Travis Johnson

Blackboard Acts on Patent Award, Angers Customers

Thanks for the comment, though I wouldn't characterize the patent opponents as larcenous. I think at its heart this is a dispute with good arguments on both sides, and my reading of the patent doesn't give me much confidence that Blackboard will enjoy a nice revenue stream from royalties in the years ahead. I expect the prior art put forth by opponents will be very compelling when this is litigated or disputed, though I could easily be wrong.

But I also think this will help shake out smaller operators, which is good for Blackboard, and I think BBBB should remain dominant in their niche whether or not they have patent protection for their entire product portfolio. The important thing for the success of Blackboard's business is the strength of their customer relationships and the impact of their sales force -- not their patent.

Message to Tight-Fisted Google: Spend or Stagnate

Math mistake: I typed too quickly and put in Google's total current assets as their cash hoard. In truth, their cash and short term securities holdings are $10 billion, not $14 billion. Sorry for the exagerration, and thanks to the reader who pointed out my error (and to the many who flamed me for irresponsibly urging Google to blow money acquiring whatever they can find, which I hope is now how my comments read).

Cheers,
Travis

Message to Tight-Fisted Google: Spend or Stagnate

Math mistake: I typed too quickly and put in Google's total curent assets as their cash hoard. In truth, their cash and short term securities holdings are $10 billion, not $14 billion. Sorry for the exagerration, and thanks to the reader who pointed out my error (and to the many who flamed me for irresponsibly urging Google to blow money acquiring whatever they can find, which I hope is now how my comments read).

Cheers,
Travis

Google Needs to Shed Some Cash

I posted something quite similar a couple days ago -- Since they can't spend money on people and servers as fast as it's coming in, what else can they do? Dividends or buybacks seem irresponsible (or at least an admission of failure) in light of their secondary offering last year, unless of course they really did have no strategic plan for using that money :)

I don't like to see my companies doing acquisitions just because they have too much cash, but they need to invest it in something soon, whether it's an internal initiative or an acquisition, or they lose the opportunity to strengthen their position at a time when their major competitors remain stuck in the mud.

Cheers,
Travis

IMAX Accounting and Legal Woes Make It a Sell

Philip, I love your conspiracy theory ... but would a pair of friendly Canadians do that? In all seriousness, I think Imax probably overshot and demanded either too much autonomy or too much money from investors -- if they really set the bar at $14 that was a significant reach.

But I think you're right, the company's worth much more than it's selling for today ... the only question is how long it will take for that worth to be realized. I think, truthfully, that even an $8 takeover would be a bargain for any acquirer, assuming that the lawsuits and accounting inquiries are as unimportant as they seem to me.

IMAX Plunge Presents a Buy Opportunity

I assume it's just more panicking over the lawsuits that are continually being filed, and the fact that they've changed CFO's probably adds flame to the fire. I decided to sell the part of my Imax holdings that were in a margin account since I can't justify borrowing money to hold these, but I still hold the shares that I bought at 6.20 after the bad news was released -- I could be wrong, but I think the accounting questions are largely unimportant and that the company's actual performance more than justifies a price of at least $9-10.

Again, I could be wrong -- I don't see any chicanery in their accounting dispute, and I think the class action lawsuits are the typical garbage that follows any bad news, but I'm neither an accountant nor a lawyer.

Medical Device Company Hansen Medical Files for IPO

Very interesting, I've been keeping an eye out for this company since they announced an IP exchange partnership with one of my larger holdings, Intuitive Surgical, last fall (investor.intuitivesurg...;p=irol-newsArticle&am...

Fred Moll has a good track record in startup medical technology, having previously been one of the founders of Intuitive Surgical (and a board member until a few years ago) as well as Origin Med, now owned by Guidant. I don't know if this IPO will be worthwhile in the near term, since so much rides on FDA approval, but I wouldn't bet against it in the long term.

Stay Tuned for an Akamai-Google Clash

Interesting analysis -- I'm an Akamai shareholder (and a Google shareholder) as well, and I haven't ever built my assumptions about Akamai's growth around their ability to sell advertising on top of their served data. It might be an interesting business for them, but I think their core businesses should do well as more and more commercial high bandwidth data moves online, with or without advertising. Those providers who are selling audio or video content (a la itunes or movie downloading) are relying on the best service, not on help in advertising, and likewise I don't think those who sell software online are going to rely on advertising or on Google's automated service. As long as there is a large market for purchased online downloads (as opposed to ad-subsidized), it would be hard to beat the reliability and speed of the Akamai network. I sometimes think about selilng a small portion of my Akamai because it has come so far so fast, but not because I"m worried about their lack of an advertising product.

Lightening Up on the India Fund

Sounds like a good idea, though I have never heard of it and don't know any of the particulars. If you have data about the fund (premium, expenses, composition, trading symbol) please link.

Thanks,
Travis

Northern Orion: Raking In the Cash

Thanks to an attentive reader, I need to warn you that I referred to this as both an Argentinian and a Chilean company in this post. Sorry, folks -- both Alumbrera and Agua Rica are in Argentina, I must have beed drinking too much delicious Chilean wine when I wrote this.

Cheers,
Travis

American Science and Engineering: Global Security Needs Should Drive Growth

Well, as I posted on my site, I did buy both before and after earnings to hedge my bets -- I'm very confident in ASEI in the long run, but clearly neither I, the analysts, or management has any talent for predicting quarter by quarter earnings. The conference call was largely a dance between analysts desperate to glean guidance figures from the company, and the CEO and CFO deftly deflecting specifics but saying business is very good and large orders are "expected."

News today on the foiled plot in the UK has served to bring this company back to investors' attention, though so far their cargo and mobile scanning units are much more critical to the business than their nascent personal scanning and luggage scanning products that have airport implications (and the airport business, while large, also brings with it many more competitors with solid products, ASEI's technological lead in cargo scanning and scanning vans is much stronger).

Still, I think it's hard to argue against a trend of more security scanning at all sensitive locations, and it's hard to argue against a company with arguably the most advanced products in their core segments whose earnings, while lumpy, are giving it a current and forward PE well below the market average.

IMAX Plunge Presents a Buy Opportunity

All quite true -- and good reasons why Imax has been so volatile and hasn't been priced significantly higher. I tend to agree that there is still likely to be some sort of partnership or deal, albeit lower, but I certainly don't think the shares are well priced down here below $6.

Imax has plenty of warts, and I clearly was too optimistic in thinking that a 35% drop was as absurdly low as it would go ... but it also has solid earnings and good prospects for continuing installations and a great film slate, and I don't think the SEC inquiry is significant -- it might cause restatements and the movement of earnings from one quarter to another, but it appears that it's just a timing issue in recognizing revenue, so I don't really care. Imax is worth at least a market multiple, I think, and if they can make a partnership to help them ramp up the growth to meet demand, they might do much better than that.

That said, my short term record has been abysmal of late. I could be wildly wrong.

Lightening Up on the India Fund

Sorry ... that's a bit of an exaggeration ... the two-day profit would actually be about 15%.

Cheers,
Travis

Lightening Up on the India Fund

As you can see, the premium has returned to IFN in a big hurry now that the rights offering is over and the transactions are going through. I'll hold the shares that I picked up in the rights offering (looks like the official price was $33.90 -- which means essentially a 20% two day profit for anyone who wants to sell this evening) for a while to see how things develop, but if we continue to see the premium accelerate back to the levels we saw over the winter I'll be very tempted to sell those shares, too. Again, I can't predict where the Indian economy is going, though it's certainly hot, but I can predict that the high management fees and high premium make this a risker investment than some others I have in mind.

Lightening Up on the India Fund

To tell the truth, I didn't pay that much attention to the details of the premium over the winter when it really ballooned -- switching to IIF may have been a plan a while back, though it has had its troubles as well. I regret not delving into the details earlier, and frankly I don't quite understand why IFN is so different from IIF, premium-wise.

And the Powershares ETF is just about worthless, in my opinion -- an index of the US-listed shares and ADRs gets you only those shares that are already themselves trading at a big premium to their domestic counterparts, and it really reduces exposure to the non-tech-outsourcing parts of the Indian economy. I'd like an actual representative, lower cost index ETF of the Indian market, much like I own for Korea or can get through Ishares and others for dozens of other countries.