Edward Schneide...'s  Instablog

Edward Schneider, CFA
Send Message
Edward Schneider is a managing director of Quan Management LLC. Mr. Schneider has over 20 years of investment experience, including 15 years managing technology funds in both quoted equities and venture capital. Prior to founding Quan Management in 2000, Mr. Schneider was a Geneva-based fund... More
  • Leading-edge mobile media companies: Buy Yoc, Sell Augme Technologies 5 comments
    Jan 27, 2011 9:37 PM | about stocks: GOOG, AAPL, HIPPQ
    Based in Berlin, Germany, Yoc AG (YOC) is a mobile media company with a market-leading initiative into browser-based mobile media platforms (as opposed to downloading applications). Browser-based smart phones will be the future – especially as Android-based mobile phones proliferate around the world.

    Usually, pure-plays in hyper-growth niches like mobile media are reserved for the venture world, and in any case, quickly arrive at sky-high valuations. About one year ago, Google (NASDAQ:GOOG) paid $750M or 24x 2009 revenues for Yoc-peer AdMob, and Apple (NASDAQ:AAPL) paid $275M or 13.5x revenues for Quattro Wireless, according to mobile ad network revenue data from IDC.
    Debt-laden, public-peer Velti (VEL) is trading at 3.5x trailing revenues in the UK. Yoc, however, is only trading at 2.0x trailing revenues with a market cap of €59M ($80M).

    The knock on Yoc has been a slowdown in revenue growth from 100% in 2008, to more mundane 10% to 15% increases in 2009 and 2010. This year, management expects top-line growth to reaccelerate to 25%, equating to €38M ($52M) in revenues, led by rich-media mobile advertising and mobile browsing initiatives. Yoc was mildly profitable in 2010, and generated an estimated €1M in EBITDA in Q4 of 2010. If Yoc's new mobile initiatives are successful, there is a lot of upside to these numbers.

    Our Quan Technology Fund recently initiated a position in Yoc. As a hedge, we shorted Augme Technologies (AUGT.OB). Augme's mobile advertising and media products had strong sequential revenue growth in 2010 from a very small base of almost zero. But the valuation is ridiculous. At a market cap of $243M, Augme is trading at 123x trailing revenues with a net loss of $10M, and only $0.7M left in cash as of November 2010.

    Disclosure: I am short AUGT.OB.

    Additional disclosure: I am long YOC
    Stocks: GOOG, AAPL, HIPPQ
Back To Edward Schneider, CFA's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (5)
Track new comments
  • Off the Radar Investor
    , contributor
    Comments (85) | Send Message
    Think you made a big mistake on shorting Augme Edward. I understand it is only a hedge but I think you're on the wrong side of the stock. Many of the funds I personally know are betting heavily against you on this one. In fact, they have been looking for size in the name just recently. By any chance have you read Northland Capitals report on the company? Darren Aftahi has a very hot hand and currently has a $4.50 target on the shares. You seem to have made a decision based on outdated financials and not taken into consideration any possible value of their patents? To not assign any value to their IP could be a big mistake. Does YOC even own any patents?
    29 Jan 2011, 03:04 PM Reply Like
  • Off the Radar Investor
    , contributor
    Comments (85) | Send Message
    Here is Northland's recent update in case you missed it. The firm made it one of their top picks for 2011.


    Augme Technologies AUGT Last: $3.98 Rating: Outperform Target: $4.50 Analyst: Darren Aftahi


    · Business Description: Augme provides Internet applications and services, which are based on marketing driven technology platforms that enhance delivery through intelligent distribution to all Internet-enabled devices.


    · We believe continued marquee customer wins, further expansion in existing customer campaign efforts, and an increasingly rapid systemic shift toward “rich media” consumer mobility experiences will provide Augme the building blocks necessary for robust top line growth, and more importantly ramp to sustained profitability.


    · Based on our extensive channel checks, we believe Augme is at the cusp of significant incremental revenue growth as the Company is beginning to see higher overall brand penetration levels with many of its over two dozen Fortune 500 customers, which we believe should translate into recurring and larger pieces of business, and a more likely “beat and raise” scenario throughout CY’2011 and beyond.


    · Going forward we expect the Company will increasingly benefit from 1) a continued trend toward brands seeking a fast-to-market turnkey mobile marketing technology platform to bridge the convergence of the physical and digital worlds (especially in consumer package goods(seekingalpha.com/symbo...)), 2) an inflection point in smartphone usage relative to feature phones, and 3) integration into brands’ CRM and ERP systems driving the value proposition of Augme’s vast database of contextually relevant end-user information. As such, we expect brands will demand simple, complete and, fast-tomarket mobile marketing solutions, such as Augme’s device agnostic patented AD LIFE platform.


    · As 2011 plays out, we see increased shareholder value being driven by the Company’s ongoing operations as its AD LIFE platform becomes instrumental for brands looking to implement effective and efficient mobile marketing campaigns and believe any positive outcome in current IP litigation will put AUGT’s embedded call option, “into the money”. As such, we reiterate our Outperform rating and believe shares are substantially undervalued at current price levels of ~$2.90, based on our sum-of-the-parts probability weighted analysis, which results in our estimated $4.50 12-month price target.


    · Link to full 2011 Best Idea Research Report & Disclosures: research.northlandsecu...
    29 Jan 2011, 03:30 PM Reply Like
  • Off the Radar Investor
    , contributor
    Comments (85) | Send Message
    Some very encouraging news on Augme today Ed. You never did respond if YOC owned any IP?


    Augme Technologies, Inc. Engages Goodwin Procter
    NEW YORK, NY--(Marketwire - February 2, 2011) - Augme Technologies, Inc. (OTCBB: seekingalpha.com/symbo...), a technology and services leader in interactive media marketing that offers the only patented and innovative end-to-end mobile marketing platform, today announced that it has retained Goodwin Procter, LLP, a leading national law firm. Goodwin Procter, with 850 attorneys, has offices in Boston, Hong Kong, London, Los Angeles, New York, San Diego, San Francisco, Silicon Valley, and Washington, D.C.


    A pioneer in Internet and mobile marketing and services, Augme Technologies has developed an extensive intellectual property portfolio, and it believes that widespread infringement of the Company's IP claims exists in the marketplace.


    "With Goodwin's assistance, we will continue to identify possible violations of our intellectual property rights and, if appropriate, to initiate legal proceedings against suspected infringers of such rights," noted Paul Arena, Chief Executive Officer of Augme Technologies, Inc.


    The Goodwin team is headed by Thomas Scott, a partner in the firm's Litigation Department and chair of its Intellectual Property Group. Mr. Scott specializes in such intellectual property issues as patent prosecution, litigation and licensing, appellate practice (especially before the Federal Circuit) and technology licensing. He has developed significant patent portfolios for financial institutions and patent licensing organizations, and has negotiated patent licenses that have collectively generated more than $650 million in royalties.


    "Tom Scott heads a strong team of highly respected attorneys," continued Arena. "With Goodwin's counsel, we will continue to evaluate opportunities to maximize and monetize the value of our intellectual property assets."
    2 Feb 2011, 04:04 PM Reply Like
  • Off the Radar Investor
    , contributor
    Comments (85) | Send Message
    Good article here Ed.


    20 Feb 2011, 09:02 PM Reply Like
  • Off the Radar Investor
    , contributor
    Comments (85) | Send Message
    Bet your glad this one only stayed on the instablog. ;)
    28 Feb 2011, 04:35 PM Reply Like
Full index of posts »
Latest Followers


More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.