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."
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!
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.
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.
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.
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.
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.
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.
Takeover noise is finally starting to abate, so maybe it's time to focus on robust fundamentals... Seredipity has detailed the concerns better than most, and it's true that profitability taken longer than most folks thought.
The reason I'm bullish is that I think the enterprise business (particularly the SAN replacement business) is emphatically NOT a commodity. In fact, IP including controllers, the Flash Translation Layer, Adaptive DSP thechnology, and the migration to TLC NAND are key differentiators moving forward. And the massive R&D spend over the past 2 quarters has put OCZ is ahead of everyone in this regard. The nascent SAN replacement business is just starting to grow. And although it will undoubtedly contribute to revs and eps this year, OCZ has opted not to include it in guidance. But let's face it, MSFT does not qualify a 50% gross margin, sole source product from a tiny company if the product is a commodity...the Z-Drive R4 is definitely not a commodity.
The off-the-shelf retail products are further along towards becoming standardized. OCZ's NAND supply agreement and internal wafer processing capability both combine to provide a competitive advantage, however, and can boost GM by as much as 400 basis points as they become fully implemented.
I think the massive inventory build reflects three separate dynamics: (1) They bottom-ticked $14 mil in low-price NAND before prices rise in the fall, (2) They want to quickly move up the learning curve on the new wafer processing capability...new head of operations Jason Ruppert should help this effort...and inventory turns should improve dramatically next few quarters, and (3) They want to be able to support several hundred million revs above current guidance, driven by SAN relacement business from MSFT, AMZN and others.
I think they are managing to $900 mil-plus in revs this year, and eps at that sales level should be around 65 cents. In fact, I think F2Q will probably be above guidance, and that would provide a good opportunity for management to bring guidance in line with spending.
Finally, I think management has done a disservice to investors by not including SAN Replacement in guidance. Serendipity is right about this: expenses and inventory build make NO sense with current guidance. Guidance is "conservative", but this company is actually being managed quite aggressively. Perhaps if revised guidance better reflects managements actual goals, investors will award OCZ valuation more in line with its robust growth.
To conclude, STX and WDC's resistance to embracing SSD technology reminds me of EK defending its film business in the face of digital camera grpwth. I suspect they will wake up; hope it's not too late.
Action today is hilarious! Weak holders are puking out a perfectly good company before a huge back-half sales ramp. STX buyout rumor would be great. But if not, the stock will be worth even more in 6-9 months.
My understanding is MSFT business is already shipping. Z-Drive R4 anniversaries in August; trials usually run 6-12 months. In February, they said the had 500 SAN replacement trials underway. Reviews have been awesome, and MSFT Azure has already qualified. The reasons for ramping inventory are (1) stock up on cheap NAND flash before prices rise in the fall, (2) get up the learning curve on new wafer processing capability, and (3) they see big sales ramp in the back half. Numbers are way too low, and a $1.0 bil buyout would be a bargain for STX.
Why Seagate Will Sizzle Into Earnings Next Week [View article]
Nice article on STX Bret. You might be aware that the rumor mill is speculating STX may acquire SSD maker OCZ Technology. I think there is a strong possibility the rumor is true. OCZ has had a tough run lately. Although sales growth has been great, they burned $55 mil of cash last quarter on higher R&D, Sales & marketing and big inventory build.
I think such a deal would be a major positive for STX however. Although controversial, OCZ has emerged as the largest independent SSD company by revenues. It has the broadest product portfolio, its own proprietary controllers, its own Flash Translation Layer, and its own Adaptive DSP technology. STX bought Densbits for its TLC NAND technology, but they are 9-12 months off. OCZ's TLC NAND technology is ready now, and an OCZ acquisition would make STX the leader in that nascent business....they would leapfrog everyone.
Consensus esimates and F2013 guidance for OCZ do not include any revenues for newly won enterprise business (MSFT, AMZN and more), so estimates are way too low. I estimate OCZ will generate $918 mile in revs this year and earn 64 censts per share. Moreover, as part of STX, OCZ could do $1.5-$2.0 bil in revs next year. A deal at $1.0-$1.5 bil would be accretive for STX within a couple of quarters.
So I agree STX is a buy. It may dip on any announced OCZ acquisition, but should rally even more strongly after the market digests the potential. I like OCZ here too.
7 Reasons Why This Semiconductor Company Is A Buy [View article]
My comment regarding SNDK was to illustrate flash prices have bottomed and are now rising...addresses your comments about declining flash prices. The voltage regulator shortage impacted Vertex 4 and Agility 4sales in the mrq. Management was quite specific about it on their conference call, and it was the reason they released bookings of $140 mil in addition to sales of $113 mil. I have no clue why you would claim the majority of OCZ's drives are PCIe cards; Only the VeloDrive, RevoDrive and Z-Drive R4 are PCIe products, ther rest are SATA. They have not yet announced many sales for the Z-Drive R4 (launched last August), but reviewers have compared it favorably with the ioDrive Duo, and it has already been qualified by MSFT. OCZ has far greater sales volumes and faster growth than FIO, so don't understand why you think FIO is the leader. Good luck with your short, but the info you are providing is bogus.
Mitek Systems Could Be Headed Much Higher This Year [View article]
Mitek Systems Could Be Headed Much Higher This Year [View article]
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!
OCZ Technology: A New SSD Called Vector And Potential Licensing Agreements [View article]
OCZ Technology At 52 Week Low: Sinking Ship, Or Can New CEO Seal A Buyout? [View article]
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
Molycorp And 'The Pain Ahead' [View article]
OCZ Technology: Another Supply Warning As Demand Surges [View article]
Seagate Wants To Buy A Solid State Maker: Will It Be Fusion-Io, Ocz Technology Or Stec? [View article]
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.
Seagate Wants To Buy A Solid State Maker: Will It Be Fusion-Io, Ocz Technology Or Stec? [View article]
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.
Mitek One Billion Potential Users By 2014 And 33% Of The Float Short [View article]
Mitek One Billion Potential Users By 2014 And 33% Of The Float Short [View article]
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.
OCZ Technology Gets No Respect [View article]
The reason I'm bullish is that I think the enterprise business (particularly the SAN replacement business) is emphatically NOT a commodity. In fact, IP including controllers, the Flash Translation Layer, Adaptive DSP thechnology, and the migration to TLC NAND are key differentiators moving forward. And the massive R&D spend over the past 2 quarters has put OCZ is ahead of everyone in this regard. The nascent SAN replacement business is just starting to grow. And although it will undoubtedly contribute to revs and eps this year, OCZ has opted not to include it in guidance. But let's face it, MSFT does not qualify a 50% gross margin, sole source product from a tiny company if the product is a commodity...the Z-Drive R4 is definitely not a commodity.
The off-the-shelf retail products are further along towards becoming standardized. OCZ's NAND supply agreement and internal wafer processing capability both combine to provide a competitive advantage, however, and can boost GM by as much as 400 basis points as they become fully implemented.
I think the massive inventory build reflects three separate dynamics: (1) They bottom-ticked $14 mil in low-price NAND before prices rise in the fall, (2) They want to quickly move up the learning curve on the new wafer processing capability...new head of operations Jason Ruppert should help this effort...and inventory turns should improve dramatically next few quarters, and (3) They want to be able to support several hundred million revs above current guidance, driven by SAN relacement business from MSFT, AMZN and others.
I think they are managing to $900 mil-plus in revs this year, and eps at that sales level should be around 65 cents. In fact, I think F2Q will probably be above guidance, and that would provide a good opportunity for management to bring guidance in line with spending.
Finally, I think management has done a disservice to investors by not including SAN Replacement in guidance. Serendipity is right about this: expenses and inventory build make NO sense with current guidance. Guidance is "conservative", but this company is actually being managed quite aggressively. Perhaps if revised guidance better reflects managements actual goals, investors will award OCZ valuation more in line with its robust growth.
To conclude, STX and WDC's resistance to embracing SSD technology reminds me of EK defending its film business in the face of digital camera grpwth. I suspect they will wake up; hope it's not too late.
OCZ Technology Gets No Respect [View article]
OCZ Technology Gets No Respect [View article]
Why Seagate Will Sizzle Into Earnings Next Week [View article]
I think such a deal would be a major positive for STX however. Although controversial, OCZ has emerged as the largest independent SSD company by revenues. It has the broadest product portfolio, its own proprietary controllers, its own Flash Translation Layer, and its own Adaptive DSP technology. STX bought Densbits for its TLC NAND technology, but they are 9-12 months off. OCZ's TLC NAND technology is ready now, and an OCZ acquisition would make STX the leader in that nascent business....they would leapfrog everyone.
Consensus esimates and F2013 guidance for OCZ do not include any revenues for newly won enterprise business (MSFT, AMZN and more), so estimates are way too low. I estimate OCZ will generate $918 mile in revs this year and earn 64 censts per share. Moreover, as part of STX, OCZ could do $1.5-$2.0 bil in revs next year. A deal at $1.0-$1.5 bil would be accretive for STX within a couple of quarters.
So I agree STX is a buy. It may dip on any announced OCZ acquisition, but should rally even more strongly after the market digests the potential. I like OCZ here too.
7 Reasons Why This Semiconductor Company Is A Buy [View article]