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Stan Piland  

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  • Mitek's Explosive Growth In Mobile Deposit [View article]
    Management has stated that they use a sliding scale starting at 12 cents per transaction for 1 million transactions. We do not know the breakpoints for lower prices or how low the per-transaction price goes. I've used a slightly different methodology, but agree that 6-8 cents is probably a good estimate. The bigger issue short term is that transaction growth has slowed past few quarters. We really need to see reacceleration to reach the profitability you (and I) expect. Any thoughts on that?
    May 13, 2014. 11:39 AM | Likes Like |Link to Comment
  • Mitek's Explosive Growth In Mobile Deposit [View article]
    Nice article! I own the stock and agree with the thesis. But does it bother you that sequential transaction growth has slowed from over 25% to "double digits in the first quarter and was not even mentioned in the 2Q conference call? Management won't provide an estimate of the current MRDC transaction run rate. But I estimate that it's less than 200 million per year. We really need to see a reacceleration to 25% sequential growth to reach those 2 billion annual transactions in the next few years.
    May 7, 2014. 06:30 PM | 1 Like Like |Link to Comment
  • Parkervision's Win Has Investors Cheering: Don't Be Surprised To See A Secondary Offering On The Way Though [View article]
    Win some, lose some. Moved on....
    Oct 25, 2013. 03:29 PM | Likes Like |Link to Comment
  • Parkervision's Win Has Investors Cheering: Don't Be Surprised To See A Secondary Offering On The Way Though [View article]
    I love how shorts keep calling this "round one." Yes, it is indeed the first of many possible patent infringement suits, but it was a resounding victory for an innovative little company with great technology. The jury ruled that QCOM infringed on substantially all of the instances in this case, so it is likely that the jury awards at least the roughly $500 mil sought. Analysts think the total award from this suit alone could be as high as $2 billion.

    But the rest of the PRKR story could be even more bullish. First, this case only pertains to U.S. chip sales, or about 20% of QCOM total chip revs....additional suits to cover global sales are likely. Second, PRKR will likely seek an injunction which would prohibit QCOM from shipping products with the infringed technology into the U.S. This would provide a huge incentive for QCOM to settle globally. And third, it is most likely that QCOM did not indemnify their phone-maker customers; they too will likely face similar suits.

    Consider that a $2bil award translates to roughly $19 per fully-diluted PRKR share. Additional suits can only provide upside to that near-term target.
    Oct 19, 2013. 10:45 AM | Likes Like |Link to Comment
  • Can OCZ Take Advantage Of M&A Mania? [View article]
    Ashraf, this is a thoughtful article, and I agree that the end-game is most likely to sell the company.

    But takeover valuations (or any valuations, for that matter) are typically based on a multiple of underlying operating metrics such as revenues, cash flows, or profits, and I see no discussion of any of these in this article. For instance, WDC bought STEC for roughly 2X forecasted $103 mil in 2013 revenues. Importantly, STEC was forecast to lose $1.61 per share in 2013, and if anything that company is more of a mess than OCZ is. Today, SNDK announced the acquisition of SMART for roughly 3X annualized 1Q13 revenues of $25 mil.

    Based on Schmitt's recent comments, it sounds like OCZ is probably doing $240-$280 mil in revs in 2013. They have recent collaborations with NTGR and MLNX in the enterprise space, and new products seem to have been well-received. So can you explain why you think OCZ is only worth 50% of revenues compared with two recent comps at 2X and 3X revs? Thanks.
    Jul 2, 2013. 07:10 PM | 4 Likes Like |Link to Comment
  • 5 Stocks To Watch For Gains Next Week [View article]
    Thanks, nice article! I'm with you on MU and FNSR. The emergence of an MU-Samsung-SK Hynix oligopoly fundamentally changes the dynamics of the DRAM industry moving forward. Over time we will likely see earnings and stock performance comparable to the STX-WDC hard drive oligopoly. Investors are only now beginning to see the potential.

    Telecom spending on 100G upgrades is the highest-probability tech theme of 2013, in my opinion. And it should be a powerful revenue driver for an industry which has significant operating leverage. CIEN, FNSR, and JDSU are three of the most prominent players, and almost no one in the institutional investment community owns them in size. I think CIEN and JDSU could make a run for their 2011 highs. FNSR could easily double, but needs to address the longer-term threat of silicon photonics. Hopefully they will address that issue in the quarter's conference call.
    Jun 15, 2013. 12:17 PM | Likes Like |Link to Comment
  • Micron To Print Some Black Ink, Part II [View article]
    Thanks...very helpful.
    I initially bought MU for a trade, but shifted to a longer term investment after they acquired Elpida. This acquisition is transformational, because the DRAM industry is now an oligopoly. Although the industry will remain cyclical, the depths of a down cycle will likely be muted, because there is no longer a price spoiler. And as noted in recent conference presentations, there is no capital available for building new DRAM fabs. This consolidation is similar to what happened in hard drives, and now STX and WDC are both cash-generating machines. I think the street is underestimating not only the magnitude of MU's earnings power, but its duration as well.
    Jun 13, 2013. 01:17 PM | 7 Likes Like |Link to Comment
  • Ciena Corporation - Well Positioned To Grow Future Revenue As Profitability Remains An Issue [View article]
    Nice description of CIEN's progress, but your conclusions regarding profitability and valuation are truly bewildering.

    First, optical networking is a cyclical business with significant operating leverage. Experienced value investors know the time to buy cyclical stocks is when they are at the bottom of a cycle, i.e. when there is no "E" to calculate the P/E ratio. When they look cheap on reported earnings, it's probably time to sell them. CIEN is probably in the second inning of an emerging carrier capex cycle, and estimates for the next few years are almost certainly too low.

    Second, while it is normally prudent to look at GAAP earnings rather than the adjusted earnings tech companies use to cover up stock-based compensation, a close look at CIEN's financials shows that most of their adjustment to the GAAP loss actually reflects non-cash amortization of intangible assets. Arguably, adjusted earnings provide a better reflection of the true economic profits of the company, despite the accounting conventions.

    Using non-GAAP earnings, CIEN actually reported a 2 cents profit in the F2Q. Consensus estimates have risen to 50 cents for F2013 and 96 cents for F2014, and these numbers incorporate a bump in share count from 102 mil to 152 mil to reflect dilution from the convert beginning in the F3Q. I think expectations will continue to rise, as they always do when a cycle progresses. I am forecasting F2014 eps will actually be north of $1.25, particularly if the economy stabilizes in Europe. Importantly, these estimates only assume recovery in the telecom expenditure cycle. If, in addition, we see a recovery in enterprise tech spending, upward revisions to sales and profits will be higher still.


    Historically, CIEN has peaked at 4-5X revs at the top of the cycle. If it only gets to 2X F2014 revs or 25X my $1.25 F2014 earnings estimate, then the stock should go to $30 within the next 6-12 months, with additional upside if/when we see an acceleration in enterprise spending.

    Disclosure: I own CIEN, and I'm not selling!
    Jun 8, 2013. 01:39 PM | 1 Like Like |Link to Comment
  • 2 Stocks To Buy, 1 Stock To Sell, What's Next For The Market [View article]
    Nice article. Re: NTAP, it should also be noted that the company has $6.7 bil in cash or $18.42 per share. Even netting out $2.6 bil in debt, the company has $4.1 bil in net cash or $11.18 per share. About half the cash is in the U.S. (not subject to punitive double taxation), and NTAP should generate about $1.2 bil in free cash flow annually.

    The company can and should pay a dividend in addition to the current $1.5 bil buyback authorization. Cash at this level is clearly not an efficient allocation of capital. I expect a $.50-$1.00 dividend is likely near-term, suggesting a 1.4%-2.8% yield at current prices and a 1%-2% yield at my $48 target.

    If NTAP does not allocate capital in a more efficient manner, the company will almost certainly be acquired over the next year. ORCL, CSCO, SAP, and MSFT are just a few of the potential buyers.
    May 10, 2013. 01:13 PM | Likes Like |Link to Comment
  • Has Mitek Systems Inc. Reached Its Inflection Point? [View article]
    Although not the breakout quarter this article was expecting, MITK posted a nice quarter! Revenues at $3.2 mil and Non-GAAP eps of (.06) both beat the consensus. Software revs were a tad light of my expectations, suggesting some catch-up on reorders will occur next quarter. But maintenance revenues were well ahead of expectations. I am estimating $850-950k of maintenance revs are recurring, so consensus estimates for F3Q and F2013 will undoubtedly have to go up.

    SG&A was a little higher than my estimate due to the litigation expenses, but Gross Margin (87%), Sales and Marketing Expense, and R&D all were in line with my estimates and appear to be well managed.

    I continue to think MITK is one of the best secular growth stories among publicly traded companies. It may sound a little like "hurry up and wait," but the convergence of transaction growth and revenue growth will likely be very good for this stock over the next few quarters.
    May 7, 2013. 08:44 PM | 1 Like Like |Link to Comment
  • Whisper Number Impact: Earnings Preview For JDS Uniphase [View article]
    This is useful information. But absent a huge surprise, the stock will be most impacted by guidance and order expectations. In my opinion, optical networking is the most attractive segment in technology this year. Cloud computing, mobile internet, streaming video, etc. simply cannot be supported by the current broadband infrastructure. So carriers and enterprises are ramping up a significant 100G upgrade which will accelerate through 2013 and through 2014. And the stocks are cheap! I like JDSU, CIEN and FNSR best.
    May 1, 2013. 12:46 PM | Likes Like |Link to Comment
  • Has Mitek Systems Inc. Reached Its Inflection Point? [View article]
    Most independent research shows MPBP is actually a larger TAM than RDC. About 40% of households with internet access use online bill payment, but growth has stagnated in the past few years. The main reason is that entering the data can be intimidating and is a hassle.

    But banks know that online payments are much cheaper to process than checks. And they know people who use online payment consistently use more services from their financial institution than the average customer. And they know the connection between online payment use and customer loyalty is quite strong.

    So banks need to foster greater utilization of online payment services, and they think the best way to do that is to make it easy. I think the rapid growth in mobile banking suggests customers are growing comfortable with the technology, so MPBP is the next logical step.

    Importantly, no revenues or profits from MPBP have been built into any analysts' estimates (including my own $1.50 eps estimate for 2016.) So any benefit will represent upside relative to expectations.
    Apr 25, 2013. 12:59 PM | Likes Like |Link to Comment
  • Has Mitek Systems Inc. Reached Its Inflection Point? [View article]
    Do you have any basis for your belief that MITK infringed USAA's patents?
    Apr 19, 2013. 10:36 AM | Likes Like |Link to Comment
  • Has Mitek Systems Inc. Reached Its Inflection Point? [View article]
    Thanks for a really thoughtful article! This is first rate. One point I would clarify about the miserable performance in 2012: since they sell through channel partners, and since they book revenues when they sell a block of transactions, the lag between initial sale and reorders is actually longer than 6-12 months. Once signed, the bank has 6-12 month systems integration period before they can even launch. Then there is the additional period of ramping customer acceptance. In any event, as noted over half the signed banks have launched, and transaction growth is ramping nicely.

    All indications are that the product is wildly popular with end users. So while the projection of a profit in the second quarter is aggressive, it is possible. But more important, an unappreciated aspect of their business model is that it gives MITK a LOT of leverage to the success of RDC with end users. I am less interested in a small profit now, and really excited about my $1.52 estimate for F2016! That estimate assumes nothing for MPBP, so is actually quite conservative.

    What would really make sense is for MITK to buy TISA. Their 20m new share authorization would cover the cost, and such a deal would be immediately accretive, since TISA is quite profitable. And it would give MITK a platform to market both RDC and MPBP products globally.

    Thanks for a great article!
    Apr 17, 2013. 09:33 PM | Likes Like |Link to Comment
  • Mitek Systems Could Be Headed Much Higher This Year [View article]
    I don't think they compete. NFC is replacing plastic credit or debit cards with a specially adapted phone to be scanned at the point of sale. MPBP is one more step towards digitizing paper at the back end, or bill payment. I don't think there will be a shortage of paper-based bills anytime soon. I think MPBP is a bigger TAM than even remote deposit, so very bullish on USBank's launch of the service.
    Mar 8, 2013. 01:04 PM | Likes Like |Link to Comment
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