Box stock surges 10% after report says the company is exploring a sale amid pressure from activist investor Starboard

Box CEO
Aaron Levie, the CEO of Box.

  • Box stock surged as much as 10% on Monday before paring gains.
  • A report from Reuters Monday said the cloud storage company may be open to a sale amid pressure from activist investor Starboard Value LP.
  • Starboard has been edging Box to sell after pushing for a board challenge less than a month ago.
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Shares of Box surged as much as 10% on Monday after reports from Reuters and CNBC said the company is exploring a sale amid pressure from hedge fund and activist investor Starboard Value LP.

The news comes after Reuters reported last month that Starboard was preparing to launch a board challenge against Box unless major changes were made at the cloud storage company.

Reports say Starboard has been upset with Box’s inability to capitalize on the work-from-home trend during the pandemic. Starboard currently owns 10.9 million shares of Box, worth some $246 million as of March 19’s closing price.

Despite the pressure from Starboard, Box stock is up roughly 100% over the past year. However, even after Monday’s move higher, the Redwood City, California-based firm is down 13% from its May, 2018 record highs.

In Box’s fiscal year 2021 earnings report filed last Friday the company revealed revenues of $770 million versus $696 million a year ago.

Although the company was able to limit losses to just $43 million versus $144 million in fiscal year 2020, Box’s slowing revenue growth during the pandemic has been a cause for concern for investors.

In January, DA Davidson analyst Rishi Jaluria downgraded Box to “neutral” and issued an $18 price target on the company citing low scores in a CIO survey for 2021 spending intentions.

Box traded down 6.63% as of 1:14 p.m. ET on Monday.

Box chart
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How edge computing has become a $250 billion ‘perfect complement’ to cloud computing

Hivecell
Hivecell is a startup focused on edge computing that helps companies avoid the cost of storing massive amounts of data in the cloud.

  • Edge computing places processing power closer to where data is being created in the physical world.
  • It has received increased investment thanks to connected devices like factory robots or autonomous vehicles.
  • It complement’s cloud computing by solving issues of latency, bandwidth, autonomy, or compliance.
  • This article is part of a series about cloud technology called At Cloud Speed.

As technologies like autonomous vehicles, factory robots, and remote monitoring systems become more commonplace, a concept called edge computing is receiving increased attention and investment.

Edge computing refers to a model in which processing power is placed closer to where data is being created in the physical world: While cloud computing platforms like Amazon Web Services are hosted from the retailer’s own massive data centers scattered across the world, edge computing focuses on smartening up the car, robot, or other systems right on the device or placing a processor in closer proximity.

It’s a concept that’s only become more popular as a surge in connected devices – like Tesla’s semi-autonomous cars or camera-laden robots in Amazon’s factories – collides with the rise of cloud computing, presenting an opportunity for both.

“Edge computing is actually a counterbalance to the cloud,” Gartner analyst Bob Gill told Insider. “It’s a perfect complement to the cloud that solves for the weakness of the cloud.”

As the flexibility, efficiency, and pricing of cloud computing have led firms to abandon their in-house data centers, it’s created a new set of technical challenges. While the cloud offers immense raw computing power, relying on it comes with trade-offs, too.

“People realized that not all the things that they want to do in the cloud worked well in the cloud,” IDC analyst Dave McCarthy told Insider.

Specifically, edge computing can help solve issues of latency (where systems need to be able to process data incredibly fast), bandwidth (where machines are generating vast amounts of data that would be inefficient to send to a distant data center), autonomy (where systems need to be able to function without network connection), or compliance (like when information needs to remain within a specific country to adhere with local regulations).

Gartner expects that by 2022 more than 50% of enterprise-generated data will be created and processed outside the traditional data center or cloud.

Why edge computing is on the rise

One of the big reasons for the move towards edge computing is the explosion of the so-called Internet of Things, where connected devices often collect vast amounts of data that can then be analyzed, like smart factory equipment that can flag machines that may break down or restaurant point-of-sale systems that can make predictions about what ingredients will run out first.

“Edge computing and IoT devices go together like peanut butter and jelly,” Forrester’s Glenn O’Donnell said.

But the amount of data these devices collect can be so vast that sometimes it doesn’t make sense financially to store it all, or the process of moving it to the cloud for processing takes too long.

“You see this in connected cars, in smart factories, even in retail environments where a piece of data is generated, and you want to take action on that data, but you need to do it really fast,” said IDC’s McCarthy. “The whole round trip – like the time it takes to send it to the cloud, have the cloud make a decision, and then send the answer back so you can do something – is too long.”

Startups and major public firms alike are focused on different sides of the problem, from services that automatically route workloads through the closest possible data centers, to making chips more capable of performing machine learning-related processes on-device. Intel, for example, expects the silicon-related side of edge computing to be a $65 billion market by 2024, and analyst firm IDC predicts that the global market for edge computing-related products and services will reach $250 billion by 2024.

And while edge computing provides a counterbalance to cloud computing, the hyperscale cloud firms like Amazon Web Services, Microsoft Azure, and Google Cloud are all making big investments too, especially by partnering with telecom companies to extend their networks – with a major push towards helping the carriers adopt 5G, which would allow their respective platforms to reach devices far afield from a traditional WiFi connection.

“The cloud companies are making huge bets on edge technology, which almost seems like an oxymoron, but they recognize that there are a lot of scenarios that don’t work in the cloud,” said IDC’s McCarthy. “They realized that they had two choices: They could ignore that business or they could find a way of extending their cloud technology to these edge locations. And they’ve chosen to do the latter.”

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Okta drops after company gives weak guidance and announces $6.5 billion Auth0 acquisition

Okta Auth0 deal
Okta cofounders Frederic Kerrest and CEO Todd McKinnon (top L to R) on a video call signing the agreement to acquire Auth0 for $6.5 billion with its cofounders CEO Eugenio Pace and Matias Woloski (bottom L to R)

  • Okta fell by nearly 10% Thursday as the ID-authentication software company’s outlook missed Wall Street’s view. 
  • The company expects a first-quarter adjusted loss of $0.20 to $0.21 a share compared with the consensus of a loss of $0.07. 
  • Okta plans to buy rival Auth0 in a transaction valued at $6.5 billion. 
  • Visit the Business section of Insider for more stories.

Okta shares dropped nearly 10% Thursday following a quarterly outlook that missed Wall Street’s estimate while the identity-authentication software maker said it plans to buy rival Auth0 in a $6.5 billion stock deal.

The company late Wednesday projected a first-quarter adjusted loss of $0.20 to $0.21 per share, which was wider than the consensus estimate of a per-share loss of $0.07. It also expects year-over-year growth in total revenue to $237 million to $239 million compared with Wall Street’s view of $237 million.

Shares of Okta lost as much as 9.6% when it hit an intraday low of $218. The stock later pared the decline to 4.5%. Over the past 12 months, the shares have advanced about 79%.

The company’s projection came within its fourth-quarter financial report and alongside a separate announcement about planning to buy Auth0. Okta said its guidance does not include any potential impact from the proposed Auth0 deal.

Okta said the pending deal will stoke growth in the $55 billion identity market. Auth0 will run as an independent business unit inside of Okta and both of its platforms will be supported and integrated over time.

The transaction “will accelerate our innovation, opening up new ways for our customers to leverage identity to meet their business needs,” said Todd McKinnon, Okta’s CEO and co-founder, in the statement.

For the fourth quarter, the company posted adjusted earnings of $0.06 a share, swinging from a loss of $0.01 a year ago. Revenue of $234.7 million increased from $167.3 million in the same period a year ago.

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