Axion Power Concentrator 216: Mar. 10: Axion Power And EPower Engine Systems Inaugurate Strategic 18-Wheeler Alliance Using PbC Batteries In Hybrid Drive Trains For Class 8 Trucks [View instapost]
First of all, an apology to all the Axionistas. I’d like to share some thoughts on the Valence Bankruptcy hoping some of the knowledgeable posters here can step in and answer some question / underline the weak points of this thinking. It is related to the sector, and as such I hope you may also consider it a description of a potential scenario (climate/ landscape) where Axion is operating. Under this scenario both A123 and Valence could end up as part of bigger competitors. I’m mainly the messenger, as I’ve stolen the approach from another investor. When Valence filed for bankruptcy, it looked like Berg, its major shareholder and owner of more than 90% of the company’s debt, was going to use bk to wipe out shareholders (including himself) and take full control of the company. A request for an equity committee was denied. The company expected to re-emerge by year’s end (2012). Then A123 filed. JCI acted as the stalking horse in a 363 sale of that company, but ended up losing against Wanxian. The price doubled to roughly $250 million. Hot bidding war. JCI wasn’t happy about the result and tried to block the deal even after losing it. Unsuccessfully. Back to Valence. The company hasn’t re-emerged yet – the opposite. It filed in court to hire two investment banks looking for equity financing. May be it was something due after A123 showed there may be more value than expected for good IP in the sector. However, it is interesting the investment banks will get only half commission if a deal is closed with JCI and a few other companies (that might have already expressed interest in the company?). Speculation time. May be Valence (Berg) has now realized that post bk Valence will have a different kind of competitor, giant Wanxiang rather than a relatively small and probably still financially weak A123. A tougher competitor for scale, financial and production capacity, etc. etc. May be in the long term a plan B can be now more rewarding both for the company (its management) and its major lender/shareholder: a sale to a big guy, who can take also advantage (in part) of its large NOLs. Berg would just get as much money as possible back (first as creditor and lastly as shareholder), depending on how many people you can get to bid and what price comes out. Questions: am I correct thinking JCI is pretty weak on IP in the lithium battery sector? A buy out of Valence would strengthen its patent portfolio. May be A123 and Valence had no interest (financial capacity) to start a legal fight with a big guy, but Wanxiang owning A123 may set a completely different scenario. It’s also about building a decent defense in case things get tough. Here are the names of companies included in the “reduced commission” list for the investment banks: Berg, JCI, SAIF, Enertech Capital, Via Motors. I’d appreciate any comment on the last 3 companies (strengths, financial capabilities, etc). Could Valence be worth over $120 million in a bidding war? The NOLs are impressive, but could only be used in part. (Section 382 limitation - Following a “more than 50%” ownership change, corporations ability to deduct pre-ownership change NOL’s is limited. If an ownership change occurs in a bankruptcy case, the calculation of the annual limitation is based on the value of the corporation immediately after the ownership change. Since this calculation is usually after significant debt relief, the equity value is higher, more NOLs). Axion related: if I got it right the long time horizon is not competing with the big guys, but becoming a partner to them. Safer, and pretty smart as a strategy. However, here comes the reference to "sources that are in alignment with our business objectives" for the next financing round. Just wondering if any of the previous big names could be interested in getting additional IP in the sector (even outside of lithium, and through a partnership and not necessarily a buyout ) at a time it seems on fashion to do so (the hotter demand for IP is, the easier it may be for Axion). And given the fact the Axion is only looking for a financing, and not on sale, how this deal could be structured. Thanks.
Immersion's New Multi-Year Licensing Deal With Samsung: Increased Royalty Rates Plus Basic Haptic [View article]
Let me disagree with your comment, for several reasons.
The parts I quoted from the Apple - Samsung court case clearly show that haptics was considered by Samsung an integral part of its development of the Galaxy range and a key differentiator from Apple's iPhone. A strong validation of haptics and a very good reason why Samsung renewed the licence with IMMR.
Understanding how Android and iOS differ as to haptics is also key to understand why Immersion hasn't taken a clear position, yet, toward Apple for their use of haptics:
Mark McMahon - FBL
Okay. But what you just mentioned did sound a lot like that they are – potentially infringing on your basic haptics, with like the alert system, that sort of thing?
Vic Viegas - President & CEO
With regards to Apple, we’ve never made that statement. Now we’ve not taken a position that it’s infringing or that it’s not infringing. We have taken a position that the android operating system has currently shipping is using basic haptics which is covered by our patent portfolio.
Apple is certainly aware of Immersion and interested in the space - actually we can't rule out it could even consider a buy out of Immersion, given the strength of Immersion's IP and patent portfolio, and what this could mean for many of Apple's competitors which are Immersion's licensees (or may be infringing basic haptics).
I find it hard to consider the inclusion of the Apple ticker in this article as just a way "to get more views": on purpose I did not put GM and VC as that could be considered a stretch (although the companies are mentioned as licensees), but Apple is a key part of it. I'd say that an Apple investor could also get interesting information about areas (haptics and Samsung litigation) he/she might not have considered/be aware of.
Not All Data Center Stocks Are Created Equal [View article]
Converting into a REIT allows the company to take advantage of a tax efficient structure. On the other side, the company will have to distribute its earnings to shareholders and will be forced to finance further expansion tapping the credit market. The recent Public Offering of Senior Notes may be considered an example of how the company can successfully achieve this target.
Axion Power Concentrator 214: Mar. 4: Axion Power And EPower Engine Systems Inaugurate Strategic 18-Wheeler Alliance Using PbC Batteries In Hybrid Drive Trains For Class 8 Trucks [View instapost]
iindelco:
definitely a step needed to avoid further problems (although the 363 bk sale process is public), but the terms and names involved are interesting:
Valence Technology Settles Patent Dispute With Hydro-Quebec
AUSTIN, Texas, June 13, 2012 (GLOBE NEWSWIRE) -- Valence Technology, Inc. (Nasdaq:VLNC), a leading U.S. based global manufacturer of advanced energy storage solutions settled its patent dispute with Hydro-Quebec, entering into a settlement agreement that resolves existing litigation with no monetary payment made by either side, and each party bearing its own costs and attorneys fees.
Under the terms of the settlement, all claims in the litigation have been dismissed and Valence Technology is free to sell its proprietary lithium magnesium metal phosphate products, without liability to The University of Texas, Hydro-Quebec, or any of their related entities. In addition, Valence Technology's customers and suppliers are also removed from any liability related to the lawsuit.
assets: NOLs and IP, mainly (I'm starting my diligence on Valence, so I could be missing the elephant in the room...)
Axion Power Concentrator 214: Mar. 4: Axion Power And EPower Engine Systems Inaugurate Strategic 18-Wheeler Alliance Using PbC Batteries In Hybrid Drive Trains For Class 8 Trucks [View instapost]
thanks for your comment - I may be completely off, but it looks like Valence believes there might be some investors crazy enough to put additional money there: Attached hereto are amended Exhibits “A,” “B,” “C,” and “D” to the motion dated February 8, 2013, of Valence Technology, Inc. (the “Debtor”), the debtor and debtor-in-possession in the above captioned Chapter 11 case, for an order authorizing the Debtor to employ and retain KPMG Corporate Finance, LLC (“KPMGCF”) and Roth Capital Partners, LLC (“Roth”) as investment bankers to the Debtor (the “Motion”) [Docket No. 291]. http://bit.ly/Xqrej9 may be the NOLs are the main value there... :-)
Axion Power Concentrator 214: Mar. 4: Axion Power And EPower Engine Systems Inaugurate Strategic 18-Wheeler Alliance Using PbC Batteries In Hybrid Drive Trains For Class 8 Trucks [View instapost]
Sorry if I step in with something which may have already been discussed (I'm a forgetful reader), or seem OT: I am under the understanding that Johnson Controls may be interested in bidding for Valence Technology, after the A123 debacle. This may be read as a further attempt by JCI to strengthen its patent portfolio outside of its core competences/skills. Axion related, the fact that IP is "on fashion" again in the industry could hopefully mean that financing from "sources that are in alignment with our business objectives" may be less difficult than a few months ago... A bit of a stretch and wishful thinking, I know... :-)
Long time ago, Equinix used to compare itself to an airport: if you are a Telecom in the business of exchanging bits (think of them as passengers), it makes more sense to take one or more slots at JFK in NY rather than at an underserved smaller airport nearby. Plus the costs associated with connecting to a new facility jw408 alluded to. The first mover advantage plays an important role in this business, and barriers to entry are quite high.
It is not only a problem related to the presence of many Telecom/ISP providers within a facility.
Most Equinix data centers have built ecosystems where key customers act as magnet for other business partners. This creates a snowball effect, which is one of the beauties of the business model. Being just one cross connect away from people you need to connect to is a great advantage in terms of cost and latency.
REIT conversion. It's tough to answer in a few words, but Equinix is generating a lot of discretionary free cash flow. A REIT structure will help investors focus on this aspect of the business, that gets a bit lost under the existing structure. Plus the tax related advantages.
Herbalife - A Case History In Bad Due Diligence [View article]
I believe John Hempton is long Herbalife - if I got this comment right:
>I am utterly convinced by everything in Bill Ackman's presentation except the final conclusion - that Herbalife's stock will collapse. I took a long position on Christmas Eve.
Cincinnati Bell (CBB -6.9%) sold off after its CyrusOne (CONE) subsidiary set a price range of $16-$18 for its 16.5M-share IPO. That's good for a market cap of $312M-$351M. IPO buyers will own 84.5% of CyrusOne after the offering, and CBB just 9.7% (employees will own the rest). CyrusOne had revenue of $162.8M (+22% Y/Y) for the first 9 months of 2012, and a net loss of $5.1M. (S-1) [View news story]
CBB will own 9.7% of CONE outstanding shares of common stock and 68.5% of the outstanding operating partnership units, which, if converted into CONE common stock, would represent an additional 61.9% of the company. This way, Cincinnati Bell expects to effectively own approximately 71.6% of CyrusOne. Market cap will be around 1 billion, at the mid point.
Immersion Corporation: Profiting From The Touch Screen Revolution [View article]
A couple of clarifications as a follow up to the article.
HD haptics are technically better described as higher fidelity, rather than localized.
The combination of Immersion TouchSense 5000 software with high definition actuators delivers vibrations across a broader frequency range than traditional device motors. The result is a more nuanced and lifelike experience because of this wide range of frequency vibration.
As to the paragraph about the automotive sector, the company indicated a wide range for royalties ($1 to $5). It is, however, also possible that the same car contains both a rotary knob and a touchscreen with haptics, so that the final result is a higher rate per unit.
My calculation of a historical number of about $7 derives from an old filing disclosing how many cars had implemented haptics at that time. As I have been pointed out, however, total revenues might have included also project work, etc. - bringing the actual royalty rate per unit lower.
The real purpose was to underline that royalties in the automotive vertical are in the dollar range, and not cents like in mobility, and I still expect them to settle at a few dollars for each car.
Rumor Has It: Is Mohawk Industries Eyeing Marazzi Group? [View article]
Thanks. As you might have noticed, the deal finally went through at a higher price than first rumored. I'm planning an update with more details about Marazzi Group and the potential synergies of the deal.
Mohawk Industries (MHK) agrees to acquire Marazzi Group, a global manufacturer and marketer of ceramic tile, for ~$1.5B in cash and stock. MHK says the addition of Marazzi, whose 2011 revenues totaled ~€833M ($1.16B), will make it the worldwide leader in ceramic tile. MHK -0.8% AH. [View news story]
Axion Power Concentrator 216: Mar. 10: Axion Power And EPower Engine Systems Inaugurate Strategic 18-Wheeler Alliance Using PbC Batteries In Hybrid Drive Trains For Class 8 Trucks [View instapost]
I’m mainly the messenger, as I’ve stolen the approach from another investor.
When Valence filed for bankruptcy, it looked like Berg, its major shareholder and owner of more than 90% of the company’s debt, was going to use bk to wipe out shareholders (including himself) and take full control of the company. A request for an equity committee was denied. The company expected to re-emerge by year’s end (2012).
Then A123 filed.
JCI acted as the stalking horse in a 363 sale of that company, but ended up losing against Wanxian. The price doubled to roughly $250 million. Hot bidding war. JCI wasn’t happy about the result and tried to block the deal even after losing it. Unsuccessfully.
Back to Valence.
The company hasn’t re-emerged yet – the opposite. It filed in court to hire two investment banks looking for equity financing. May be it was something due after A123 showed there may be more value than expected for good IP in the sector. However, it is interesting the investment banks will get only half commission if a deal is closed with JCI and a few other companies (that might have already expressed interest in the company?).
Speculation time. May be Valence (Berg) has now realized that post bk Valence will have a different kind of competitor, giant Wanxiang rather than a relatively small and probably still financially weak A123. A tougher competitor for scale, financial and production capacity, etc. etc. May be in the long term a plan B can be now more rewarding both for the company (its management) and its major lender/shareholder: a sale to a big guy, who can take also advantage (in part) of its large NOLs. Berg would just get as much money as possible back (first as creditor and lastly as shareholder), depending on how many people you can get to bid and what price comes out.
Questions: am I correct thinking JCI is pretty weak on IP in the lithium battery sector? A buy out of Valence would strengthen its patent portfolio. May be A123 and Valence had no interest (financial capacity) to start a legal fight with a big guy, but Wanxiang owning A123 may set a completely different scenario. It’s also about building a decent defense in case things get tough.
Here are the names of companies included in the “reduced commission” list for the investment banks: Berg, JCI, SAIF, Enertech Capital, Via Motors. I’d appreciate any comment on the last 3 companies (strengths, financial capabilities, etc).
Could Valence be worth over $120 million in a bidding war? The NOLs are impressive, but could only be used in part. (Section 382 limitation - Following a “more than 50%” ownership change, corporations ability to deduct pre-ownership change NOL’s is limited. If an ownership change occurs in a bankruptcy case, the calculation of the annual limitation is based on the value of the corporation immediately after the ownership change. Since this calculation is usually after significant debt relief, the equity value is higher, more NOLs).
Axion related: if I got it right the long time horizon is not competing with the big guys, but becoming a partner to them. Safer, and pretty smart as a strategy. However, here comes the reference to "sources that are in alignment with our business objectives" for the next financing round. Just wondering if any of the previous big names could be interested in getting additional IP in the sector (even outside of lithium, and through a partnership and not necessarily a buyout ) at a time it seems on fashion to do so (the hotter demand for IP is, the easier it may be for Axion). And given the fact the Axion is only looking for a financing, and not on sale, how this deal could be structured.
Thanks.
Immersion's New Multi-Year Licensing Deal With Samsung: Increased Royalty Rates Plus Basic Haptic [View article]
The parts I quoted from the Apple - Samsung court case clearly show that haptics was considered by Samsung an integral part of its development of the Galaxy range and a key differentiator from Apple's iPhone. A strong validation of haptics and a very good reason why Samsung renewed the licence with IMMR.
Understanding how Android and iOS differ as to haptics is also key to understand why Immersion hasn't taken a clear position, yet, toward Apple for their use of haptics:
Mark McMahon - FBL
Okay. But what you just mentioned did sound a lot like that they are – potentially infringing on your basic haptics, with like the alert system, that sort of thing?
Vic Viegas - President & CEO
With regards to Apple, we’ve never made that statement. Now we’ve not taken a position that it’s infringing or that it’s not infringing. We have taken a position that the android operating system has currently shipping is using basic haptics which is covered by our patent portfolio.
http://seekingalpha.co...
Apple filed several patents about haptics, as I discussed in a few of my previous articles about IMMR.
http://bit.ly/10mDArN
Apple is certainly aware of Immersion and interested in the space - actually we can't rule out it could even consider a buy out of Immersion, given the strength of Immersion's IP and patent portfolio, and what this could mean for many of Apple's competitors which are Immersion's licensees (or may be infringing basic haptics).
I find it hard to consider the inclusion of the Apple ticker in this article as just a way "to get more views": on purpose I did not put GM and VC as that could be considered a stretch (although the companies are mentioned as licensees), but Apple is a key part of it. I'd say that an Apple investor could also get interesting information about areas (haptics and Samsung litigation) he/she might not have considered/be aware of.
Not All Data Center Stocks Are Created Equal [View article]
Immersion's New Multi-Year Licensing Deal With Samsung: Increased Royalty Rates Plus Basic Haptic [View article]
It look like the story is unfolding nicely.
Axion Power Concentrator 214: Mar. 4: Axion Power And EPower Engine Systems Inaugurate Strategic 18-Wheeler Alliance Using PbC Batteries In Hybrid Drive Trains For Class 8 Trucks [View instapost]
definitely a step needed to avoid further problems (although the 363 bk sale process is public), but the terms and names involved are interesting:
http://bit.ly/YNv69P
Valence Technology Settles Patent Dispute With Hydro-Quebec
AUSTIN, Texas, June 13, 2012 (GLOBE NEWSWIRE) -- Valence Technology, Inc. (Nasdaq:VLNC), a leading U.S. based global manufacturer of advanced energy storage solutions settled its patent dispute with Hydro-Quebec, entering into a settlement agreement that resolves existing litigation with no monetary payment made by either side, and each party bearing its own costs and attorneys fees.
Under the terms of the settlement, all claims in the litigation have been dismissed and Valence Technology is free to sell its proprietary lithium magnesium metal phosphate products, without liability to The University of Texas, Hydro-Quebec, or any of their related entities. In addition, Valence Technology's customers and suppliers are also removed from any liability related to the lawsuit.
assets: NOLs and IP, mainly (I'm starting my diligence on Valence, so I could be missing the elephant in the room...)
Axion Power Concentrator 214: Mar. 4: Axion Power And EPower Engine Systems Inaugurate Strategic 18-Wheeler Alliance Using PbC Batteries In Hybrid Drive Trains For Class 8 Trucks [View instapost]
Attached hereto are amended Exhibits “A,” “B,” “C,” and “D” to the motion
dated February 8, 2013, of Valence Technology, Inc. (the “Debtor”), the debtor and
debtor-in-possession in the above captioned Chapter 11 case, for an order authorizing the
Debtor to employ and retain KPMG Corporate Finance, LLC (“KPMGCF”) and Roth
Capital Partners, LLC (“Roth”) as investment bankers to the Debtor (the “Motion”)
[Docket No. 291].
http://bit.ly/Xqrej9
may be the NOLs are the main value there... :-)
Axion Power Concentrator 214: Mar. 4: Axion Power And EPower Engine Systems Inaugurate Strategic 18-Wheeler Alliance Using PbC Batteries In Hybrid Drive Trains For Class 8 Trucks [View instapost]
This may be read as a further attempt by JCI to strengthen its patent portfolio outside of its core competences/skills.
Axion related, the fact that IP is "on fashion" again in the industry could hopefully mean that financing from "sources that are in alignment with our business objectives" may be less difficult than a few months ago...
A bit of a stretch and wishful thinking, I know... :-)
Not All Data Center Stocks Are Created Equal [View article]
Equinix owns the majority of the key interconnection points in the USA - see this blog post for more information:
http://bit.ly/V89Lfb
Long time ago, Equinix used to compare itself to an airport: if you are a Telecom in the business of exchanging bits (think of them as passengers), it makes more sense to take one or more slots at JFK in NY rather than at an underserved smaller airport nearby. Plus the costs associated with connecting to a new facility jw408 alluded to. The first mover advantage plays an important role in this business, and barriers to entry are quite high.
It is not only a problem related to the presence of many Telecom/ISP providers within a facility.
Most Equinix data centers have built ecosystems where key customers act as magnet for other business partners. This creates a snowball effect, which is one of the beauties of the business model. Being just one cross connect away from people you need to connect to is a great advantage in terms of cost and latency.
REIT conversion. It's tough to answer in a few words, but Equinix is generating a lot of discretionary free cash flow. A REIT structure will help investors focus on this aspect of the business, that gets a bit lost under the existing structure. Plus the tax related advantages.
Thanks to both you and jw408 for the comments.
Gramercy Capital Corporation: An Edward De Bono Stock [View article]
thanks for your kind comment.
I really enjoyed your latest update on GKK:
http://seekingalpha.co...
Herbalife - A Case History In Bad Due Diligence [View article]
>I am utterly convinced by everything in Bill Ackman's presentation except the final conclusion - that Herbalife's stock will collapse. I took a long position on Christmas Eve.
http://bit.ly/V5lcl3
Great story to watch, and great learning experience.
Cincinnati Bell (CBB -6.9%) sold off after its CyrusOne (CONE) subsidiary set a price range of $16-$18 for its 16.5M-share IPO. That's good for a market cap of $312M-$351M. IPO buyers will own 84.5% of CyrusOne after the offering, and CBB just 9.7% (employees will own the rest). CyrusOne had revenue of $162.8M (+22% Y/Y) for the first 9 months of 2012, and a net loss of $5.1M. (S-1) [View news story]
This way, Cincinnati Bell expects to effectively own approximately 71.6% of CyrusOne.
Market cap will be around 1 billion, at the mid point.
Immersion Corporation: Profiting From The Touch Screen Revolution [View article]
HD haptics are technically better described as higher fidelity, rather than localized.
The combination of Immersion TouchSense 5000 software with high definition actuators delivers vibrations across a broader frequency range than traditional device motors. The result is a more nuanced and lifelike experience because of this wide range of frequency vibration.
As to the paragraph about the automotive sector, the company indicated a wide range for royalties ($1 to $5). It is, however, also possible that the same car contains both a rotary knob and a touchscreen with haptics, so that the final result is a higher rate per unit.
My calculation of a historical number of about $7 derives from an old filing disclosing how many cars had implemented haptics at that time. As I have been pointed out, however, total revenues might have included also project work, etc. - bringing the actual royalty rate per unit lower.
The real purpose was to underline that royalties in the automotive vertical are in the dollar range, and not cents like in mobility, and I still expect them to settle at a few dollars for each car.
Rumor Has It: Is Mohawk Industries Eyeing Marazzi Group? [View article]
Mohawk Industries (MHK) agrees to acquire Marazzi Group, a global manufacturer and marketer of ceramic tile, for ~$1.5B in cash and stock. MHK says the addition of Marazzi, whose 2011 revenues totaled ~€833M ($1.16B), will make it the worldwide leader in ceramic tile. MHK -0.8% AH. [View news story]
http://seekingalpha.co...
Axion Power Concentrator 188: Dec. 19: Latest News [View instapost]