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Stan Piland

 
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  • Travelzoo's Sell-Off Shows Why Others Are Good Shorts [View article]
    Too funny!

    What would be useful would be to publish some genuine analysis detailing WHY you think earnings and sales growth might slow, why ROIC might decline, etc., and when we could expect it to happen. Maybe you could publish an earnings model which demonstrates some thought has gone into analyzing a company's operations and what valuation it might support.

    These are normal exercises that investors perform as a matter of routine due diligence. But I see none of it here.

    If I recall, you were shorting LULU when I wrote my long recommedation last October...stock was around $23 split-adjusted. Everything I said then is still true, but the estimates are much higher. They have beaten every quarter for over two years, and they can easily grow 30%-plus for the next 5 years, assuming comps slow to single-digits. I still think it's worth a premium valuation, because I did the actual research to support my thesis.

    In general, blindly shorting really good companies which are growing through innovation and good execution, while buying crappy companies at low valuations is not "value investing". In fact, it's not investing at all!
    Jul 23 04:32 PM | 2 Likes Like |Link to Comment
  • Incoming Apple Orders May Not Justify Fusion-io's $1.8 Billion Market Cap [View article]
    Price is truth, as they say.

    You are an IT guy? Compare Z-Drive R4 to ioDrive Duo and give me ONE metric where the ioDrive Duo compares favorably. CPU Utilization? Bootable? Power Fail Protection? Max Capacity? Flash Life? Max Read? Max Write? Write IOPS? $/GB ?...I would like to see just one metric where the ioDrive Duo compares favorably, but I don't think you can find one. So what makes them the technology leader?

    But I'm glad I'm not short it...:-)
    Jun 27 09:38 PM | 2 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 06:30 PM | 1 Like 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 01:39 PM | 1 Like 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 08:44 PM | 1 Like Like |Link to Comment
  • Mitek Systems Could Be Headed Much Higher This Year [View article]
    It was featured in Harry Boxer's TheTechTrader.com "Charts of the Day" video with a $5 short-term target. Also, Fifth Third launched the Mobile Deposit service on Thursday...another large bank goes "live."
    Feb 9 10:54 AM | 1 Like Like |Link to Comment
  • Mitek Systems Could Be Headed Much Higher This Year [View article]
    Nice article. And as one who has been involved with MITK for several years, I agree that the stock should easily return to double digits. It's even better than you think, however. First, on their call Jan 31, management raised the total to 708 signed banks, including all of the top 10 retail banks and 32 of the top 50. A total of 318 have launched the service compared with 205 last quarter, representing a 55% increase.

    The revenues for Mobile Check Deposit (MCD) have indeed been lumpy, and since revenues are booked up front, they are dependent upon reorders for follow-on revenues. But the 6-12 month systems integration prior to launch is past for most of the largest banks, and the service is wildly popular with end users. Management has said that sequential transaction growth has exceeded 25% for each of the past 3 quarters. MITK gets an average of about 10 cents per transaction, and over time, transaction growth and revenue growth must converge. Importantly, the advantage to their revenue model is that it provides much better leverage to the ultimate success of the service with end users.

    I agree that Mobile Photo Bill Pay (MPBP) is a game-changer. The TAM is even larger than MCD, and their per-transaction fee is higher. Moreover, revenues are billed ratably rather than up front. They already have three signed deals for MPBP including USBank, channel partner and bill payment processor Allied Payment Network, and one unnamed bank which is thought to be JPMorgan Chase. Online bill payments have not grown in the past few years, because entering the data is a pain in the butt. But MPBP eliminates the hassle of entering data manually for customers. And the cost-per-transaction is MUCH lower than that of check processing for banks. So once this product starts to launch, the ramp in adoption will likely be very fast.

    I agree the USAA litigation presents somewhat of a binary risk, but much less at $4.00 than it did at $9.00. If MITK loses, it will have to share some past revenues. But if MITK wins, it will likely win sizable punitive damages filed under the Lanham Act for unfair business practices. In the meantime, USAA appears to be running its mobile deposit system on a first-generation platform, which is inferior to later generations. And since there does not yet seem to be a competing MPBP platform on the market, USAA will likely be shut out of this important market until it settles. In brief, I like my odds on a favorable settlement.

    Bottom line, I'm glad you wrote this excellent article, and I agree that this could be a big stock in the next year or so. Thanks!
    Feb 3 10:31 AM | 1 Like Like |Link to Comment
  • OCZ Technology: A New SSD Called Vector And Potential Licensing Agreements [View article]
    Board member Ralph Schmitt just resigned as CEO of PLX Technology. PLXT is in the process of being sold to IDTI. Think OCZ may have found a new CEO...
    Oct 9 07:10 PM | 1 Like Like |Link to Comment
  • OCZ Technology At 52 Week Low: Sinking Ship, Or Can New CEO Seal A Buyout? [View article]
    OCZ has estimated the SAN replacement market to be a $23 bil opportunity. FIO says more like $28 bil. Both address different segments of the market, so are unlikely to see each other in competition.

    The Z-Drive R4 series of drives have had the best reviews of any product in the industry in every respect, including speed, reliability, and cost per iops. In a head-to-head comparison with the FIO io-Drive Duo, The Z-Drive R4 won by a "KO." http://bit.ly/RnKeeh

    As of February, the Z-Drive R4 was in over 500 qualification trials. Trials typically last 12-16 months. It has been qualified for the MSFT Azure cloud platform. Azure is said to be all SSD-based, and I'm not aware of any other product yet qualified. There are several trials which could each easily result in multiple hundred-million-plus annual revs within the next few months. So I have estimated SAN replacement could contribute over $200 mil revs at 50% GM in 2H2013.

    I think management shares this expectation; that's why they made the deliberate decision to ramp up inventories, Sales & Marketing, and R&D spending. I am hopeful that new management better communicates this expectation to the street.

    Although
    Sep 28 09:42 AM | 1 Like Like |Link to Comment
  • Molycorp And 'The Pain Ahead' [View article]
    As lacking as this article may be in facts or insight, it sure seems to have helped create a nice buying opportunity...thanks!
    Sep 24 02:35 PM | 1 Like Like |Link to Comment
  • OCZ Technology: Another Supply Warning As Demand Surges [View article]
    Although supply issues are disappointing, I continue to think SAN Replacement revenues could total several hundred million in the second half of F2013. Importantly, this business is not affected by shortages in commodity-grade MLC NAND. Management emphasized that they were not withdrawing guidance for F2013, even as 2Q and 3Q HDD replacement sales are below estimates. I actually think they will raise F2013 guidance, but maybe not until they resolve the supply issues.
    Sep 7 11:21 AM | 1 Like Like |Link to Comment
  • Seagate Wants To Buy A Solid State Maker: Will It Be Fusion-Io, Ocz Technology Or Stec? [View article]
    I specifically asked management about that review; they indicated they frequently had to correct technical errors in reports. It is the only review I have seen which made that assertion. But they have explicitly stated the Z-Drive R4 uses enterprise grade, and they don't have a supply issue there.

    Regarding Micron, I think his use of the term "perfect storm" is pretty descriptive. He was also explicitly stated that allocations to their own SSD business had been cut back more than external customers.

    The stock is trading way below 50% of revs, and they're growing 45% in a bad quarter. I think SAN Replacement revs are going to be several hundred million bucks in the second half, driven primarily by 50%-plus GM Z-Drive R4 sales.
    Sep 6 08:17 PM | 1 Like Like |Link to Comment
  • Seagate Wants To Buy A Solid State Maker: Will It Be Fusion-Io, Ocz Technology Or Stec? [View article]
    I have covered this stock for a year and a half. In that time they have consistently met or beaten sales targets. GM has consistently expanded. They have consistently introduced cutting-edge products. OCZ has the broadest product portfolio, the biggest sales volume, their own proprietary controller technology, their own Flash Translation Layer, and their own Adaptive DSP technology. They have been among the first to market in almost everything they do. And most important, the investments have already been made.

    The only disappointment was postponing profitability to invest in a massive new business...which I think looks pretty good. But the valuation has been compressed by clowns who constantly find reasons why the company will soon fail.

    Well they haven't failed yet, and I expect that by mid-fall, the stock price will begin to reflect their strong operating momentum.
    Aug 27 12:56 PM | 1 Like Like |Link to Comment
  • Mitek One Billion Potential Users By 2014 And 33% Of The Float Short [View article]
    Can you explain why you think TISA has a better RDC product? So far, no one has seen it. Also, systems integration to launch mobile deposit takes 6-12 months, at significant cost to the bank...pretty sticky business. Why do you think banks which have already absorbed these costs would choose to incur additional switching costs? Finally, are you suggesting that TISA and Kofax have mobile photo bill payment technology currently? I don't know about Kofax, but TISA has made no such announcement. MITK is the leader in this space; the rest are distant laggards.
    Aug 3 11:51 AM | 1 Like Like |Link to Comment
  • Mitek One Billion Potential Users By 2014 And 33% Of The Float Short [View article]
    Nice article...I am extremely bullish on MITK technology. I would add one additional observation. On the most recent quarterly call, management disclosed that transaction volumes were up 25% sequentially. I confirmed that sequential transaction volume comparisons are accelerating to the upside, so next quarter should be even higher.

    The company has long collected aggregate transaction data, but has been prohibited from releasing it, because to do so would violate NDAs with their largest customer. But since Wells Fargo and Bank of America have now launched the service (as well as the other134 who have now launched), my expectation is that they will be able to release aggregate transaction data within a few quarters.

    This is very important, since their revenue recognition is lumpy by nature. Transaction data (at roughly 10 cents per transaction) will enable investors to better gauge the powerful growth trajectory of this company.

    An additional catalyst is the pending launch of Mobile Photo bill pay, which should happen this summer. I have little doubt that MITK will be back in the double digits within the next few quarters.
    Aug 2 01:08 PM | 1 Like Like |Link to Comment
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