The End Game At Hewlett-Packard: Analyzing The Company's Takeover Prospects [View article]
As a Japanese company, Fujitsu would benefit from a storng yen in this case, as it makes overseas deals more affordable. There could be synergies between Fujitsu & HP, but something would likely have to happen with HP's PC business. HP's debt figures were given in their Q4 2012 earnings presentation, which is linked to at the beginning of the article.
Buy Attunity: An Under The Radar Investment In Big Data [View article]
On the surface, the timing of the meeting may seem suspicious, but when you read the proxy statement that outlines the financial impacts of these items, they are not that meaningful in the long-term (http://1.usa.gov/TXTymt)
Item 2: Item 2 proposed to increase the fee that non-employee, non-external directors receive for attending Attunity board meetings be increased from $300 to $430. Even if the fee increase were applied equally to all 6 of Attunity's directors, it would cost the company $780 more, hardly an exorbitant sum. Item 3: The board wants to boost Alon's bonus by 33%, salary, which results in a bonus of 8 months of salary, as opposed to the current 6 months. The bonus is to be paid only if he meets milestones set forth by the board. And given that Alon owns 13.5% of the company, we think that fact more than outweighs the additional $51,653 in bonus expenses. And Alon has shown flexibility in reducing his pay when asked by the board. In February 2009, his salary was cut by 10%, and in February 2011 his salary was cut by 4%. Item 4: Attunity needs the 2012 plan so that it can grant stock options to its US employees; the 2001 plan that the company has used up until this point can no longer be used due to changes the IRS has made to the tax code. The 2012 plan has also been "redesigned" so that Attunity can create customized sub-plans based on the tax laws of the country in question. For example, Attunity wants to create a plan just for Israel, to take advantage of specific tax incentives available to Israeli citizens.
We don't think that there is anything untoward about these proposals. To us, they seem more like mundane housekeeping items than anything else. Furthermore, CEO Shimon Alon and his board together own almost a quarter of the company. They have significant "skin in the game," and these policies will affect them just like the rest of Attunity's shareholders.
Buy Attunity: An Under The Radar Investment In Big Data [View article]
Attunity has chosen to hold its shareholder meeting late, but it is still within the legally required range. There is no law that requires shareholder meetings to occur only after the current fiscal year has closed. The meeting will be reviewing the company's results for fiscal 2011, not fiscal 2012, and while the timing of the meeting is odd, there is nothing untoward about it. Most shareholder meetings generally are about relatively mundane items, such as approving compensation plans (a requirement for public companies), re-electing directors, and approving paying whoever audits the company's financials. They likely delayed the meeting as far back into the year as they could given the fact that it will be held in Israel, and most of Attunity's investors are likely in the United States, and need more time to figure out how to get to Israel.
Hewlett-Packard: After The Autonomy Debacle, Is There Value Left In The Stock? [View article]
Unless the company can turn things around in 2013, it is likely that the job will no longer belong to Whitman. Ralph Whitworth's agreement with HP that binds him from fighting the board expires in November 2013, and by then, other activists may enter the picture. HP is the poster child of the kind of company Carl Icahn goes after, and with a market cap of $23 billion, there is scope for activists to begin pressuring the company to either break itself apart or find a buyer. We think that Whitman has been dealt a very difficult hand, and that she is doing the best she can. Whitman has not stood still in her time as CEO, and has, at the very least, been frank that HP's full turnaround will take years. But, with 2013 being targeted as HP's first year of improvement, Whitman needs to deliver, or else she risks being thrown out of HP's corner office.
Hewlett-Packard: After The Autonomy Debacle, Is There Value Left In The Stock? [View article]
That is a difficult question to answer. We think that the downside here is limited, given how far the stock has fallen. If it falls much further, it is likely that someone (private equity or another technology company) will become interested. HP's market cap is no longer big enough to deter activists, and if the company doesn't show meaningful progress through fiscal 2013, it is likely that someone will try and stir things up. As for the upside, HP can easily be worth $15 if you put a 5x multiple on the company's 2013 non-GAAP guidance, which would still be by far the lowest multiple of any major technology company. HP's multiple has fallen far faster than its earnings, and if the company can merely show that things are stabilizing, then the multiple is likely to expand as investors regain confidence.
Hewlett-Packard: After The Autonomy Debacle, Is There Value Left In The Stock? [View article]
So far, there aren't any indications that the dividend is threatened. Cash flow, while down in fiscal 2012 versus fiscal 2011, was down mostly due to working capital shifts, and HP's net debt is falling. A look at HP's last 10-Q (they haven't filed their 10-K yet) shows that the company's debt maturities are spread out fairly evenly over the next decade, and appear to be manageable as long as cash flow holds at present levels. http://1.usa.gov/SQ9Ez1
Hewlett-Packard: After The Autonomy Debacle, Is There Value Left In The Stock? [View article]
To her credit, Meg Whitman is revitalizing HP's R&D, and she is at least trying to bring back a focus on innovation. HP is moving into cloud computing, and Whitman is trying to balance the need for a leaner cost structure with the need for more R&D.
Hewlett-Packard: After The Autonomy Debacle, Is There Value Left In The Stock? [View article]
The requirement to write down goodwill if the underlying businesses have become impaired is a GAAP requirement, and HP is simply following accounting requirements. That being said, their acquisition track record is quite poor. We think it is difficult to determine whether or not this would all be happening under Hurd. His tenure was marked by severe cost gutting across all of HP, which boosted profits, but at the expense of innovation. Could that strategy continue to work in a changing technological environement? Perhaps, but there is no way of knowing for sure.
Hewlett-Packard: After The Autonomy Debacle, Is There Value Left In The Stock? [View article]
With Autonomy, Palm, and EDS written down, there isn't much left that HP can actually write down. 3Par is performing well, meaning that it is unlikely to be impaired, and while there is likely intangibles related to the Compaq deal, it is likely that they would have been written down by now if there was a requirement that they need to do it. In theory, further writedown are possible, but at this point in time, we think it is unlikely that HP will take more multi-billion writedowns.
Salesforce Q3 Earnings Preview: What Does The Company Need To Deliver To Keep The Stock Afloat? [View article]
We talked about the issue of mutual funds in several previous articles on Salesforce, and how Fidelity embodies this issue perfectly. Fidelity has been a Salesforce investor since the company's earliest days as a publicly traded one, and is likely sitting on huge profits. But, with a stake of almost 15%, how does Fidelity realize those profits? They can't really sell all those shares, as it would put so much pressure on the stock that the gains would likely be reduced substantially. 13-F filings can provide clues as to what is going on; 13-F's for Q3 show that 13-F filers reduced their stakes in CRM by around 1.26% relative to Q2, which is not large enough to cause cracks in the stock's foundation (http://bit.ly/RPM0nW).
Salesforce Q3 Earnings Preview: What Does The Company Need To Deliver To Keep The Stock Afloat? [View article]
"High flyers" like LinkedIn or Salesforce have one thing in common: the fact that they are high fliers. Over the long run, their stock performance will be determined by how well the company itself does, not how similar stock perform. In our view, the recent selloff in Apple highlights the difference between investors and traders. For example, we used this selloff to acquire more shares in Apple. Given that Apple is our largest holding, performance has certainly been impacted over the past few weeks. But we don't measure performance over a few weeks. How much ancillary effects a selloff in high fliers has depends on each fund, for they all face different circumstances, and different redemption needs.
Buy Attunity: An Under The Radar Investment In Big Data [View article]
Attunity's Q3 is a seasonally weak quarter for the company, and they forecast record revenues and profits for Q4 when Q3 earnings were released. With growth companies such as Attunity, sequential revenue is something to watch, but at the moment, it is unlikely to be an issue. Q4 results should be released at the end of January; we will wait and see what Attunity has to say.
Buy Attunity: An Under The Radar Investment In Big Data [View article]
2000 was the height of the tech bubble, and most stocks became unhinged from their fundamentals. Attunity, as a technology stock, was caught up in the bubble. The company did announce a reverse split in July of this year (http://bit.ly/X4f0y6). As for Splunk, we have not looked at the company in detail and as such don't feel too comfortable commenting on its valuation. We chose to focus on Attunity because it is an under the radar play on Big Data, whereas Splunk is a company well-known by most technology investors.
Buy Alaska Air Group: Why The New Southwest Of The Airline Industry Is Undervalued [View article]
We own Hawaiian too, because of its growth potential in Asia. Its expanding to new routes, and as the yen continues to remain strong, tourism for Japanese citizens will remain more affordable, thereby benefiting Hawaiian, which is something we wrote about in our article on Hawaiian.
Buy Alaska Air Group: Why The New Southwest Of The Airline Industry Is Undervalued [View article]
Alaska's current management team is probably a bit too conservative to buy Hawaiian, even if it could be a good fit, as it would give them access to growth in Asia. The differing aircraft will be an issue in a takeover, however. Hawaiian flies 767's, 717's and A330's, and it will be adding the A350 in 2017. Alaska's success has come in part from its use of just 2 aircraft, the 737 and the Q400. Is expanding from 2 to 6 aircraft types worth it? Perhaps the growth opportunities in Asia are.
It is certainly true that Alaska doesn't have torrid growth in front of it. But what it does have is a great balance sheet, industry-leading margins, a management team that has a proven track record of creating value, and a valuation that does not recognize all those achievements.
The End Game At Hewlett-Packard: Analyzing The Company's Takeover Prospects [View article]
Buy Attunity: An Under The Radar Investment In Big Data [View article]
Item 2: Item 2 proposed to increase the fee that non-employee, non-external directors receive for attending Attunity board meetings be increased from $300 to $430. Even if the fee increase were applied equally to all 6 of Attunity's directors, it would cost the company $780 more, hardly an exorbitant sum.
Item 3: The board wants to boost Alon's bonus by 33%, salary, which results in a bonus of 8 months of salary, as opposed to the current 6 months. The bonus is to be paid only if he meets milestones set forth by the board. And given that Alon owns 13.5% of the company, we think that fact more than outweighs the additional $51,653 in bonus expenses. And Alon has shown flexibility in reducing his pay when asked by the board. In February 2009, his salary was cut by 10%, and in February 2011 his salary was cut by 4%.
Item 4: Attunity needs the 2012 plan so that it can grant stock options to its US employees; the 2001 plan that the company has used up until this point can no longer be used due to changes the IRS has made to the tax code. The 2012 plan has also been "redesigned" so that Attunity can create customized sub-plans based on the tax laws of the country in question. For example, Attunity wants to create a plan just for Israel, to take advantage of specific tax incentives available to Israeli citizens.
We don't think that there is anything untoward about these proposals. To us, they seem more like mundane housekeeping items than anything else. Furthermore, CEO Shimon Alon and his board together own almost a quarter of the company. They have significant "skin in the game," and these policies will affect them just like the rest of Attunity's shareholders.
Buy Attunity: An Under The Radar Investment In Big Data [View article]
Hewlett-Packard: After The Autonomy Debacle, Is There Value Left In The Stock? [View article]
Hewlett-Packard: After The Autonomy Debacle, Is There Value Left In The Stock? [View article]
Hewlett-Packard: After The Autonomy Debacle, Is There Value Left In The Stock? [View article]
Hewlett-Packard: After The Autonomy Debacle, Is There Value Left In The Stock? [View article]
Hewlett-Packard: After The Autonomy Debacle, Is There Value Left In The Stock? [View article]
Hewlett-Packard: After The Autonomy Debacle, Is There Value Left In The Stock? [View article]
Salesforce Q3 Earnings Preview: What Does The Company Need To Deliver To Keep The Stock Afloat? [View article]
Salesforce Q3 Earnings Preview: What Does The Company Need To Deliver To Keep The Stock Afloat? [View article]
Buy Attunity: An Under The Radar Investment In Big Data [View article]
Buy Attunity: An Under The Radar Investment In Big Data [View article]
Buy Alaska Air Group: Why The New Southwest Of The Airline Industry Is Undervalued [View article]
Buy Alaska Air Group: Why The New Southwest Of The Airline Industry Is Undervalued [View article]
It is certainly true that Alaska doesn't have torrid growth in front of it. But what it does have is a great balance sheet, industry-leading margins, a management team that has a proven track record of creating value, and a valuation that does not recognize all those achievements.