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Stan Piland  

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  • Micron: Tsinghua Unigroup's Reported $23B Bid Is A Long Shot [View article]
    I agree Tsinghua Unigroup has little chance of closing a deal, but this bid probably accelerates a bigger wave of consolidation in the semi industry. Longer term investors should take note. MU President Mark Adams recently noted that HDD companies at some point would need access to NAND Flash at cost...although smaller, both STX and WDC could easily obtain private equity financing to buy MU. As you noted, INTC is a likely buyer. MU is now "in play," and the question is price. IMHO Einhorn is right: the stock is deeply undervalued. Private market value for MU could approach $60, which would be in line with average semiconductor transactions.
    Jul 14, 2015. 12:18 PM | 10 Likes Like |Link to Comment
  • SK Hynix Q1 Results Are Ominous For Micron [View article]
    Absolutely correct that my analysis is forward looking. I actually make a better living anticipating where a stock will be in the future than I can make saying where it is now. Thanks for the insight.
    May 18, 2015. 10:08 PM | 1 Like Like |Link to Comment
  • SK Hynix Q1 Results Are Ominous For Micron [View article]
    I disagree that Apple will impact pricing for other buyers. In fact Apple's supply agreement with Samsung sops up a big chunk of the expected new capacity which shorts insisted would collapse prices just a few months ago. Mobile and server markets continue to be capacity constrained, so Samsung's agreement with Apple simply leaves more of the higher margin business for MU.

    Regarding the economy or a potential market correction, I would rather short high-multiple, over-leveraged, and hyper-competitive businesses whose multiples will collapse with their growth rates. At a single-digit multiple, with excellent cash flow and a likely dividend within the next 12 months, and potentially more consolidation in NAND Flash, MU would still be a favorite long.
    May 18, 2015. 05:24 PM | Likes Like |Link to Comment
  • SK Hynix Q1 Results Are Ominous For Micron [View article]
    I've owned MU for over 3 years, and this article has not convinced me there is anything wrong with the bull case. If these analysts were so smart, why did they wait so long to downgrade? The stock is already down over 20% y-t-d on weaker 1Q PC sales and spot DRAM prices; no one has expectations for either to rebound in 2Q. Server and mobile chip growth is robust, and the PC market will be ok (but not great) in 2H 2015, so should be good for all 3 competitors.

    What is overlooked here is the structural change consolidation has brought to the DRAM industry...with only 3 competitors, there is no price spoiler, so capacity increases will be rational and will likely not disrupt pricing. Moreover, the same consolidation is likely in the NAND Flash market. Given missteps at SNDK this year, that stock is extremely cheap. I would not be surprised if MU tries to acquire SNDK before year end. If that happened it would be huge for MU! They have a great track record integrating acquisitions, and a deal would allow NAND producers to impose the same pricing discipline as DRAM. I'm a better buyer of MU at these levels, and also SNDK.
    May 18, 2015. 03:51 PM | 3 Likes Like |Link to Comment
  • Micron Stock A Buy Despite Rival SanDisk's Lower Forecast [View article]
    Nice article! I have been long MU for several years on the twin theses that (1) their flash business would provide above-market long-term growth, and (2) DRAM industry consolidation would enable the business to be managed for superior ROIC and cash flow generation. Notwithstanding recent weakness in PC sales (and MU stock price,) I continue to think both these themes are powerful drivers of future performance. In light of the rumored INTC/ALTR merger, I think an additional theme should be considered: massive consolidation and/or private equity investment in the broader semiconductor space. With projected free cash flow of $2.3 bil in 2015 and $3.3 bil in 2016, I would think private equity firms should be interested in MU at these levels.
    Mar 29, 2015. 02:03 PM | 5 Likes Like |Link to Comment
  • 3 Reasons To Buy Autobytel [View article]
    Notwithstanding a gut-wrenching downdraft in late January, this was a pretty good call! This was a great quarter, well above analysts' expectations. And guidance for 2015 should justify a stock price in the low-mid $20s, at least. Nice work!
    Feb 28, 2015. 11:41 AM | 1 Like Like |Link to Comment
  • Ziopharm Oncology: 5 Potential Downsides To Its New Deal [View article]
    Nice hatchet job! This company is controlled by Randall J. Kirk, whose record in both medical innovation and value creation for shareholders is extraordinary. Sorry, but my money is on RJ.
    Jan 16, 2015. 02:26 PM | 19 Likes Like |Link to Comment
  • ITT Educational Services Should Be Avoided [View article]
    Not a very insightful article. Stay away because the stock could move too much? I don't see any mention of recent consolidation of the PEAKS loans, one-time write-offs of bad credit losses, or normalized earnings moving forward. It is not puzzling that ESI shot up on a raised cash outlook and new lending facility; the company has been viewed as liquidity-constrained, and now they have over $5 per share in cash on the balance sheet. In the next few weeks the company will provide 3Q results and provide their outlook for 2015. I think normalized eps for 2015 will be over $2.00 per share. Regulatory headwinds are finally beginning to abate for this group, and this stock trades for about 5X 2015 earnings. The group is around 19X...looks like a pretty good spec to me!
    Dec 6, 2014. 01:46 PM | 4 Likes Like |Link to Comment
  • Quality Distribution: Deleveraging Should Free Up Cash For A Big Move By Management [View article]
    Ha! Wasn't a very good sale! Stock was up 25-30% within just a few months. He also kept a large position of stock and options. And like most CEOs he continues to be incentivized with additional options grants. CEOs sell for a number of reasons, so I have not found insider selling to be a reliable indicator of stock performance. Valuation and growth are what matter most, and on these metrics, QLTY is compelling.
    Dec 6, 2014. 12:42 PM | Likes Like |Link to Comment
  • Quality Distribution: Deleveraging Should Free Up Cash For A Big Move By Management [View article]
    Nice summary! The deleveraging process actually predates entry into the energy business; former majority owner Apollo was more comfortable with debt than most public-company shareholders. But Gary and Joe have done a great job expanding the footprint while restructuring and reducing high-cost debt. I agree that energy exposure is "the tail that wags the dog" with regards to the stock price. But there's about $100 billion in new chemical capacity on the drawing boards in the U.S. That new capacity will provide a tailwind for QLTY's core chemical business for years to come. So agree that recent weakness is an outstanding opportunity for opportunistic investors.
    Dec 5, 2014. 01:34 PM | Likes Like |Link to Comment
  • Mitek's Explosive Growth In Mobile Deposit [View article]
    Rough week for the stock. I see three reasons for the weakness. First it was disclosed in the Q that MITK's countersuit alleging patent infringement was dismissed on July 28. That leaves both USAA's suit and MITK's Lanham Act countersuit suit to be heard on Sept 8. I have no idea how those will turn out, and clearly holders are nervous. But again, as I understand the suit, even a loss would not materially impact MITK's sales and profits, as USAA is no longer a customer.

    Second, CTO Mike Strange mysteriously left MITK. I've heard several theories as to why, but suffice to say that releasing the info after the close on Friday adds to uncertainty, and it's consistent with management's track record of clumsy disclosure.

    Third is the "market share" issue, which I personally consider to be a non-event. TISA signed a deal with Allied Payment Network, an important MITK channel partner. But it is not at all clear how that deal is structured or what exactly Allied will be selling. We have seen these announcements before from both TISA and KFX, but so far I haven't seen a bank launch their service. I've assumed all along that there will be additional competitors, and they will likely use the same channel partners. But MITK has an enormous lead and installed base. There are significant switching costs, so I'm not convinced their book is in jeopardy.

    In my opinion the stock is a speculative buy, and with an EV/2014(e)Rev multiple of just over 2X, the stock is certainly cheap. My views on MITK's market opportunity and my estimates are unchanged. But with its history of opaque disclosure, uncertainty regarding the suit, and three quarters of flat sequential revenues, management needs to step up their game for the stock to work.
    Aug 21, 2014. 12:26 PM | 1 Like Like |Link to Comment
  • Mitek's Explosive Growth In Mobile Deposit [View article]
    Random thoughts on recent comments: First re: pricing, the company has said pricing starts at 12 cents per transaction for 1 million transaction, and declines for larger blocks...won't say what the breakpoints are or how low pricing goes. I think 7-8 cents is a good estimate for the current average. Regarding the shift from checks to digital, I think that was a given from the start. But check volumes will still be huge for the foreseeable future, especially consumer checks. More important, MITK's digital imaging platform can digitize a variety of other paper documents. Mobile photo bill pay, balance transfer, and insurance account opening are great examples, but I'm confident more will emerge.

    As frustrating as this stock has been this year, it's important to remember a few positives. The MD pricing model essentially placed most of the risk for product launch on MITK rather than the banks. But it also gives MITK a lot of leverage to the success of the service. The service is very popular, so sales and profits can rise quite quickly once they hit the inflection point on pricing. Also important to remember they have 87-91% gross margins...big number. At 1 bil transactions, they can earn over 50 cents per share (my estimate) fully taxed; at 2 bil transactions, eps would be over $1.00 Finally, I think it's a high probability that more financial institutions adopt MPBP and other services fairly soon. Within the next quarter or two, I expect more MPBP announcements (think Bank of America, WFC or Chase) and the second insurance customer (GEICO would be huge.) If this happens, MITK will get back this year's losses and much more. So I'm holding for now, and if I didn't own so much, I would be a buyer into the patent trial.
    Jul 30, 2014. 10:34 AM | 1 Like Like |Link to Comment
  • Mitek's Explosive Growth In Mobile Deposit [View article]
    One more thing: It really pisses me off that with flat sequential revenues and decelerating y-o-y revenue growth, stock-based compensation has moved steadily higher to $922k, almost 20% of sales. CEO Jim DeBello sold a ton of stock over $5 late last year. A major negative is that management and the board appear to be using shareholders' equity like it's their own personal piggy bank.
    Jul 28, 2014. 05:10 PM | Likes Like |Link to Comment
  • Mitek's Explosive Growth In Mobile Deposit [View article]
    Thanks. I am also frustrated with the lackluster sales growth, and I attribute that to the screwball revenue model. Recall the per-transaction price for Mobile Deposit declines on a sliding scale starting at 12 cents per transaction for a million transactions. So transaction growth has been double digits for several quarters, and reorders have gone from 4 to 9 to 13 in the past 3 quarters, but license revenues have essentially been flat. It looks like reorders have (on average) been larger, so transaction growth is offset by lower pricing. I've been thinking that at some point transaction growth and revenue growth would converge, but it's taken longer than I expected.

    So far, I'm still holding. At less than 4X EV/Revs and bordering on profitability, it's pretty cheap if the growth comes, and especially if they win the USAA suit. But they need to see reacceleration in transaction growth, bottom out pricing on the sliding scale, and start to get some traction on the new products. Any evidence those things are happening, this stock could be a rocket; otherwise dead money.
    Jul 28, 2014. 05:00 PM | Likes Like |Link to Comment
  • Mitek's Explosive Growth In Mobile Deposit [View article]
    Anyone have any thoughts on the quarter?
    Jul 25, 2014. 11:50 AM | Likes Like |Link to Comment
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