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J.P. Moreno

 
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  • VirnetX / Apple Appeal: Bad News For VirnetX And Other Patent Assertion Entities [View article]
    This is actually one of few people sharing a comment that truly comprehends how Apple is using VHC technology, and how pervasive the infringement is. Apple cannot simply remove one feature, or one application. Apple IDs, Secure Servers, Secure Comm Links... these elements are all part of an entire system which is modeled after the Secure SIP protocol. Because of this fact, and it is well documented that Apple is using this secure protocol, it is clear that Apple's entire Secure Domain, which allows them to release such features as FaceTime (secure video chat), iMessage (secure messaging chat), VPN on Demand, and potential future applications (e.g. file sharing) - are based on VirnetX technology. And to be clear, these are not really new applications. These have all been around in the SIP world for over a decade. What Apple has done is taken them mobile. And they've built their entire system around VirnetX technology, which facilitate automatically secure communication links between users. Because of this, they cannot simply stop infringing. And they have no workaround because any proposed workaround (e.g. relay servers) will not work. That is why no one in the VoIP world will use Relay Servers, unless it's for a backup system.
    Mar 7 12:07 PM | 15 Likes Like |Link to Comment
  • Parametric Sound Merger Not Likely To Be Positive For Shareholders [View article]
    Gaming consoles are being refreshed currently, and there are several reports and articles that project solid growth from 2014 onward.

    http://bit.ly/1bcPY3h

    That, combined with the trend of an increased demand for premium headsets (over $100) over the past 5 years bodes very well for Turtle Beach. That is where PAMT technology will fit in with this landscape going forward. Turtle Beach knows what they are doing. They didn't merge with PAMT to let the tech sit on the shelf... And on the flip side, PAMT tech will now enter a sector that is going to be one of high growth for the next several years, with a partner that everyone else is chasing for market share.
    Aug 7 04:14 PM | 1 Like Like |Link to Comment
  • Parametric Sound Merger Not Likely To Be Positive For Shareholders [View article]
    You clearly miss my points (intentionally?).

    Beats is a market sector leader. The P-S ratio could be justified anywhere between 1.71 to 2.01. See my math for actual revenues in 2011 used for the high end. So those are not "pushing up" all the assumptions I could. It's basic logic.

    Secondly, despite 2013 behind a year of gaming console refresh, it does not mean that gamer audio headsets are shrinking in sales. Also, the market over the past 5 years has demonstrated that higher end headsets (over $100) shows continuous growth. Turtle Beach owns this sector. After the refresh, gaming is expected to resume its growth. So, these assumptions that 2013 could see growth in revenues are not impossible.

    My point was that we should wait for guidance before jumping to conclusions. My assumptions are less absurd than your Skull Candy comparison.

    And you avoided my point that your analysis (and mine) completely ignores PAMT's technology value. PAMT was already trading in the $50-$100+ market cap range... The valuation primarily due to its technology (not revenues).

    I personally am content to wait to see the financials of TB. That's all that really matters. And unlike you, I believe I understand why Turtle Beach is the ideal match to take PAMT technology to the masses. That is something PAMT could not have done on their own... They now have a venue and a mass producing market leader to do this.
    Aug 7 03:44 PM | 1 Like Like |Link to Comment
  • Parametric Sound Merger Not Likely To Be Positive For Shareholders [View article]
    The $600 million valuation for Beats was done in late 2011 based on estimated 2011 revenues ($350 mil) for Beats. This put the valuation of the company at that time at approximately 1.75 x estimated revenues. Interestingly, there are more current numbers available (I think Wiki has old references):

    http://bit.ly/1bcFYH7

    "Through the end of 2012, early NPD data show Beats captured a 64% market share of premium headphones, along with 28% of the overall headphone market share. Beats recorded $519 million in revenue, up from $298 million in 2011, according to NPD data provided by the company."

    So if we are doing real math, the company's actual selling price was $600 million / $298 million (actual revenue) = 2.01

    Those are 2011 numbers. As you can see, Beats revenue went way up in 2012 to the tune of 519/298 = 1.74 increase. A large revenue increase.

    For discussion, let's take an envelope approach. We'll use your 1.71 number (conservative) for 2012 Turtle Beach numbers as the low end, and 2.01 (actual Beats valuation as the high end).

    End of 2012 revenue for TB = $205 million.

    Low end: TB valuation at end of 2012 = $350 mil
    High end: TB valuation at end of 2012 = $412 mil

    If we assumed that 2013 holds NO growth for Turtle Beach, then your point is well made. But given how the gaming headset market is growing, as well as the overall audio headset sector (see Beats for an example), it would be logical to conclude that Turtle Beach's revenues will grow in 2013. Will they see 75% growth like Beats did? Probably not. However, TB is a market sector leader, like Beats. So we are talking apples to apples now (not like your example of Skull Candy). Let's take another envelope approach to TB's 2013 revenue growth possibilities. Let's say low end = 25%, and high end = 50%.

    Turtle Beach's 2013 projected revenues:

    Low end = $205 * 1.25 = $256 mil
    High end = $205 * 1.50 = $307 mil

    Now take our envelope P-S ratios on these:

    TB valuation based on $256 mil estimated revenue:
    Low end = $256 * 1.71 = $438 mil
    High end = $256 * 2.01 = $514 mil

    TB valuation based on $307 mil estimated revenue:
    Low end = $307 * 1.71 = $525 mil
    High end = $307 * 2.01 = $617 mil

    And if you think the 25-50% revenue growth is far-fetched, you might start doing some reading. Turtle Beach is #1 in this field and they are teamed up with the big boys (e.g. MSFT) for the biggest games (e.g. Call of Duty).

    http://bit.ly/1bcFWiH

    As a market sector leader, like Beats, I think it's logical to conclude that Turtle Beach will see significant revenue growth in 2013, and those actual numbers are what should be used for current valuation, not the end of 2012 revenue numbers. I am content to wait for guidance from the new company, but my point in doing this envelope analysis is that it's not unfathomable to see a market cap range justified in the $400-$600+ range if the numbers come in as stated above.

    So PAMT's portion is 20%

    0.20 of $438 million = $88 million
    0.20 of $617 million = $123 million

    And here's the kicker. This analysis assumes the PPS and newly formed company's valuation is based only on Turtle Beach's fundamental numbers (e.g. revenues). We are completely ignoring PAMT technology's value in this analysis. I absolutely believe PAMT tech has some value, which is why it was trading on its own in the first place... In fact, the market has valued PAMT (basically its technology) in the $50 - $100 mil range already. Now, PAMT has a partner with a platform to use PAMT technology in a hot sector. But even if you ignore PAMT technology's value altogether (which you and I have both done), you could still see fundamentals of Turtle Beach alone justify a healthy market cap.
    Aug 7 03:09 PM | 1 Like Like |Link to Comment
  • Parametric Sound Merger Not Likely To Be Positive For Shareholders [View article]
    Parametric (20%) + Turtle Beach (80%) is now a full fledged company with a business model that has over 50% of the market sector. PAMT technology will enter a red-hot gaming market with a company that is already set up to produce and distribute. Those are all positives. Let's just be patient and see what TB's financials are and what they are really making, rather than making bold assumptions like the author of this article. They may be making nice profits for all we know. In fact, given that they are #1 in the sector (by a long-shot) and have grown their business, those seem to be indicators that Turtle Beach is making healthy profits.

    As for short-term PPS... I am not as concerned with a $70 pps as you. $70 assumes the number of shares stays the same. That's simply a numbers game that will work itself out based on the overall market cap and number of shares (which may increase... no big deal). Once there is more clarity as I expect we will get, the PPS will take care of itself. Let's just wait for more info on TB's financials and then we can talk about it. Also, the 8-K mentions a lock-up of shares for 6 months. I view that as a positive. With the small float and the lock-up of shares, this should be good for the PPS.

    In any case, I see no reason to jump to conclusions and make random assumptions. There's obviously a plan and we'll just watch it unfold. As we get more facts, we will get a better sense of what the true value of the newly formed company is worth. I will say this... I'm glad the partner PAMT is teaming up with is Turtle Beach, and not someone like Skull Candy! That would have been a reason to short.... or to cry "disaster".

    Turtle Beach >>>> Skull Candy.

    Just sayin'....
    Aug 7 02:18 AM | 2 Likes Like |Link to Comment
  • Parametric Sound Merger Not Likely To Be Positive For Shareholders [View article]
    I can argue that your logic is somewhat flawed if you are pulling Skull Candy and Logitech out of the hat as comparable companies to Turtle Beach. They are not what I would call "comparable" by any stretch of the imagination.

    Turtle Beach currently is the dominating player in the gaming headset market, which is also growing. From my quick math, the gaming headset market is close to $400 million, using 2012 numbers. Turtle Beach's +50% market share is pure dominance. The #2, #3, #4 companies are not even close... and they are certainly not named Skull Candy or Logitech. So, I could easily argue that Skull Candy and Logitech should not even be mentioned in the same breath (or Seeking Alpha article) as Turtle Beach. Therefore, the P-S metric for those companies that you call "comparable" is nonsense. One could argue that a market sector leader could easily have a P-S ratio over 2.0. Take Apple for example... they are at 2.34

    http://bit.ly/11Lcf5p

    Rather than jump to conclusions and proclaim the merger is a "disaster", I will wait for a little more clarity. I like that Houlihan Lokey and JP Morgan are involved. And I am very impressed that the partner for PAMT technology is the top dog in the gaming headset market sector. PAMT has found a partner that has the ability to produce, with an already strong market presence and global retail distribution points. And the technology may be the key to how TB continues to dominate this market going forward. Time will tell.

    And we should find out more about Turtle Beach's financials soon. So rather than compare TB to the bottom of the barrel competitors, let's exercise some patience and wait for a little more info. This could very likely be a very nice merger.
    Aug 7 12:22 AM | 2 Likes Like |Link to Comment
  • VirnetX Vs. Apple: Viability Of Apple Workaround To Avoid A Permanent Injunction [View article]
    Well, Apple is fighting because 1% of a significant portion of Apple products is a lot of money.

    As for the ideas being funded by taxes... not technically. These were not government employees. They were SAIC employees, which is a private company that does contract work. So the ideas were owned by SAIC and patented by the scientists. So that is not an issue.

    And yes, the information can be found in trial depositions and trial transcripts.
    Feb 22 11:53 AM | 6 Likes Like |Link to Comment
  • VirnetX Vs. Apple: Viability Of Apple Workaround To Avoid A Permanent Injunction [View article]
    Peepap - well, things could develop in as little as a few days, or if Apple drags it out (e.g. appeal), perhaps up to a year. I do not know Apple's strategy at this point. And even if I did, that could change depending on many variables. I do believe the final judgment / potential injunction, if written properly could get things going sooner though.
    Feb 22 11:50 AM | 5 Likes Like |Link to Comment
  • VirnetX Vs. Apple: Viability Of Apple Workaround To Avoid A Permanent Injunction [View article]
    I do not know if the relay servers will cause that issue. But I believe Quality of Service will be degraded significantly as I describe in the article.
    Feb 22 11:48 AM | 4 Likes Like |Link to Comment
  • VirnetX Vs. Apple: Viability Of Apple Workaround To Avoid A Permanent Injunction [View article]
    Withglee, my allegiance lies in fundamental research, and letting the facts speak for themselves. Theoretical solutions are not the same as real-world solutions. HTTPS is not Secure SIP. They function differently, even though you believe there are similarities on the security side. If they were the same, then there was no need for Henning Schulzrinne to develop SIP at all. SIP was needed and developed specifically for real-time communication because HTTP was inadequate. And it was originally developed without security. It was not obvious how to make that happen. That's where these scientists stepped in.

    VirnetX is not suing anyone for rectangles with rounded corners or scrolling lists. So your analogy does not apply to this case.

    And if your dog in the hunt is your abhorrence to corruption and the damage you receive, I'm not sure what to tell you. The ideas are patented. The defendants are using them to build a wide variety of products and profit from them. So, like any other company that owns valuable intellectual property, they have the right to protect it and try to secure licensing deals. It's just the way the world works, for small companies and large. You pay for innovative ideas. Not everything is free.

    Best of luck to you in your investments and thanks for the discussion.
    Feb 22 11:47 AM | 8 Likes Like |Link to Comment
  • VirnetX Vs. Apple: Viability Of Apple Workaround To Avoid A Permanent Injunction [View article]
    adrian,

    Actually, that's a good question. VirnetX patents do not touch on https at all. That's a different security protocol - mainly for a web server and having secure access to it. SIP is used for real-time communications. And VirnetX patents cover that protocol specifically.

    Real-time communications like FaceTime (and iMessage) are based on SIP, not HTTP. And once they start using the secure version of SIP, they are infringing because VirnetX owns that model.

    Apple IDs (e.g. user_name@yahoo.com act like Secure SIP email addresses (e.g. sips:user_name@msn.com). The Apple IDs trigger security when they contact Apple secure DNS servers, and they require secure links to be established between the two devices. It is an entire model and Apple is using it. Unless they scrap the way that FaceTime and iMessage work, or eliminate security altogether, then I don't see the relay solution as a good one. But in time, we will find out.

    VirnetX only protects what they own. And it does not include HTTPS.

    Best to you, and great questions.
    Feb 21 07:19 PM | 5 Likes Like |Link to Comment
  • VirnetX Vs. Apple: Viability Of Apple Workaround To Avoid A Permanent Injunction [View article]
    Apple really is the only one that has set up a global communication network with mobile devices, tablets, and computers. Unified Communication companies use the same technology for security, but they all use SIP proxy servers mainly for call set up only. Relay servers can be used, but in my opinion, for a global system like Apple has developed, I just don't see it as a great solution. But we will find out.

    As for security, if Apple servers are involved in relaying the media / data, then they would obviously be able to access any information sent through its servers. So, it's just a privacy issue that Apple would have to make its users aware of.
    Feb 21 07:13 PM | 5 Likes Like |Link to Comment
  • VirnetX Vs. Apple: Viability Of Apple Workaround To Avoid A Permanent Injunction [View article]
    Thanks hawaiianeye. Glad to contribute to folks like yourself in understanding your investment. Best to you.
    Feb 21 07:10 PM | 3 Likes Like |Link to Comment
  • VirnetX Vs. Apple: Viability Of Apple Workaround To Avoid A Permanent Injunction [View article]
    I know what HTTPS is, and it is not the same. It does not allow for secure links to be automatically be established between two devices to enable secure real-time communication using SIP. HTTP is not the same as SIP. HTTPS is not the same as Secure SIP.

    But if you think you have all the answers, call Apple, I'm sure they'd love to hear any idea that gets them out of this one.

    Also, as to your concept of someone listening in. I did not state that the government or someone with authority could not have a backdoor entry to the secure link. That is actually built into 3GPP specs. In any case, I'm not sure why you even bring that up since that's not something I even covered.

    And again, you mention the 0.5B award. Obviously that bothers you. If the technology is used by companies who profit from it (like Apple), I believe VirnetX should receive fair compensation. A reasonable royalty. If it equates to $0.5 Billion in past damages... so be it.
    Feb 21 07:07 PM | 8 Likes Like |Link to Comment
  • VirnetX Vs. Apple: Viability Of Apple Workaround To Avoid A Permanent Injunction [View article]
    Thanks Steven, yes, I think the Cisco trial will have many things to write about. I have not shared everything I know on the Cisco front, but maybe after the trial I will comment more on it. Thanks for reading the article and for your comment.
    Feb 21 06:18 PM | 3 Likes Like |Link to Comment
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