Stock Market Predictions

Big-data investors look for the next Splunk

Stock Market Predictions

Essentially a catch-all term, big data refers to the ability to collect and analyze massive amounts of information on almost every dimension of the human experience.

Splunk allows companies to analyze data cheaply and simply, compared to the expensive data warehouses and specialized, hard-to-deploy technology they might have needed in the past.

From general business aspects to narrow sectors ranging from retail to healthcare to climate, the possibility of capitalizing off this data has the investment community excited.

Investors "know a heck of a lot more about big data now than they did two weeks ago, and they'll know a heck of a lot more in a month than they do now," said John Connors, a former Microsoft investor who now works as a venture capitalist at Ignition Partners, where he headed up the firm's Splunk investment.

Some backers of big-data companies didn't realize they had such a hot ticket until well after they made their initial investment.

Dave Hornik, an early backer of Splunk and who also backs traffic-information company Inrix, said he did not think of Inrix as a big data investment at first.

"But it turns out it is absolutely about big data," he said.

Most of the pure-play big data companies are still a couple of years away from IPOs, said Asheem Chandna at Greylock Partners, which invests in big data companies Cloudera and Sumo Logic. But he predicts stepped-up mergers and acquisitions of smaller big data companies in the short term, as well as blockbuster IPOs in the future.

"We're at the start of a decade-long run around new opportunities in big data," he said, singling out sub-areas such as analytics, business intelligence and automated pattern detection.

Greylock Partners fields around two dozen pitches a month from big data start-ups, more than double the rate of a year ago, Chandna noted.

"Splunk's IPO is going to have a huge impact," said Ted Tobiason, who runs technology equity capital markets at Deutsche Bank. "You can't ignore the valuation."

Splunk shares opened at $32, up 256 percent from the mid-point of the company's original IPO filing, valuing the business at about eight times forecast 2013 revenue. That is a lot higher than Jive Software, a recent hot software IPO that priced its offering at 4.7 times 2013 revenue, Tobiason noted.

While there are few pure-play big data companies nearing IPOs soon, Splunk's stock-market splash may encourage venture capital firms to invest more when big data firms look for new rounds of financing, Tobiason said.

VC firm Accel Partners launched a big data fund headed by Ping Li recently, but investors in other VC firms are likely asking how they plan to get more involved in the sector, he added.

It may also help big data start-ups to persuade more talented software engineers to jump ship from established tech companies, Tobiason said.

"This is the expansion of a huge market and you're going to have a lot more winners like Splunk," said Rob Ward of venture capital firm Meritech Capital, which invests in Cloudera and another big data company called Tableau Software.

Tableau is growing quickly and is likely considering an IPO some time next year, Ward added.

Curt Monash, an independent tech industry analyst, said he is busy meeting several big data companies, including Cloudera, Couchbase and Hortonworks.

"Cloudera probably has the second-best traction after Splunk," Monash said. "They have doubled in every metric you can measure them by. They have about 220 employees and a number of subscription customers. Subscription is the majority of their revenue now, which they are happy about."

Couchbase is part of a group of companies including 10gen that offer a hot type of database technology that can handle massive amounts of variable data, he added.

Other companies doing well in the big data space include MetaMarkets and Infobright, according to Monash.

Here are a handful of promising big-data businesses highlighted by venture capitalists, bankers and tech industry experts:

Cloudera: Helps other companies, including Nokia, Qualcomm and Groupon, store and crunch big data using Hadoop, a popular type of open-source software.

Cloudera is run by Michael Olson, former CEO of database company Sleepycat Software, which was acquired by Oracle in 2006. Cloudera's Chief Scientist is Jeff Hammerbacher, who built Facebook's data team.

While most people complain about the avalanche of data spewing from social networks and other sources, Hammerbacher thinks there is not enough data in the world.

Cloudera raised $40 million in Series D funding in late 2011 led by Frank Artale of Ignition Partners and existing investors Accel, Greylock, Meritech Capital Partners and In-Q-Tel, known as the investment arm of the CIA.

Hortonworks: Formed from the team that helped develop Hadoop as an open-source project inside Yahoo several years ago. The company is trying to get Hadoop used by as many people as possible, and it boldly predicts the technology will process half of the world's data within the next five years.

Hortonworks has support, training and partner programs to help other companies learn how to use Hadoop. CEO Rob Bearden was COO SpringSource and JBoss, two successful open source companies. The CTO and co-founder is Eric Baldeschwieler, who led the evolution of Hadoop at Yahoo.

Hortonworks has been coy about its funding. However, Benchmark Capital general partner Peter Fenton is an investor and sits on the company's board of directors.

Sumo Logic: Think of this company as a next-generation Splunk, building in cloud-based capabilities right from the start. Currently, Splunk is premise-based, meaning it uses on-site computer servers rather than remote, cloud-based servers.

The company raised $15 million earlier this year from investors including Greylock and Sutter Hill Ventures. Chandna at Greylock Partners says on top of its existing business, Sumo Logic's cloud-based technologies mean it could one day sell anonymized industry insights gleaned from across the spectrum of companies it does business with.

Inrix: This company represents one of many industry-specific big data plays venture capitalists are making. It uses several hundred thousand receivers based around the roads to gather millions of pieces of data every hour on factors such as how fast cars are moving, whether they are slowing down or speeding up, whether windshields are on, and so on.

Together, the data gives a complete picture of traffic patterns now, and likely ones in the future. The data can be sold to entities ranging from GPS makers to municipalities who need to plan roads. Its latest funding round was last year, when it raised $37 million led by Kleiner Perkins Caufield & Byers and August Capital.

10gen: The company develops MongoDB, an open-source database that can handle lots of different types of data, partly because it does not require information to be store in traditional tables and rows.

10gen was founded by former DoubleClick Founder and CTO Dwight Merriman and former DoubleClick engineer and ShopWiki Founder and CTO Eliot Horowitz.

10gen raised $20 million in Series D funding last year from Sequoia Capital, Flybridge Capital and Union Square Ventures.

MetaMarkets: This company helps online media businesses analyze high volumes of streaming data in areas such as online advertising, gaming and social media.

MetaMarkets is run by Michael Driscoll, who led Dataspora, which delivers data science to telecom companies, insurers and retail banks.

MetaMarkets raised $6 million last year from investors including IA Ventures, Village Ventures and True Ventures.

(Reporting By Sarah McBride and Alistair Barr; Editing by Bernard Orr)

Luxury bag maker Tumi surges in market debut

Stock Market Predictions

Tumi's strong start as a public company mirrors the impressive stock market debut of luxury brand Michael Kors Holdings Ltd, whose stock has more than doubled in value since it started trading on December 15.

The luxury goods industry has been performing well despite economic uncertainty around the world. Strong growth in emerging markets and the tendency of increasingly affluent Asian shoppers to buy luxury goods when on vacation have also boosted sales.

The upbeat market for pricey goods has prompted a spate of initial stock offerings, including the $2.1 billion IPO of Italian fashion house Prada SpA in Hong Kong and the $487 million IPO of Italian luxury shoemaker Salvatore Ferragamo.

Tumi priced 18.8 million shares at $18 per share on Wednesday, raising $338.4 million. It had expected to sell its shares for $15 to $17 each.

The maker of luggage, business cases and handbags is benefiting from a resurgence in the travel industry, which had suffered after the September 11 attacks on the United States.

"Tumi commands great brand loyalty and has done an amazing job when it comes to selling directly to customers," said Marshal Cohen, NPD Group's chief retail industry analyst.

"Tumi's use of e-commerce and social commerce to sell their products is where we'll really see the growth story."

The IPO allowed British private equity firm Doughty Hanson to reduce its stake in the luxury bags maker to about 60.7 percent.

Doughty Hanson, which previously owned 84.3 percent of Tumi's stock, is also an investor in Netherlands-based maker of activated carbon, Norit NV, which has filed to go public in the United States.

Tumi competes directly with the world's biggest luggage maker, Samsonite International SA, which tried to buy the company early this year, according to media reports.

Other competitors include Burberry, Dunhill, Gucci, Louis Vuitton and Montblanc.

"The company caters to an elite clientele, who can afford up to $2,000 individual luggage ... the company will only grow," said Scott Sweet, senior managing partner at IPO Boutique.

Tumi has retail stores at premium retail venues across the globe including New York, Paris, London, Rome, Tokyo, Moscow and Milan and plans to open eight to 16 stores over the next three years.

The company's net sales rose 31 percent to $330 million in 2011. Net income rose to $16.6 million from $104,000.

Goldman Sachs, JPMorgan and Credit Suisse were the main underwriters of the offering.

Shares of the South Plainfield, New Jersey-based company closed up 47 percent at $26.50 on the New York Stock Exchange on Thursday.

(Reporting by Tanya Agrawal and Ashutosh Pandey in Bangalore; Editing by Supriya Kurane and Viraj Nair)

Morgan Stanley bond trading unexpectedly strong

Stock Market Predictions

The investment bank and brokerage said its bond trading revenue rose compared with last year's first quarter, stripping out an accounting quirk, even as its chief rival, Goldman Sachs Group Inc, posted a decline. Morgan Stanley shares were up 1 percent at $17.85 in Thursday afternoon trading.

"We had identified several years ago that we were punching below our weight in fixed income products," Chief Financial Officer Ruth Porat said in an interview. "I think you're beginning to see the fruits of all we've done here."

Morgan Stanley also showed some progress in its wealth management business.

In spite of those gains, the bank lost money during the first quarter because an accounting adjustment cost it $2 billion. Analysts typically exclude that item, known as debt valuation adjustment (DVA), from their performance assessments.

The bank reported a net loss of $119 million, or 6 cents per share, compared with a profit of $736 million, or 50 cents per share, a year earlier.

Excluding the debt adjustment, which requires companies to record gains when their own debt weakens and losses when their debt strengthens, Morgan Stanley earned $1.4 billion, or 71 cents per share.

The bank's trading revenue was much higher in the first quarter than the 2011 fourth quarter, thanks in large part to improvements in the fixed-income markets. U.S. competitors including Goldman, JPMorgan Chase & Co, Citigroup Inc and Bank of America Corp also posted gains.

But Morgan Stanley's trading results were also significantly better compared with the first quarter of 2011, a level of improvement that eluded many rivals.

"This clearly demonstrates company-specific improvement," said David Trone, an analyst with JMP Securities.

Goldman reported a 14 percent year-over-year decline in trading revenue, although its results are not exactly comparable because it separates client trading from its own trading.

Following Morgan Stanley's report, several analysts said the company surpassed their earnings and revenue forecasts, attributing the outperformance to its trading business.

"Those trading results were well ahead of our expectations," said Edward Jones analyst Shannon Stemm. "The fact that Morgan Stanley stood out from its peers really told us that the investments in that business are starting to pay off."

Much of the increased client activity in bond trading came as a result of the European Central Bank's Long Term Refinancing Operation (LTRO), announced in December, Porat said.

The LTRO offered a lifeline to struggling European banks, easing investor concerns about the European debt crisis and creating less-volatile trading conditions.

"We've had thousands of investors literally on some of our weekend calls trying to understand what's going on in the Eurozone," Porat said.

Morgan Stanley profited by advising clients on how to hedge risk related to Europe, particularly in foreign exchange, and by executing those trades, she said.

Morgan Stanley's wealth management business, a joint venture with Citigroup, posted higher profit margins during the quarter -- 11 percent compared with 10 percent a year ago and 7 percent in the fourth quarter.

Investors and analysts have been watching wealth management closely because Morgan Stanley has been slow to hit profit targets as it integrates Citigroup's Smith Barney business into its own.

Management initially aimed for a pretax margin of 20 percent for retail brokerage but lowered that target to the mid-teens last year, saying low interest rates and weak client activity were hurting performance.

The wealth management business reported more client assets in fee-based accounts and more revenue and assets per financial adviser. Some of those gains are the result of efforts to fire hundreds of unproductive advisers. Morgan Stanley's financial adviser headcount was 17,193 at March 31, down 2 percent from the end of the fourth quarter and down 5 percent from a year earlier.

The bank plans to complete a technology integration this summer that will put all of the financial advisers on the same platform, an effort that will save the bank an estimated $500 million a year.

The bank plans to buy another 14 percent of the business from Citi after May 31, when a previously agreed option becomes available.

About 51 percent of the business is owned by Morgan Stanley, and Citi holds the rest. Sources told Global Markets last month that Morgan Stanley wanted to buy all of Citigroup's stake this year, but Morgan Stanley Chief Executive James Gorman said on a conference call with analysts on Thursday that his bank had "no particular compulsion or anxiety to accelerate" the pace of its purchase.

DOWNGRADE THREAT

Moody's Investors Service may downgrade Morgan Stanley soon, but the bank has been preparing for such an event, CFO Porat said. Ratings cuts can raise a bank's funding costs, increase its collateral requirements, and force clients and counterparties to move their business elsewhere.

To prepare for a possible downgrade, Morgan Stanley has been moving derivatives into its higher-rated bank entity and has reduced the size of its structured products business, which would be most impacted by the change, Porat said.

Since many derivatives contracts will be centrally cleared on exchanges, due to new regulations, the impact on Morgan Stanley's long-term, over-the-counter derivatives business will be limited, she said. Only about 8 percent of those contracts would be affected by a Moody's cut, she said.

Moody's warned in February that it might lower Morgan Stanley's rating by three notches to Baa2, putting its rating below peers, including Goldman Sachs.

The bank has said it would have to post an additional $6.52 billion in collateral if that happened.

In the first quarter, Morgan Stanley's net revenue totaled $6.9 billion. Excluding the debt adjustment, revenue was $8.9 billion, up from $7.8 billion a year earlier.

Excluding debt adjustments, Morgan Stanley's trading revenue rose 33 percent to $5 billion. Pretax income from trading, excluding DVA, more than doubled, to $1.67 billion from $621 million. Its fixed income trading division delivered $2.6 billion in revenue, excluding DVA, up 34 percent from a year ago.

(Reporting By Lauren Tara LaCapra; additional reporting by Jed Horowitz and David Henry; Editing by Dan Wilchins, Maureen Bavdek and John Wallace)

Ixia shares jump on strong 2nd-quarter profit forecast

Stock Market Predictions

Victor Alston, who will become chief executive on May 10, plans to extend beyond Ixia's core expertise with the goal of doubling the total addressable market (TAM) in the next three to five years, Mizuho Securities analyst Joanna Makris wrote in a note to clients.

The company named Alston its Chief Operating Officer last month and said he would take over as chief executive from Atul Bhatnagar.

Wunderlich analyst Matthew Robison raised Ixia to "buy" from "hold" citing "solid first-quarter earnings and no sign of trouble in the CEO department."

In the current quarter, the company expects to earn 15 cents to 17 cents per share, excluding items, it said on a post-earnings conference call.

Analysts, on average, were expecting a profit of 15 cents per share, according to Thomson Global Markets I/B/E/S.

For the January-March quarter, Ixia earned 15 cents per share, excluding items, on revenue of $85.6 million.

Shares of the company, which has a market value of $793 million, were trading up 13 percent at $12.70 on the Nasdaq. They touched a high of $13.21 earlier in the session.

(Reporting by Sagarika Jaisinghani in Bangalore; Editing by Unnikrishnan Nair and Supriya Kurane)

Microsoft rises as better PC sales boost profit

Stock Market Predictions

The deluge of mobile devices, such as smartphones and tablets, has seen Apple Inc and Google Inc vie for top honors in consumer electronics, leaving Microsoft trying to reinvent itself to compete in a changing landscape.

Microsoft's first-quarter results, released on Thursday, boosted confidence in the company, which expects to launch a new tablet-friendly version of Windows. At least four brokerages raised their price targets on the stock.

"The product launches should create a positive mix effect on gross margin, as was the case in the previous two Windows launches," Barclays analyst Raimo Lenschow said in a research note to clients.

Lenschow, who has an "equal weight" rating on Microsoft shares, raised his price target on the stock by $3 to $36.

Evercore analyst Kirk Materne said strong demand from enterprise customers should mean the shares continue to rise ahead of the company's expected fall product launch.

But he said it was unclear if additional revenue from upcoming product launches "will need to be plowed back into spending on businesses where (Microsoft) is lagging (mobile, online) or whether most of the upside can drop to the bottom line."

Microsoft shares were up $1.62, or 5.2 percent, to $32.63 on Nasdaq in morning trade. The stock touched a four-year high of $32.95 last month but has declined 6 percent since.

(Reporting by Sayantani Ghosh in Bangalore, Sinead Carew in New York; Editing by Don Sebastian and John Wallace)

Tempur-Pedic forecast disappoints shares dip

Stock Market Predictions

The company, which competes with Sealy Corp (ZZ.N) and Select Comfort Corp (SCSS.O), expects to earn $3.80 to $3.95 per share on revenue of $1.6 billion to $1.65 billion in 2012.

Analysts, on average, were expecting earnings of $3.97 per share on revenue of $1.66 billion, according to Thomson Global Markets I/B/E/S.

For the first quarter, Tempur-Pedic earned $56.2 million, or 86 cents per share, compared with $48.3 million, or 68 cents per share, a year ago.

Revenue rose 18 percent to $384.4 million.

Analysts on an average had expected the company to earn 84 cents per share on revenue of $384.5 million for the first quarter.

The Lexington, Kentucky-based company's shares were trading down 11 percent at $74.15 after the bell. They closed at $83.75 on Thursday on the New York Stock Exchange.

(Reporting by Chris Jonathan Peters in Bangalore; Editing by Sreejiraj Eluvangal)

Midstates Petroleum makes modest debut

Stock Market Predictions

The IPO market has been marked by poor pricing, pulled deals and delayed offerings in recent months. IPOs accounted for 11.3 percent of equity capital markets activity in the first quarter, down from 20.6 percent a year earlier, according to Thomson Global Markets data.

This week's IPOs signaled a turnaround with shares of business technology companies Splunk Inc (SPLK.O) and Infoblox Inc (BLOX.N) as well as luxury bag maker Tumi Holdings Inc (TUMI.N) soaring on their first trading day.

Midstates shares opened 2 percent above their IPO price. The company had priced its offering at $13 per share, significantly below its expected range of $16 to $18.

Oil and gas companies have found it difficult to attract investors on their debut trading days. Of the 19 energy companies that have gone public in the last year, only Oiltanking Partners (OILT.N) opened more than 10 percent above the IPO price.

SandRidge Energy's (SD.N) unit, SandRidge Mississippian Trust II (SDR.N), which also went public this week, opened 4 percent above the offer price.

"Oil & gas companies are extremely risky...they are exposed to geopolitical conditions, to volatility of fuel prices... This makes investors wary," said Scott Sweet, senior managing partner at IPO Boutique.

Houston-based Midstates Petroleum offered 18 million shares and the selling stockholders the remaining 6 million.

Private investment firm First Reserve cut its stake in the company to 47 percent from 77 percent.

Midstates Petroleum focuses on oilfields in Louisiana that were discovered by major oil companies in the 1940s and 1950s, but left under-developed because of low oil prices, the adoption of a state-level severance tax and other regulatory hurdles.

The company's average daily production has grown to 7,499 barrels of oil equivalent per day in 2011 from 995 in 2008.

It has drilled 57 gross wells, 93 percent of which are in commercial production, in the same period. The company expects to drill 67 wells this year.

Midstates' 2011 revenue more than tripled to $209.4 million from 2010. It reported net income of $16.7 million, compared with a loss of $15.6 million in 2010.

Shares of the company were trading up 15 percent at $14.95 on the New York Stock Exchange.

(Reporting by Ashutosh Pandey and Eileen Anupa Soreng in Bangalore; Editing by Supriya Kurane and Don Sebastian)

Verizon Wireless data revenue growth impresses

Stock Market Predictions

While wireless customer growth slowed, Chief Financial Officer Fran Shammo said the company's mobile venture, Verizon Wireless, saw the fastest growth in mobile service revenue in three years as more customers used smartphones.

Any signs of data revenue growth would be a relief to carriers such as Verizon Wireless as they have been paying phone vendors such as Apple Inc hefty subsidies for every smartphone they sell and spending billions of dollars to upgrade their networks to support these smartphone users.

"It's critical they're able to increase revenue from all this upfront investment," said Credit Suisse analyst Jonathan Chaplin.

Verizon Wireless average monthly revenue per user (ARPU) for contract customers rose 3.6 percent in the quarter to $55.43 compared with expectations for growth closer to 3 percent from two analysts. This was helped by data service revenue that grew 16 percent to $23.80.

Shammo said the growth should continue as more people buy smartphones and the company starts to offer new shared data service plans under which customers will be able to connect more than one device under a single data service plan.

"We're confident we'll continue to accelerate our growth in this area," Shammo told analysts on a conference call.

Shammo told Global Markets that customers using Verizon's fastest network are paying more for data services because the higher-speed data rates encourage them to spend more as they use additional services such as video streaming.

When it is launched this summer, Shammo said the new shared data plan would bring incremental revenue for each device connected to the company's network.

Many analysts have suggested that a shared data plan would make more sense for operators as most consumers have shied away from connecting devices such as tablet computers to cellular networks because they do not want to pay a second monthly fee on top of their data plan for smartphones.

Verizon shares were up 61 cents at $38.27 in afternoon trading on the New York Stock Exchange on Wednesday.

REVENUE UP BUT CUSTOMER GROWTH SLOWS

ARPU growth is especially important since customer growth is declining. Verizon Wireless added 501,000 contract customers in the quarter, roughly in line with the average expectation for just over 511,000 from five analysts polled by Global Markets, but down from fourth quarter additions of 1.2 million.

Given that Verizon, the first of the big U.S. operators to report first quarter results, typically posts the strongest customer growth, its sluggishness may foretell a sharp slowdown across the industry.

"People were upgrading, but there doesn't seem to be as many new people coming in to wireless," said Piper Jaffray analyst Christopher Larsen, adding that Verizon's mobile growth was in line with his recently lowered estimate.

However, Larsen was impressed with the company's financials.

"It looks like it was a good quarter over all. Earnings per share was slightly ahead of the Street. Revenue was a little bit better," Larsen said.

The slower customer growth also comes with a silver lining as the Verizon Wireless profit margin rose to 46.3 percent from 42.2 percent in the fourth quarter, when an Apple Inc iPhone fueled growth, but also required hefty subsidies.

The company said it sold 3.2 million iPhones in the quarter and 2 million phones using its fastest network based on Long Term Evolution (LTE) technology.

Verizon earnings rose to $1.69 billion, or 59 cents per share compared with Wall Street expectations for 58 cents per share according to Thomson Global Markets I/B/E/S. In the year-ago quarter it reported a profit of $1.44 billion, or 51 cents per share.

Revenue rose to $28.24 billion from $26.99 billion and compared with analyst expectations for $28.17 billion.

Verizon Wireless is a venture of Verizon and Vodafone Group Plc. Its biggest rival AT&T Inc and Sprint Nextel, the No. 3 U.S. mobile service, report quarterly results next week.

(Reporting By Sinead Carew; editing by Gerald E. McCormick, Dave Zimmerman and Andre Grenon)

Infoblox market debut gets a technology boost

Stock Market Predictions

Infoblox's IPO comes a day after Splunk Inc (SPLK.O) made a blockbuster debut, reaping the rewards of being the first mover in the 'Big Data' space.

Infoblox shares closed up 33 percent at $21.30 on the New York Stock Exchange on Friday, taking its market valuation to $937.2 million.

The company had priced its offering at $16 per share, above its initial proposed range of between $12 and $14.

Technology companies have attracted considerable investor interest in the IPO market in recent months, with most trading at very high multiples.

Infoblox provides automation technology that helps customers create internal networks and data centers to address the growing number of network connected devices and applications.

The company, which was founded in 1999 by its present Chief Technology Officer Stuart Bailey, counts Adobe Systems Inc (ADBE.O), Best Buy Co Inc (BBY.N), Boeing Co (BA.N) and Caterpillar Inc (CAT.N) among its 5,400 plus end customers.

"We saw a big opportunity looming in the next few years for network automation, and we really wanted to make sure we could invest in that, a bit ahead of the curve," Chief Executive Robert Thomas told Global Markets.

The company may look at "small technology acquisitions" after a year, he said.

Thomas previously served as CEO of NetScreen Technologies, a network security company acquired by Juniper Networks (JNPR.N) for $4 billion in 2004.

For the six months ended January 31, the company recorded a net loss of $2.8 million on revenue of $80.7 million, according to a regulatory filing. The CEO said the company has a target of achieving an operating profit margin of 18 to 22 percent in three years.

Infoblox is backed by Sequoia Capital, a venture capital firm known for investing early in companies like Google (GOOG.O), LinkedIn (LNKD.N), YouTube and more recently, Instagram -- the photo sharing app maker that was scooped up by Facebook for $1 billion.

Sequoia Capital owns a fourth of Infoblox, a stake now valued at about $234 million. CEO Thomas owns about 6.6 percent of the shares.

Business security products maker Proofpoint Inc (PFPT.O) also made its debut on Friday after an $82 million IPO priced above range. It closed up 8 percent at $14.08.

(Reporting by Aman Shah and Sharanya Hrishikesh in Bangalore; Editing by Supriya Kurane, Sreejiraj Eluvangal)

Chesapeake discloses loans after Reuters report

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Global Markets reported on Wednesday that McClendon has borrowed as much as $1.1 billion against his 2.5 percent interest in wells received as part of his compensation.

The loans, taken out over the past three years, were previously undisclosed to shareholders, analysts and academics said, raising concerns that McClendon's personal financial deals could compromise his fiduciary duty to Chesapeake.

The company did not detail the amounts and terms of the loans, nor specific lenders, according to a preliminary proxy filing with the U.S. Securities and Exchange Commission.

Wall Street analysts who follow the company characterized the disclosure as a step in the right direction, but said more was needed.

"The increased disclosure in the proxy is a start, but it's still disappointing that Chesapeake remains tone deaf to analyst and investors and only seems to take action once they're called on the carpet ... through a journalistic expose such as the one that came to light this week," Mark Hanson, analyst at Morningstar said in an email sent to Global Markets.

Joseph Allman, analyst at JP Morgan, said the company's shareholders would benefit most if the company eliminated the Founders Well Participation Program (FWPP) that grants McClendon personal interest in all wells the company drills.

McClendon spent $457 million to participate in the FWPP in 2011, according to the filing. Shortly after in January 2012, he borrowed up to $500 million from a unit of EIG Global Energy Partners, part of the overall $1.1 billion.

The Global Markets report drew swift reaction from investors, who pushed the stock down 5 percent the day it was published. The stock has since recovered and closed down 3.1 percent at $17.44 on Friday on the New York Stock Exchange.

Meanwhile, pressure on the company has intensified. Phil Weiss, an oil analyst at Argus Research who has had a "sell" rating on Chesapeake, said in a note to clients on Friday that it was in the best interest for McClendon, the board of directors, or both to step down.

"When we consider the full financial picture at Chesapeake, including its high debt levels, its use of financial engineering, the relatively low quality of its financial data, the questionable nature of some of the CEO's transactions with the company ... we believe the best thing for investors would be to replace the board and/or the CEO," Weiss wrote in his note to clients.

On Wednesday, shareholder David Dreman, chairman of Dreman Value Management LLP, said the company's management "has to be cleaned up."

LEGAL CHALLENGES

McClendon and several Chesapeake directors are the target of a lawsuit by a shareholder over potential conflicts of interest over his loans.

McClendon's biggest personal lender, EIG Global Energy Partners, has also been a big financier to Chesapeake, and the lawsuit says that some analysts believe EIG's investors have been given favorable terms from the company on financing deals.

In the proxy filing on Friday, Chesapeake disclosed more information regarding the loans.

"Additionally, over the life of the FWPP, Mr. McClendon has typically mortgaged his interests acquired under the FWPP with one or more lenders, some of which also have lending, investment or advisory relationships with the company," the filing said, without mentioning EIG or other firms by name.

Court documents showed that the lawsuit, filed in the U.S. District Court of Western District of Oklahoma, was brought by Deborah Mallow IRA SEP Investment Plan.

"This action is brought to address material disclosure violations permitted by the board of directors and to ensure that any damages suffered by Chesapeake by reason of these violations are borne by the individual defendants, and not by Chesapeake and its innocent shareholders," the lawsuit says.

A spokesman for Chesapeake declined to comment, citing the pending litigation.

Noting that the company's market value fell by more than $500 million on the day Global Markets published its report, the lawsuit says it is possible that the defendants have exposed the company to class-action securities fraud liability.

The plaintiff is seeking to require that the CEO and other board members disclose all material facts relating to the McClendon loans, arrange independent oversight for the borrowings to identify any threats to the company, and to rescind the plan under which McClendon was able to invest in the wells.

The case is In re: Deborah G Mallow IRA SEP Investment Plan vs Aubrey McClendon, et al., U.S. District Court, Western District of Oklahoma. No: 5:12-00436

(Additional reporting by Tanya Agarwal and Swetha Gopinath in Bangalore and Ernest Schneyder in New York; Editing by Patricia Kranz, Matthew Lewis and Bernard Orr)