Fusion Research

Research analyst, oil & gas, tech, mid-cap
Fusion Research
Research analyst, oil & gas, tech, mid-cap
Contributor since: 2012
Company: Fusion Equity Research
iBeacon is in early stages of adoption therefore it's hard to put the figures right now, but Apple has already deployed this hardware in all the U.S. stores, which provide in-house notification to iPhone users. This technology would strengthen the marketing efforts of the companies as the users will get offers and other related notifications from the beacon hardware. This technology has not been limited to Apple's stores, PayPal has unveiled its own Beacon hardware, that allows customers to automatically check-in at a store, receive deals and information via notifications, and pay for products without swiping a card or pulling out their smartphone. No doubt this market will disrupt following the adoption of this technology by other establishments with android users also joining the iOS users. This market has a huge potential and can add incremental value to Qualcomm's bottom line.
Yes, Stratasys' inability to work with metal makes the company's bid weak, but Stratasys is considering on entering metal based 3D printing, probably via acquisition route. There is huge market opportunity from aviation industry, and despite being in the disadvantage, the company can adopt aggressive acquisition strategy like acquisition of Makerbot for consumer and prosumer market, for gaining market share in the metal 3D printing.
Stratasys strong presence in both industrial and consumer segments (after the acquisition of Makerbot) of the 3D printing makes it a strong contender in the 3D printing market. The company has strong upside potential, and will benefit from the positive investors sentiment towards 3D printing market.
While, for GE's market opportunity, it's too early to comment on which company will take lead, as the jet engine manufacturer is looking for 3D printer which can fulfill GE's production needs of faster, and higher-quality output at a lower cost. While, GE announcement is not speculation for 3D printer manufacturers as GE is testing equipment from 3D Systems, and Concept Laser GmbH. The company which is able to fulfill GE's production needs will take an early lead in the race to capitalize on this market.
The news of merger has already been discounted in the stock market as the combined market cap of both the company has already crossed $29 billion mark that Applied Materials had announced in its press release. Therefore, in pre-merger investment one should not take short term share appreciation as the motive of investing at this time, but one should look at the overall synergies mentioned in my article, which will be reflected in both topline and bottom-line. Also, the company will also execute $3 billion share buyback program in first 12 months following completion of merger transaction. This will further boost the EPS of the company, and will provide significant value to shareholders. I believe that there is no clear cut answer to the time of investment, but investment should be based for long term for grabbing significant return. Still the merger is pending and this transaction would result in formation of a new company, therefore it is too early to comment on Option rate for the year 2015.
The business model of SolarCity and First Solar is entirely different. First Solar is basically involved into manufacturing of solar panels and provides turnkey solutions. While, SolarCity is not the manufacturer of solar panels, but provide end to end solutions in solar installation.
Yes, SolarCity might work on better margins because of its vertically integrated business model, but one cannot ignore First Solar as the company has done an important acquisition towards rooftop market (TetraSun) which will help in competing the lucrative Japanese market, and to some extent Europe. As per the latest quarterly result, the YTD book-to-bill ratio is more than 1, and as the fourth quarter result is still pending further comments on this cannot be done. As mentioned in my article, the company has done strong bookings in the third quarter, thus making book-to-bill ratio to 2:1, therefore I believe going forward project business will continue to be a significant growth driver for the company.
Yes, AMD’s Mantle API provide good graphics performance and enhance gaming experience. In my article, I had discussed about the overall growth drivers and AMD’s strategy to reduce the dependence on PC related revenue, thereby generating about 50% of revenue from its five growth pillars which includes ultra-low-power devices, embedded, professional graphics, semi-custom, and dense server by 2015.
As mentioned in my article that Intel’s Bay Trail will also power Android based devices in 2014. This itself will be a game changer for Intel as AMD’s hasn't come out with Android supportability, but had revealed in June last year, about its intentions to make its chips compatible with Android and Chrome OS. In addition, Intel will be making the Bay Trail on 22nm manufacturing process, while Beema and Mullins is based on 28 nm, which denoted the increased performance provided due to greater number of transistors. While for the graphics segment, AMD had launched R9 and R7 series GPUs, in October last year. These GPUs target both high end (performance gamers) and low end (budget consumer) segments, and will compete against NVIDIA's upcoming GPU codenamed Maxwell.
As discussed in my article, Freebies differ from daily deals as the company earns revenue in the form of commission it gets from the retailers, and only when the user redeems the coupon. I wouldn't say Freebies venture as a gamble, rather a diversification strategy for the company in the online deals market. Though it is in its early phase, but has the potential to expand its presence in this growing online coupon market, which is valued at $4 billion in North America. Further, Groupon launched this business in the holiday season which may provide tailwind for the company's fourth quarter revenues. In addition, Freebies will help improve Groupon's margin since online coupons have higher margins than daily deals.
In my view, Freebies is a logical addition to the company's e-commerce marketplace, where it faces competitive challenges. Entry in online coupon could be a positive signal for the company in the long term, as the new offering is an extension of its existing product line and will help the company in earning additional revenue.
It's true that FCC wants to maintain the U.S wireless market competitive, and has also earlier said that market needed four national carriers when it blocked AT&T’s takeover of T-Mobile. By merging Sprint and T-Mobile, U.S. market wireless market will be restricted to three major national players, which may go against FCC's vision.
As for Sprint and T-Mobile merger is concerned, I also feel that their merger will create more problems given that they have different networks, and will face the challenge of integrating different technology into its network. Although Sprint is working on an upgrade which would support their integration, but it would be quite an expensive process. Sprint already has its hands full with phasing out WiMax network and LTE expansion and any other network integration will affect its service. A merger of these companies means that a disruption in their network which would ultimately affect the users.
However, if the deal between Sprint and T-Mobile goes through, Sprint will have a larger user base, which will help overcome the high cost of building and maintaining networks in the capital-intensive wireless industry, and save $5 billion in annual costs for the company.
Going forward the market will become competitive especially in LTE front, thereby putting pressure on the Qualcomm's revenue. Intel has made good promises in its recent Investor meeting but execution remain key to these plans. Also, moving to 14 nm process technology from 22 nm has been tricky for Intel, with production of its Broadwell chip based on 14 nm technology already pushed by one quarter, with the earlier release date pegged at Q4, 2013.
Yes, Intel 14 nm push will provide increased performance to OEM, and will reduce the manufacturing cost for Intel, but its biggest competitor TSMC is also closing the gap with production of 20 nm chip next year, while its 16 nm will hit the market by the end of next year. This will give TSMC's SoC customer Qualcomm to manufacturer its chips on 16 nm process, while it is already in progress to launch first cellular modem based on 20 nm. Therefore, Intel’s manufacturing advantage of its 16 nm process is not sustainable for long term. Though, Intel will become more competitive than ever before in 2015 thereby affecting Qualcomm's revenue, but I believe that Qualcomm lead in the market will help in offsetting this negative impact. Also, shifting to 20 nm will help in reducing the cost thereby safeguarding its margin and putting lower impact on EPS.
For Qualcomm, QCT is a star performer, in which increased deployment of LTE will be the next revenue driver for the company. My article is focused on QCT segment along with China's rollout of LTE. In baseband (part of QCT), Qualcomm had grabbed 66% revenue share in third quarter of 2013, while in LTE baseband it had revenue share of over 95%. The company is already into third generation of LTE products, while other players like Intel, Broadcom, and Mediatek are still far behind Qualcomm. In application processor too, Qualcomm dominates the market due to increased adoption of Qualcomm's Snapdragon 800.
Intel has recently come out with real competitive LTE modem chip (XMM 7160) against Qualcomm,. Though, the company is yet to integrate this with its application processor. While Broadcom will release its first LTE enabled SoC in early 2014, and Mediatek too is planning to launch its LTE SoC in first quarter of 2014. Yes, going forward market will intensify but Qualcomm dominance over the LTE space will sustain as the company is in transition to enter fourth generation LTE', and therefore its competitors will find it tough to match Qualcomm's technology at least in near term.
I expect the natural gas prices of Marcellus shale continue to be traded at a discount to Henry Hub prices because of bottlenecks in the region due to lower takeaway capacity than production in the region. According to EIA, the current production of natural gas from the Marcellus shale is expected to exceed around 13 billion cubic feet per day, or bcfpd by the end of December this year. However pipeline infrastructure continues to lag the production increase. According to EIA estimation around 3.5 bcfpd of additional capacity of pipeline will come into service between this year and 2015 for takeaway of natural gas from the Marcellus formation. So while these additional pipelines infrastructure come into operation the bottlenecks in the Marcellus formation will continue to depress the price of natural gas from the region.
Its not unrelated. Its one of the services which we provide under the Fusion Brand. Please see services section or go here: http://bit.ly/1bE1qrX
As ME2C' SEA technology is relatively new in the market as compared to ACI technology (as stated in our article), therefore the company is currently demonstrating its technology with several power units with an intent to get a long term contract. As per recent press release, till now MEEC has completed 31 successful demonstrations on power plants, with its technology achieving the required mercury reduction level. The company is pursuing to convert these demonstration into meaningful long term contract.
Link: http://bit.ly/1aXQfHT
@Arian, thanks for your comment, and look forward to our next article on XOM. We will try to cover the info you are looking for.
We agree that the price of Festival like Sterosonic ranges from $200 to $400, but then, there are other festivals like Life in Color and Disco Donnie where ticket price are around $40 - $60, and these events are organized more frequently as well, that’s why we took an average price of $100 for all the events organized by SFXE.
We estimate a current price of $12 for SFXE in the near term, which is 2.60X of its book value. Our 2.60X multiple is derived by applying a relative valuation approach that uses the P/B ratio of SFXE and Live Nation.
SFXE is currently trailing at a price to book value multiple of 1.98, which is too low as compared to the derived multiple.
Hi Interzone, we are getting the statement removed. This article wasn't written considering the info which you shared in your link. Thanks for bringing it to our notice.
There is no statement from Starbucks management that it will enter the home carbonation market. However in the article below, it was mentioned that the company may enter the home carbonation market through 'Fizzio', which is currently in testing phase. Also, it is mentioned that ' Fizzio' might face completion from SodaStream, a leading player in the home carbonation market. That’s the reason we wrote that it is targeting home carbonation market.

@ben: Thanks for pointing out the missing information; the company has raised funds by offering 9,000,000 shares of its common stock in an underwritten public offering at a price of $4.50 per share, during August, 2013. The net proceeds provides the company with extra cushion for general corporate purposes, that including research and development, commercialization of its products, general administrative expenses, license or technology acquisitions, and working capital and capital expenditures.
However the latest 10-Q filing of the company was filed for June quarter only that's why we quoted the June quarter numbers
Dear readers, please look out for the upcoming correction. The usage of the word all quarters is wrong. We are getting that corrected.
All three companies have provided dividends in last five years, and based on their past trends and current activities, we can expect these companies to continue this activity similarly. Noteworthy, that Telefonica, due to economic crunch stopped paying any dividends or conducted any share buybacks since July 2012. The last dividend paid by the company was in May 2012. Prior to that, Telefonica paid dividend every year since 2006. This year, on Sept 25th, it declared to compensate for the past five quarters, by paying dividend of approximately $0.97 per share in two parts, first on Nov 6 of approximately $0.48 per share, and the remaining in the second quarter of 2014.
Currently there is no generic drug available for Evista and to market the generic version the FDA approval is needed. And the FDA may take time to grant the approval for the generic version, which will help Pfizer to establish its footprints in the menopausal drug market.
Yes, generic drug may raise competition for Pfizer, however Duavee with its superior efficacy may also fight with the generic equivalents of Evista, as the patient won't mind paying higher for brand treatment.
In the complete response, FDA provides the suggestion to the drug manufacturer, regarding the drug before giving the final approval. On the suggestion received the company has to fulfill certain additional criteria and rectify the deficiencies in the drug and resubmit it for approval.
Second question:
No, PFE can't market the drug Duavee with combination of 0.624 mg/20 mg dose as stated in our article for the VVA. To market this drug it has to fulfill the efficacy norms laid by the FDA in the response letter. As the Phase III SMART trial result showed Duavee was superior than the placebo in treating patients with the other combination (0.45 mg/20 mg), this indicates that this drug can efficiently treat moderate to severe Vasomotor symptoms associated with menopause. And the 0.45 mg/20 mg combination is approved, while 0.624 mg/20 mg is not yet approved.
The earning per share was arrived by annualizing the company's this years second quarter's per share revenue. We took the second quarter earnings as a point because the revenue grew in the second quarter over the revenue in the first quarter. Since we expected an increase in its third quarter earnings based on our discussion in the article we took the second quarter as a base. Also, this was used as a reference as the company was yet to release its third quarter earnings at that point in time. Please refer to the table in our article for the second quarter revenue figure and the number of outstanding share. Quoting from the article:
"From the above table, we calculate that the company earned per share revenue of around $0.684. On annualizing the quarterly revenue per share, we get a per share revenue of around $2.74. "
Thanks. The discussion in our article revolved more around the projects that we believe would drive the future revenues. Following the same logic, we also carried out our valuations using the P/S ratio not dividend in the concluding section of our article.
The P/S of 2.43 was taken from the Yahoo finance for reference. Our calculated P/S ratio was 2.35. So we concluded the the stock value as attractive. Quoting from the article:
"At the current stock price of around $6.45, we calculate the P/S ratio as 2.35."
You are correct. We are getting that corrected
As for Yahoo! Japan is concerned, we know that it has a significant contribution to Yahoo!'s enterprise value. However, in this article we have focused on Alibaba, as it has been the hot topic of discussion due to its upcoming IPO, and Yahoo decision to retain more stake in Alibaba. Not ignoring the Yahoo! Japan contribution, we will surely cover it in our upcoming article.
We have just assumed what would be Yahoo!'s valuation if Alibaba goes public. This valuation is based on the current market cap. of Yahoo!, and Alibaba's valuation of $125 billion after going public. Yahoo! currently has a market cap of $34.46 billion, and if Alibaba's stake comes out to be $30 billion, then Yahoo!'s valuation can be as low as $4 billion.
This link may further clarify our valuation-
It's true that we used the average sales price realized by Chevron in the U.S. was $3.78 per thousand cubic feet during the second quarter ending in June this year. We took this price as a lower base case for the company's natural gas sales price. The average international sales price of natural gas during the second quarter ending in June this year was $5.93 per thousand cubic feet. In this article we argued that the sales price of natural gas in Asian markets is higher compared to other markets around the world and Chevron will benefit from exporting to these countries. The higher gas prices in Asia Quoting from the article:
"The increasing shift of exporting natural gas to the Asian markets is due to the higher price of the natural gas available in Asia compared to that available in the U.S. The prices of natural gas in the U.S. market fell due to the natural gas deposits found in the Southern U.S. in 2008. These discovery of gas deposits led to the fall in natural prices in the U.S. as depicted in the graph below. The graph also shows the increase in gas prices in Japan due to the country's high demand for natural gas."
Further, if Chevron realizes higher sales price in the Asian natural gas market, it will improve the overall average sales price of natural gas for the company. In this article we actually focused on the Gorgon and the Wheatstone projects and tried to evaluate the prospects of these projects.
Also it’s true that Chevron has a 50% interest in the Kitimat project along with Apache. Chevron became the operator of the project in July, but we limited our study to the Australian ventures.
In the article by referring to NSN, and HERE segments, we mean that they are more profitable than its handsets business. Thus, after selling off its handsets business, Nokia will be in a better position to focus on its remaining segments.
As for the cash figures, we have taken numbers from the Nokia's press release. Nokia has calculated the gross cash based on the assumption that "if Microsoft transaction as well as Nokia's acquisition of 50% of NSN would have closed before the end of the second quarter 2013, Nokia would have ended the quarter with gross cash of EUR 14.9 billion and net cash of EUR 7.8 billion, excluding transaction related expenses and taxes."
It's true that there are no official announcements, but as per Bloomberg, Reuters, and WSJ sources, Nokia is in discussion to tie-up with Alcatel-Lucent. Even Barclays have upgraded Alcatel-Lucent to Overweight based on the speculation of the merger between these are credible.
@theo_thetoric: As stated in the article and the subsequent link provided, the company has a healthy market share of 40% in the U.S. cereal market. We believe along with the 'Hello, Cereal Lovers' campaign discussed in the article and a healthy market share, General Mills has the potential to increase the cereal sales. Also, the cereal sales in the U.S. reached $10 billion last year and it is expected to touch the $11.5 billion mark by the end of this year based on the growing health concern amongst the U.S. population, which provides an opportunity for the company to observe growth in its cereal sales.