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  • A Look At MagicJack VocalTec's Current Valuation And Future Prospects [View article]
    Don't get me wrong, I think you are a good analyst, but you have to get out of "robot-mode" and look at the situation as it is to interpret the reality of CALL's finances.

    It is incorrect to evaluate a balance sheet "when unearned revenue is removed from current liabilities". This adjustment gives the inaccurate impression that the liability does not exist. It does exist. Deferred revenue (or any liability for that matter) is DEBT....it is something that has to be paid in the future. To calculate any ratio and excluding an enormous liability will lead you to an inaccurate result......perhaps an inconvenient truth.

    The truth of the matter is that CALL must provide service to its customers over the contracted period, and that costs money, actually it costs lots of money.....In fact it costs so much money that Borislow simply has ignored one of the largest cost components. I'm sure you're familiar with the FCC rulings and litigation that Dan has continued to pretend don't exist.....they do exist and they will have a substantial impact on CALL in my opinion.

    Step back for a minute and look at it from a high level. VG is in a similar business and charges a lot more to provide it. CALL pretends it does not have expenses or CAPEX.
    Jan 31 08:36 PM | 2 Likes Like |Link to Comment
  • A Look At MagicJack VocalTec's Current Valuation And Future Prospects [View article]
    Ryan, I think the structure of your article is good and I think the analysis is good but selective. You seem to place a bit too much emphasis on Earnings, Cash Flow, and Revenue. The trouble with CALL is that each of the items you rely upon are heavily influenced by management, and the management in my opinion are not terribly interested in generating value for their shareholders in the traditional sense.

    Earnings and Cash Flow are exaggerated because CALL is not managed in a way that accurately reflects the costs involved in achieving the growth you anticipate. They have nominal CAPEX (without which it will be exceptionally difficult to achieve the growth and market share you describe). There are very few employees and the overall substance of this company is very little. In fact the pristine balance sheet you describe actually has negative equity. This, combined with the substantial (but declining) deferred revenue allows them to make "EPS" pretty much whatever they want it to be, but the earnings do not deserve much (if any) multiple because they simply are not sustainable in my opinion.
    Jan 31 06:33 PM | 2 Likes Like |Link to Comment
  • Billion Dollar Problems Haunting American Tower [View article]
    This is the last communication I received from American Tower, I have sent subsequent letters, questions and e-mails none of which have been responded to.

    Maeghan Oberoi Maeghan.Oberoi@america...
    12/21/11
    to me

    Tim,
    Unfortunately at this time we're unable to accommodate your request for a call with Investor Relations. After reviewing your questions, we note that they can be answered with information which we provide on our website, in our investor presentations and in our filings with the SEC, and would like to refer you to those materials at this time.

    Regards,
    Maeghan

    From: Tim Dooling
    Sent: Tuesday, December 20, 2011 3:05 PM
    To: Maeghan Oberoi
    Subject: Re: FW: Would like to schedule some time w/IR

    OK, no problem I am available both of those days.

    A few topics I would like to cover are:

    • Tower-level economics, how it works for legacy towers and acquisitions.
    • MLA's - I would be interested in knowing a bit more about how they work and their terms.
    • I would like to get a general sense of some of the key terms in some of your large lease agreements, specifically how the lease treats mergers and decommissioning.
    • The company's balance sheet going forward, as these latest acquisitions are likely to put the company into the low 4x leverage range, which is starting to get up towards the higher end of your target range, how does this tie-out with the acquisition based growth strategy.
    • Which investments are accounted for under the cost method?
    • I'd like to talk a bit more detail about the nature of the company's foreign currency exposure.
    • I would be interested in talking about the dispersion of value (within each tower type) between the most valuable tower and the least valuable tower (how best to stratify the types).
    • The SEC investigation.
    • REIT conversion; interested in talking about the decision to convert given the somewhat non-cookie-cutter REIT nature of your businesses, especially given the overseas growth strategy.
    • Other bit and pieces as well, but those are the main points I'm interested in.
    Please let me know what time works best,

    Tim
    May 1 04:52 PM | Likes Like |Link to Comment
  • Billion Dollar Problems Haunting American Tower [View article]
    Great comments, many thanks. Eratos, you hit on a very important point, I have asked this question directly to the company and not received any response. AMT’s conference calls are all exactly one hour in duration and neatly scripted (including the Q&A, which consistently dance around this issue). They have never disclosed any detail around aggregation levels.

    AMT’s general reply to any question like this is “90% of our towers have lease expirations beyond 2020.” This response was clearly drafted by a lawyer, as it may be correct but it completely misses the point that their best towers are some of the oldest and hence soonest to expire. They have bought thousands of single-tenant and zero-tenant towers over the past few years which may very well have lease expirations beyond 2020, it is the top 5% that the investor should care about since that is where the aggregators attention is focused.

    On question #2, the answer is yes I have asked and no I haven’t received a response. In my experience AMT’s first line of defense is silence, their second line is to bully…..truth and logic seem to be further down the priority list.

    On question #4, the SEC investigation is a bit of a wildcard, however there is evidence that generally speaking the longer the period from beginning of the investigation until either a Wells Notice or no-action letter the more serious the potential problem. It could come tomorrow or it could come in a year, but it certainly has not gotten less serious in the past year or AMT would have let us know. One note: while the SEC is under no obligation to inform the company if it decides to terminate an investigation, it is standard practice for them to do so.

    Thanks again for the comments.....TF
    May 1 04:46 PM | Likes Like |Link to Comment
  • American Tower: Trouble Ahead, Trouble Behind [View article]
    Luther,

    Which details are you referring to? All of the facts and details in the article are correct. I would note that AMT will report earnings this week for the time period when most of the events in India took place.

    I would note that AMT has underperformed the Nasdaq composite and moderately beaten the S&P 500 since this article was published 5 weeks ago. The structural issues I discuss in this article are more true than ever at the moment, and they take time to become reflected in the underlying share price. I make no recommendation in the article to buy or sell stock for any return in a 5 week period. I do however maintain a short position in this security which I expect to be a profitable position over a reasonable length of time.

    TD
    Apr 30 05:20 PM | 1 Like Like |Link to Comment
  • American Tower: The Best Backdoor Smartphone Stock [View article]
    Wow....I agree with Gino on all points, and I don't follow your logic on several others, in particular:

    "with the threat of consolidation lessened after AT&T and T-Mobile's failed union, tenancy on American's towers is likely to increase from its 2.7 level....."

    Why will tenancy increase if the number of carriers remains the same? (especially in light of the MLA's that AMT is being forced into)

    "Those escalators are above the 3% escalators American pays to land lease holders, who make up about 28% of its properties"

    -This is simply incorrect, AMT's land lease holders account for 72% of their properties.

    AMT's expansion into India is nothing short of an utter catastrophe. Please see my articles on this here:

    http://seekingalpha.co...

    Their operations in Uganda and Ghana are also value-destroyers. Simply look at how much AMT's management has sold since the SEC came knocking at their door last year.

    There are too many issues to list in a reply, please click through to my earlier articles for full details.......TD
    Apr 17 11:42 PM | Likes Like |Link to Comment
  • Towers And Sliced Bread: Another Look At American Tower [View article]
    Some of the options strikes were adjusted for the .35 dividend they paid in December ahead of the REIT conversion.

    Yes there are a host of companies currently making small-cell products. The recent industry trade show showcased a lot of very interesting software which makes deployment and provisioning of these cells automatic. They call them Self-Optimizing cells, where software automatically makes all the adjustments to the mini base stations as the network topology and usage changes.

    All the things that require a truck to drive out to a cell site with a technician to tinker with, in the new network architecture this all happens seamlessly and automatically.....and cheaply.....these are things that are referred to as "liquid networks" and several other terms......net-net it harms the pricing power for traditional towers....much more quickly than AMT realizes.
    Mar 24 05:53 PM | Likes Like |Link to Comment
  • Towers And Sliced Bread: Another Look At American Tower [View article]
    Thanks for your comments:

    wehnerj: Yes, I think that is exactly right, tenants care about location, location and location.....especially so with the top 5% of the towers.

    alantava: ALU is behind the whole LightRadio innovation which makes towers less valuable. It goes by many names, femtocells, small cells, liquid net, mesh networking, picocells etc....the fundamental idea is that antennas are ubiquitous and IP based switching reduces the backhaul bottleneck.

    I am planning on going to India personally to inspect and photograph AMT's towers there, for details check analyticfirepower.com here: http://bit.ly/GWO8CB

    Finally, please excuse the typo of 1990+15 years, what I meant is that 15 years past the end of the 1990's (i.e.2000) is 2015......td
    Mar 23 11:27 PM | Likes Like |Link to Comment
  • Magic Jack Is Solving The Home Phone Problem And Market Is Catching On [View article]
    Excuse me? Not sure what you mean. Scams tend to get volatile right before they blow up.

    http://bit.ly/zmcWfx
    Mar 19 03:03 PM | Likes Like |Link to Comment
  • Magic Jack Is Solving The Home Phone Problem And Market Is Catching On [View article]
    I think that is where Dan Borislow takes his magic carpet to get cleaned.....rather amazing.....td
    Mar 16 02:44 PM | Likes Like |Link to Comment
  • Magic Jack Is Solving The Home Phone Problem And Market Is Catching On [View article]
    I would suggest taking a look at the 10-K they just filed, it is a bit of a mess to say the least. Two other data points can be gathered by googling "Dan Borislow" and see what you find, he is the guy behind it all. Then put their headquarters address into google street view, it is: 5700 Georgia Avenue, West Palm Beach, Florida.....

    No wonder the stock is hard to borrow.
    Mar 15 07:39 PM | 2 Likes Like |Link to Comment
  • American Tower: Trouble Ahead, Trouble Behind [View article]
    realestatevalueinvestor: Excellent comment, here is the way I'm thinking about it:

    India is overall a small portion of the historic revenue pie, however the Wall St models that I've seen had that slice of revenue growing at 20-25% for the next two years, which is much faster than the 6-7% growth (which is still optimistic in my opinion due to things like leasehold loss and new small-cell technologies).....The point is that the whole AMT strategy hinges upon the international growth story. The international growth story is a product of James Taiclet's imagination that the rest of the world's cellular networks will evolve in the same path as the US has. I feel very strongly that they will not, and recent events in India quite clearly demonstrate this.....but I digress, getting back to your question:

    Looking at all of AMT's non-US Rental and Management business, which was $650 mln in 2011, and Wall St. expects to be $950 in 2012 and 1,200 in 2013.....of this Wall St. had India contributing approx $175, $225 and $275 respectively, or 27%,24% and 23% for those years. These numbers now seem quite unrealistic.

    While a couple of hundred million dollars of lost revenue may not seem like much in relation to the $2.5 billion AMT generates, what is important is that the Indian situation to me throws into question the whole premise upon which AMT continues to dump billions of dollars into frontier markets with the expectation that they will behave exactly as the US......there are some great books out there which discuss how humans are prone to project their historic success into the future while ignoring the reality and unpredictability of the future....(Nassim Taleb's Fooled By Randomness is a good on)......I digress again....back to your question:

    If India were to fall off the map, AMT would lose $275 of the currently baked-in revenue for 2013. If India stayed stagnant and did the same in 2013 as it did in 2011, $100 million would need to come out of growth expectations currently out there, which is 12.5% of all of AMT's expected growth for the next 2 years. Stock prices are extremely sensitive to changes in expected growth rates, and knocking 12.5% off of the current expectation would substantially change the discount rates used to value the shares. In Gordon Growth terms, (using simplistic constant growth to illustrate the point) the share price will equal the future distribution divided by the discount rate, which is equal to the cost of equity minus the growth rate. A change in the expected growth rate impacts the denominator in the equation, which affects the value of the stock substantially. I know that in reality it is a lot more complex, but since I've already digressed twice I wanted to keep this explanation straightforward.

    To give you a number, if we were to take 12.5% off of the growth in AFFO between now and 2013, that would put it in the neighborhood of $3.40/share in 2013, the lower growth would impact the multiple applied, so applying a 14x multiple to the $3.40, puts the value in the $47.50 range.

    I'd like to emphatically state though that the math above is not my "target" for this. What I think is more important is to look at the validity of AMT's growth strategy overall. Also there are a multitude of over issues which will catalyze over time; things like the SEC investigation which is ongoing, the loss of some critical land-leases to aggregators, increased interest rates, equity offerings, bad acquisitions etc......anyway, hope that gives you some form of an answer......great question, thanks ...TD
    Mar 13 05:27 PM | 1 Like Like |Link to Comment
  • Magic Jack Is Solving The Home Phone Problem And Market Is Catching On [View article]
    Google has not and will not pay one cent to MagicJack ever. MagicJack receives no royalty income.....according to their most recent filing:

    Revenue consists of revenue from sales of magicJack and magicJack PLUS to retailers, wholesalers or directly to customers, license renewal fees, fees charged for shipping magicJack, international calling, call termination charges to other carriers and other miscellaneous charges for telecommunication usage, sales of telecommunications hardware, software and related services.

    No Royalties...

    This company's filings are a mess, and it seems clear that the author did not take the time to read them. The SEC has concerns around this company's revenue recognition policies, see filings under "Corresp" for details. There seems to be some channel-stuffing going on here, to the tune of $16 million worth of Accounts Recievable and Inventories. They recognize equipment revenue when they ship it to Radio Shack, but Radio Shack does not pay them until after it is sold....that is a problem, hence the large balances.

    They also do not seem to be good investors, probably because they are a wigit business. They show $13.768 million of "Short Sales" which cost them $15.97 million to cover, (Buy High Sell Low?), additionally they bought $12.78 million of securities which they sold for $8.22 Million.....again, wrong way......extremely odd thing for a telephone company to be trading securities so actively and ineffectively..... Good luck....
    Mar 9 05:28 PM | Likes Like |Link to Comment
  • Magic Jack Is Solving The Home Phone Problem And Market Is Catching On [View article]
    Looking only very briefly under the hood on this one and you will see that sales of their one product are declining. They speculate in securities (including their own), and do not produce any value in either activity. They do not file full financials, no audit. Bombastic headlines about large % "Beats" which amounts to very small dollar amounts. The new CEO came from Oppenheimer, which is the only analyst that dares right a report on this....spooky, one-trick pony, unstable mgmt, value-destroyer...
    Mar 9 10:14 AM | 1 Like Like |Link to Comment
  • American Tower: Trouble Ahead, Trouble Behind [View article]
    Unfortunately, the short term is highly influenced by randomness, the shorter time frame the more random it is...so really there is no effective way to answer your question.
    Mar 7 01:07 PM | 1 Like Like |Link to Comment
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38 Comments
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