&T.

To learn more about Cisco Systems, Inc. (CSCO) and to continue to track its progress please visit the Vista Partners Cisco Systems, Inc. Coverage Page.

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.

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Cisco Receives 2018 AT&T Supplier Award

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Bloomberg Reports That Apple Seeks to Use Own Chips in Macs Instead of Intel’s By 2020

Dow 30 component, Apple Inc. (AAPL), has announced its plan to use its own chips in its Mac computers hopefully as early as the year 2020. Currently, Apple uses processors from Intel Corp. (INTC).

Apple’s Kalamata, as this initiative is called according to Bloomberg’s report, is only in the early stages of development, but comes as part of Apple’s overall strategy to make their devices work together more seamlessly.

Apple has been using Intel’s chips for its Mac computers since 2005, but the company has been working to design its own chips for all of its devices for years now. Many believe that this goal of phasing Intel out by 2020 may prove to be a bit aggressive and that other pc makers will not follow Apple’s lead with regard to this initiative.

We can push the envelope on innovation. We have better control over timing, over cost and over quality.” -Chief Financial Officer Luca Maestri

To learn more about Apple (AAPL) and track its ongoing progress please visit the Vista Partners Apple Coverage Page.

To learn more about Intel Corporation (INTC) and to track its progress please visit the Vista Partners Intel Corporation Coverage Page.

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.

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Apple plans to replace Intel chips in Macs with its own: Bloomberg

Apple Inc (AAPL.O) is planning to use its own chips in Mac computers beginning as early as 2020, replacing processors from Intel Corp (INTC.O), Bloomberg reported on Monday, citing people familiar with the matter…

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Cisco Commits $50 Million to Help End Homelessness In Santa Clara

Cisco Systems, Inc. (CSCO) is a global technology leader that designs, manufactures, and sells Internet Protocol based networking and other communications technology.

Cisco has committed $50 million to Destination: Home to help end homelessness in Santa Clara County. The money will be used to help build more housing for vulnerable residents, improve technology capacity across the homeless services sector, and invest in practices that will most effectively help those in need of support.

Despite Silicon Valley being a prosperous community, Santa Clara County has nearly 7400 residents without homes and 2000 that are chronically homeless. This is the third highest chronic homeless rate in the US.

We can put an end to homelessness in Santa Clara County and there is no better partner in this work than Destination: Home. I hope to join together with other business leaders across the technology industry so that with our collective creativity and innovative spirit, we can create a thriving community for all—including those who need our help the most.” -said Chuck Robbins, Chairman and CEO of Cisco.

Cisco has put the first $20 million towards this project through the Cisco Fund at the Silicon Valley Community Foundation.

To learn more about Cisco Systems, Inc. (CSCO) and to continue to track its progress please visit the Vista Partners Cisco Systems, Inc. Coverage Page.

Cisco to Provide Destination: Home with $50 Million Over Five Years to Help End Homelessness in Santa Clara County

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