Uranium Takeover Targets : Denison / Energy Fuels / UR – Energy

English: Internationally recognized symbol. De...

English: Internationally recognized symbol. Deutsch: Gefahrensymbol für Radioaktivität. Image:Radioactive.svg (Photo credit: Wikipedia)

July 31

There are more than a few folks suggesting that one of the obvious targets is Denison Mines, but should uranium be about to see a bit of a renaissance in the next twelve months or so, analyst David Talbot, who you have probably seen much of on BNN, particularly during the days of the Hathor takeover has written some articles on two other uranium stories we should be following as well.
On the cheapy Energy Fuels, he writes “Conclusion: We recommend Energy Fuels as a BUY with an adjusted 12-month share price target of
C$0.90 from C$1.00.
Our lower target is largely due to dilution, a more conservative capex estimate for Sheep Mountain, and other cost adjustments. We were restricted
on the stock since mid April.
With two financings and the Denison (DML-T ) transaction behind them, Energy Fuels has emerged as the second largest producer in
the U.S. with a resource base of 69.6 MM lbs. Essentially a merger with Denison U.S., EFR incorporated the strategic White Mesa Mill, the only
conventional uranium mill in the US, and several operating mines into the fold. This saved EFR US$150 MM by not needing to construct its own mill for which it just received its NRC license. Numerous synergies in Utah, Colorado and Arizona can be also employed.

We believe this is paramount as filling the mill with feed helps keep costs as low as possible… very important as these smaller mines tend to have higher op costs.
We view investment in EFR as an opportunity. The new company has significant leverage to rising uranium prices. With cash and cash flow, it
is preparing pipeline projects such as the permitted Whirlwind and Energy Queen Mines and Pinenut towards production within the year. Management  has operating experience within the old Energy Fuels Nuclear. And development of Sheep Mountain in WY could bring this company to a whole new level. Risk moves from financing to execution and U308 prices.
We also expect some of the 425 MM shares issued to Denison shareholders to come out and about 5% has so far. While liquidity is up over five
fold since the deal, EFR is off 26% as investors not interested in production leave”.
On UR-Energy Talbot writes “We continue uto recommend Ur_Energy with a BUY recommendation and C$2.30 share price target.
Ur-Energy announced on Monday that they have entered into a definitive agreement to acquire 100% of Pathfinder Mines Corp (AREVA) for
US$13.25MM. AREVA owns the past-producing Shirley Basin (SB) and Lucky Mc (LM) mine sites in Wyoming and host to 10MM + 4.7MM lbs U308
respectively (non-compliant) both grading ~0.21%. This would imply an acquisition cost of ~$0.90/lb— in-line with current trading multiples for
explorers and developers.
Ur-Energy announced on Monday that they have entered into a definitive agreement to acquire 100% of Pathfinder Mines
Corp (AREVA) for US$13.25MM. AREVA owns the past-producing Shirley Basin (SB) and Lucky Mc (LM) mine sites in Wyoming
and host to 10MM + 4.7MM lbs U308 respectively (non-compliant) both grading ~0.21%. This would imply an acquisition
cost of ~$0.90/lb— in-line with current trading multiples for explorers and developers.
SB mine has apparently moved up to URE’s second priority project given its high grades and ease of licensing and mining.
The main project to deliver near-term production still remains Lost Creek, however. We understand a final EIS from the
BLM is expected in the near-term and ground-breaking is anticipated around September. That would close off a long and
bumpy process to get the mine licensed, and should be the catalyst the stock needs. However, we believe that URE may
need to come back to market to finance construction of Lost Creek”.

Apple Picks Sept. 12 As Launch Date for iPhone , iPad

Image representing iPad as depicted in CrunchBase

Image via CrunchBase

Apple (AAPL : NASDAQ : US$593.93)

July 31
iHeard…iMore has heard that Apple is planning to debut the new iPhone at a special event on Wednesday, September 12, 2012,
with the release date to follow nine days later on Friday, September 21.

This information comes from sources who have proven accurate in the past. The iPad mini will be announced at the same September 12 event, as will the new iPod nano. iMore hasn’t heard a release date for the iPad mini yet, but it could be the same as the iPhone 5.

It seems likely the new iPod touch will make an appearance on September 12 as well, though they haven’t heard any specific information about that yet either. iOS 6, which was announced during Apple’s WWDC 2012 keynote on June 11 and includes a new, Google-free Maps app, and Passbook,
should get a final presentation during the September 12 event as well, and if Apple sticks to previous patterns, a release
sometime around Wednesday, September 19.

As for hardware, they’re still hearing the iPad mini will be exactly like the 9.7- inch iPad, only scaled down to 7.x-inches. iMore originally heard Apple had a few iPhone 5 prototypes, including 3.5-inch and 4.0-inch versions, but recent reports and parts leaks make it look like the 4.0-inch, 16:9 screen version is what Apple’s going with.

They’ve also consistently heard all new iOS devices will have the new, smaller dock connector going forward, which along with the nano-SIM and rumored in-cell display should leave lots of room for the LTE radio they heard about earlier in the year, and the bigger battery to go along with it.

Cirrus Logic : BUY Target $ 43

English: Cirrus Logic EP9315 chip. Photo taken...

English: Cirrus Logic EP9315 chip. Photo taken by me, Martin Guy on 3rd March 2009 (Photo credit: Wikipedia)

Cirrus Logic 

July 31
CRUS : NASDAQ : US$29.84  Buy , Target US$43.00 
• Guidance vastly above expectations; reiterate BUY, raise target to $43
Investment recommendation
We reiterate a BUY rating on Cirrus Logic following relatively in-line results and guidance that blew away Street consensus and our estimates. While management is careful not to provide a blatant view into the ramps of its customers’ products, it was gleaned on the Q&A that both unit growth and increasing dollar content are meaningful contributors to the CQ3 revenue outlook.

Further, we believe “substantial” CQ4 growth could be in the 25% Q/Q range.

Our estimates rise
sharply on the guidance and our price target is increased to $43 from $35, where the stock was trading after hours.
Investment highlights
• CRUS reported CQ2/12A (Jun) after the close. Revenues and EPS were $99.0 million and $0.22, compared to consensus of $100.9 million and $0.21 and our estimates of $101.0 million and $0.20.
• Management guided revenue for the September quarter to range from $170 million to $190 million (up 82% Q/Q at the mid-point), compared to the consensus estimate of $129.7 million and our estimate of $134 million.
Implied EPS at the mid-point is $0.72, compared to consensus of $0.39 and our estimate of $0.41.
Valuation
Cirrus Logic’s price target of $43.00 (was $35) is approximately 12x our C2013 EPS estimate of $3.27 plus net cash of $2.43/share, compared to an 11x multiple net of cash for our coverage universe.

Microsoft Debuts Wedge Keyboard, Mouse for Windows 8 in Apple iPad Challenge

Image representing Microsoft as depicted in Cr...

Image via CrunchBase

Microsoft Corp., the world’s biggest software maker, unveiled mice and keyboards to work with its Windows 8 software for tablets and personal computers as it prepares its own device to compete with Apple Inc.’s iPad.

The wireless Wedge Mobile Keyboard, which costs US$79.95, features a protective cover that doubles as a stand for a tablet, Microsoft said in a statement. The company will also sell a pocket-size wireless Wedge Touch Mouse for US$69.95. Both use Bluetooth to connect to a computer or tablet.

Microsoft is releasing Windows 8, the next update of its flagship software, in October to run on PCs and tablets, including its own machine, Surface. The latest software, mice and keyboards are designed to combat Apple’s lead in the tablet market and boost sales of Surface when it goes on sale later this year.

The Redmond, Washington-based company also said it will sell a Sculpt Touch Mouse for US$49.95 and full-size Sculpt Mobile Keyboard for the same price. Both products use a Bluetooth connection.

Revenue in the Windows division fell 13% to US$4.15-billion in the three months ended June 30, falling short of the US$4.44-billion average analyst estimate, according to data compiled by Bloomberg. That was the fifth time in seven quarters that the unit has fallen short.

Apple’s iPad will to remain the global tablet leader through at least 2016, even as it loses some market share, according to researcher Gartner Inc. The iPad will account for an estimated 46% of shipments in 2016, down from a projected 61% this year, Gartner said. Tablets running Google Inc.’s Android software may have 37% by 2016, a gain from 32%.

Microsoft, which had 0% of the tablet market last year, is expected to nab 12% by 2016. That number may increase because the Gartner report was issued before Microsoft unveiled its Windows-based tablet.

Best Buy – Founder Seeking Buyout Group

English: Logo of Best Buy, US-based retail chain

English: Logo of Best Buy, US-based retail chain (Photo credit: Wikipedia)

 

July 30

Bloomberg reports Best Buy Co. founder Richard Schulze has been recruiting executives to help lead the retailer if his attempt to take the company private is successful, according to a senior Best Buy executive.

“He is talking to people he trusts,” J.D. Wilson, senior vice president of enterprise capabilities, said in an interview. “There is a small group he’d like to have with him in righting the ship. He is serious as a heart attack.” Wilson, who said his position is being eliminated as part of Best Buy’s cutbacks, was approached by Schulze in June and said he would work for the company if a deal went through.

Schulze also has been seeking to recruit other executives such as former Chief Executive Officer Brad Anderson, said a person familiar with the matter. Anderson has told other former Best Buy executives he is interested in joining Schulze’s effort, the person said.

Schulze, 71, has been exploring taking the world’s largest electronics retailer private after stepping down as chairman last month, a person familiar with the matter has said. An internal probe found he failed to tell the board about allegations that then-CEO Brian Dunn was having an inappropriate relationship with a female employee. Schulze said when he resigned that he would consider all options, including selling his 20% stake in the Richfield, Minnesota-based company.

Through a spokesman, Schulze declined to comment. Bruce Hight, a spokesman for Best Buy, declined to comment. Anderson didn’t immediately return a phone message seeking comment.

Shares Rise

Best Buy rose 2.7% to US$18.24 at 9:41 a.m. in New York after advancing as much as 5.9%. The shares had fallen 24% this year through July 27.

While Schulze has had discussions with several former executives interested in rejoining the company, he hasn’t reached an agreement with anyone, said a person familiar with the matter. He has also been speaking with potential investors and private-equity funds about raising money from them, said this person.

Best Buy has struggled as customers migrated to Amazon.com Inc. and other online merchants, posting a net loss of US$1.23 billion on revenue of US$50.7 billion for the fiscal year that ended in March, its first annual loss since 1991, data compiled by Bloomberg show. Same-store sales have declined in seven of the last eight quarters.

It will be challenging for Schulze to find private-equity firms willing to take on the risks associated with Best Buy and to help fund a transaction, Michael Pachter, an analyst for Wedbush Securities Inc. in Los Angeles, said last month. Best Buy’s cash flow will keep declining and the company will continue to lose money, he said.

A buyout of Best Buy would cost at least US$30 a share to convince long-time investors to sell, Anthony Chukumba, an analyst at BB&T Capital Markets in New York, said last month. That would equate to a total value of about US$11 billion, including net debt.

Apple iPhone : Forbes Shows Leaked Pictures – Says ” A Let Down”

Apple Inc.  New Headquarters

Apple Inc. New Headquarters (Photo credit: MarkGregory007)

 

from Forbes  July 30

Photos released (- see  photo end of this AMP  market  letter ) yesterday by a Japanese iPhone repair website called iLab show a very plausible view of the next iPhone,now rumored to be announced on September 12 and released September 21. What gives these pictures a higher likelihood of authenticity than previous leaks and mockups is that, as a repair service provider, iLab has the connections to the full range of parts manufactures in the supply chain, and the motivation to be prepared for dealing with the inner working of the next model.

Assuming these photos show a unit assembled, as described, from leaked actual parts, it’s a bit of a let down. I realize that it’s hard to compete with the flights of imaginative fancy that Apple obsessives have been spinning, but the design of this model is

conservative to a fault. It seems to be an improvement from the iPhone 4S, and to feature a taller screen as has been predicted, but where is the “wow” factor?

These images surface just as Apple is going to court to try to take down Samsung on patent infringement charges. I don’t think, however, that Samsung has achieved the position as the dominant smartphone manufacturer by being a copycat. I think they are beating Apple through design innovation.

So even though Apple is in a secure position at the moment, knowing that there is pent up demand for the next iPhone, playing it safe may be missing an opportunity to take the design mojo back from Samsung, Google and even Microsoft. This design won’t do that.

My concern is that this vision of the iPhone 5 will be attractive to business people and more conservative types—it will be the next Blackberry (and not the European street youth version). That’s fine, but I predict that the young and the trend-setting will go for the snappier-looking Android phones and some

will find the Windows Phone attractive, as well.

On the other end of the spectrum, older folks will find the larger, brighter AMOLED screens of Samsung’s phones preferable as well, so Apple may get squeezed there also.

From a larger perspective, this is great for the industry and for consumers. More options means more spreading of smartphones to more kinds of people. Network effects will create the opportunity for new and improved services as smartphones approach ubiquity.

But for Apple, this is not good. It puts them at the flattening place in their power law curve of growth. And if their patents get curbed or struck down in the Samsung ruling (a coin toss at this point) they will not be able to tithe the other manufacturers into submission.

I realize that I am leaping to a lot of conclusions here. We don’t know if this is the actual design yet or, really, when it will be released. But all of the intelligence points to the details that these images support so we are at least in the ballpark. A home run, unfortunately, it is not.

Design

 

Wal- Mart Thrives On Recession Blues

Walmart

Walmart (Photo credit: matteson.norman)

( Business Week)

Shares of Wal-Mart Stores (WMT) hit an all-time high of $74.80 on July 27, having recently pierced levels they haven’t visited since 1999.

The stock’s 25 percent year-to-date return is nearly triple that of the Standard & Poor’s 500 index. Over the past 13 years, the chain that put Bentonville, Ark., on the map went from earning $4.4 billion on $137 billion in revenue to now clearing $16 billion on sales of $446 billion. Unemployment has since more than doubled from its New Economy-charged days of 4 percent.

Wal-Mart’s high, which comes on its 50th anniversary, speaks volumes about the economy and market.

I first learned of the milestone in a rather terrifying note put out earlier in the week by Gluskin Sheff Chief Economist David Rosenberg wrote:

“This is looking more and more like a modern-day depression. After all, last month alone, 85,000 Americans signed on for Social Security disability cheques, which exceeded the 80,000 net new jobs that were created: and a record 46 million Americans or 14.8 percent of the population (also a record) are in the Food Stamp program (participation averaged 7.9 percent from 1970 to 2000, by way of contrast). … Increasingly, the U.S. is following in the footsteps of Europe of becoming a nation of dependents.”

Rosenberg then highlighted Wal-Mart as a beneficiary of investor ardor for companies that cater to a “deflationary trendline.” “So even in this tough macro and market environment,” he wrote, “there are ways to put money to work—in areas of the market that generate a reliable dividend stream for investors and produce a product that people need, not what they want.”

Which immediately made me think of how, in September 2010, Wal-Mart’s U.S. chief admitted at a Goldman Sachs (GS) conference (of all places) that on the last day of every month, “it’s real interesting to watch. About 11 p.m., customers start to come in and shop, fill their grocery basket with basic items … and mill about the store until midnight. Our sales for those first few hours on the first of the month are substantially and significantly higher. If you really think about it, the only reason somebody gets out in the middle of the night and buys baby formula is that they need it, and they’ve been waiting for it.”

In better times, it was all too easy to reflexively criticize Wal-Mart, which had its hands full deflecting charges that it was a mom-and-pop-store-killing, labor-abusing race to the bottom. In 2005, as the economy bubbled along, Wal-Mart learned that its predominantly low- to middle-income customer base was perhaps too susceptible to soaring gas prices (you’d think pump-pinched consumers would spend more time at Wal-Mart). The NIMBY-inspiring brand still gets hostile receptions at some county zoning-board meetings. Wal-Mart stock has been dead money for more than a decade.

One economic collapse later, it’s apparent that bad times are good for business, and the market called it. Bernard Sosnick of Gilford Securities notes that Wal-Mart was the best-performing big-cap between 2007 and 2009, a stretch that saw the S&P 500 get cut in half. The retailer has since been one of only a handful of blue chips to break past its Irrational Exuberance-era highs—despite (or because of) an economy that is anything but exuberant

Horn Petroleum and Africa Oil Update

English: Coat of arms of the state of Puntland...

English: Coat of arms of the state of Puntland in Somalia (Photo credit: Wikipedia)

Horn Petroleum* (HRN : TSX-V : $0.77)
Africa Oil* (AOI : TSX-V : $7.45)

Horn Petroleum provided an update on the Shabeel North well in Puntland, Somalia.

Based on the positive evidence of oil shows and the presence of good quality reservoir in the Jesomma, the partnership has decided to deepen the well in order to evaluate the potential of the Lower Cretaceous and Jurassic sections. The current revised total depth will be approximately
3,400 metres and is expected to take an additional 15-20 days to reach that depth. The Jurassic section in the nearby Shabeel
well had thin reservoir sands with oil & gas shows, but this section was determined to be not thick enough to warrant testing.
These sands are expected to thicken basinward towards Shabeel North.

There was also evidence that there may have been faulting in the well which could have cut out a significant portion of the basal reservoir section, which is not expected in Shabeel North. HRN President and CEO David Grellman stated, “While we are obviously disappointed that the Jesomma sands tested wet, the overall results of the two wells drilled during this campaign are quite encouraging in the long term prospects for
oil potential of the basin. We have confirmed a working petroleum system, good quality reservoirs and thick impermeable
sealing rocks.

The two Jesomma structures drilled to date appear, subject to final petrophysical analysis, to have issues with the
integrity of the trapping mechanism. We are still hopeful that the lower zones in the Shabeel North well may have favorable
trapping geometries against the deeper thick carbonate and anhydrite sections seen in the original Shabeel well.” Africa Oil
holds an approximate 45% equity interest in HRN.

When Will The Case-Shiller House Price Index Turn Positive Year-Over-Year?

English: Zillow logo

English: Zillow logo (Photo credit: Wikipedia)

The CoreLogic index turned positive year-over-year in March: CoreLogic® Home Price Index Shows Year-Over-Year Increase of Just Over One Percent

Home pricesnationwide, including distressed sales, increased on a year-over-year basis by 1.1 percent in April 2012 compared to April 2011. This was the second consecutive year-over-year increase this year … 

And the FHFA index turned positive year-over-year in February: FHFA House Price Index Up 0.3 Percent in February

For the 12 months ending in February, U.S. prices rose 0.4 percent, the first 12-month increase since the July 2006 – July 2007 interval. 

However we are still waiting on Case-Shiller.

On Friday I posted Zillow’s forecasts for the May Case-Shiller indexes to be released this coming Tuesday. The year-over-year (YoY) decline in Case-Shiller prices has been getting smaller all year, and the Zillow forecast suggests the YoY decline will be even smaller in the May report – and be the smallest YoY decline since the expiration of the housing tax credit.

I looked at the recent improvement in prices (comparing the month-to-month changes for the NSA index to last year). If the Zillow forecast is close, at the current pace of improvement, it looks like the YoY change will turn positive in the July report – it could even happen in the June report (to be released next month).

Case-Shiller House Prices Indices

Here is a graph of the YoY change in the Case-Shiller Composite 10 and 20 indexes. In April, the indexes were down 2.2% and 1.9%, respectively.

Zillow is forecasting the Composite 10 index will be down 1.3% YoY in the May report, and the Composite 20 index will be down 1.0%.

Earlier this year, when I argued prices were near the bottom for the Not Seasonally Adjusted (NSA) repeat salesindexes, I thought the year-over-year change would turn positive late this year or early in 2013. Right now it looks like the July report.

 

 by Bill McBride

Read more at http://www.calculatedriskblog.com/2012/07/when-will-case-shiller-house-price.html#GFhLRVZePeubsOzi.99

Is Social Media The New Dot -Com Bust ?

Image representing Facebook as depicted in Cru...

Image via CrunchBase

July 30 

Social media companies, once hailed by their Silicon Valley boosters as world-changing businesses with limitless potential, are instead proving a sobering reminder of how investors can be seduced by Internet hype.

With few exceptions, the first wave of social media firms to trade on the public markets has delivered a disastrous performance that conjures memories of the dot-com bust of 2000.

The VCs, the private equity guys at the early stages, already cashed out and made their fortunes

“Farmville” publisher Zynga, which went public in December at a valuation of US$7-billion, is trading around US$3.15 a share, more than 68% off its US$10 IPO price.

Daily deals site Groupon, touted as the firm that could reinvent local commerce, has fallen from its US20 IPO price to about US$7.15 in nearly nine months. Music service Pandora Media has dropped from US$16 at its June 2011 IPO to around US$9.50 on Friday.

And on Thursday, the 800-pound gorilla of the group, Facebook Inc, reported tepid results that shaved some US$10-billion off the company’s market cap. The stock has gone straight down since its botched May initial public offering and now trades at around one-third off its US$38 IPO price.

REUTERS/Brendan McDermid

Daily deals site Groupon has fallen from its US20 IPO price to about US$7.15 in nearly nine months.

“The VCs, the private equity guys at the early stages, already cashed out and made their fortunes,” said Peter Schiff, chief executive of Euro Pacific Capital. “Everybody else who ran to buy the stock at the IPO at a sky-high valuation ended up holding the bag.”

“A lot of these companies are going to make a quick buck and flame out,” he added. “Just look at 10 years ago.”

It’s true that a few companies with more of a business focus — notably LinkedIn — have done much better. The jobs-networking site is trading at US$100.82, well above its US$45 IPO price from May 2011. Yelp Inc, the local reviews company, is holding above its US$15 IPO price from March.

Startups in areas like data analytics and business software, such as Splunk Inc have also fared well.

But the wipe-out among consumer-oriented social media companies has raised concerns the entire sector is fad-driven. While the public companies are profitable and showing strong growth — unlike the class of 1999 and 2000 — it is not clear how sustainable that is.

“People just can’t figure out how these companies are going to make money and justify these huge valuations,” said Michael Yoshikami, founder of Destination Wealth Management.

The euphoria around Internet stocks, Yoshikami added, has faded. “It’s different from six months ago,” he said.

People just can’t figure out how these companies are going to make money and justify these huge valuations

In Silicon Valley, venture capitalists fear the high-profile stock busts will take a toll on the next wave of companies trying to go public. To some extent, they say, they already have.

“It’s going to have a chilling, sobering effect,” said Tim Chang, managing partner at Mayfield Fund. “It’s especially hard to make the argument of why a company should be valued at $1 billion or more.”

On Thursday, Facebook reported its first quarterly revenues of US$1.18-billion, up 32%. But executives warned a quickening shift to its underperforming mobile app was eating into results, and user and revenue growth slowed for the fifth consecutive quarter. The stock was down 9% in afternoon trading on Friday.

It has not helped pacify Wall Street that the tech firms’ venture capital backers on Sand Hill Road in Menlo Park, California, have enjoyed big paydays via IPOs. In the case of Facebook, Accel Partners sold 49 million shares at US$38 apiece, reaping enormous profits.

Insiders have sold large chunks of their holdings in Zynga and Groupon, though the top executives still maintain enormous stakes in their companies. Zynga CEO Mark Pincus and other insiders netted some US$500-million when they sold a portion of their stock in April at US$12 a share.

Justin Sullivan/Getty Images

Facebook CEO Mark Zuckerberg lost billions in paper-wealth on Thursday after his company reported mixed results.

Others were less fortunate. T. Rowe Price lost US$61.4-million in its Facebook and Zynga holdings over two days. Fidelity, the largest U.S. fund, saw US$126-million of its on-paper holdings evaporate over the past two days.

Facebook CEO Mark Zuckerberg, who owns just north of half a billion shares, took his lumps as well, as more than US$3-billion of his paper-weath evaporated Thursday.

‘DOESN’T JIVE’

Zynga’s stock went into free-fall after it slashed its 2012 outlook from US23 to US29 cents to US4 to US9 cents, blaming weakness in existing Facebook games and a delay in its pipeline.

The results widely missed expectations set by company management at the end of last quarter, when Chief Operating Officer John Schappert said the company was “excited and comfortable raising guidance for the year.”

On a conference call, BTIG analyst Richard Greenfield took Zynga executives to task for not warning investors. Chief Financial Officer Dave Wehner said it was company policy to only give guidance once a quarter.

But the earnings report “doesn’t jive” with executives’ recently upbeat comments, Greenfield later told Reuters. A handful of plaintiffs’ lawyers announced Thursday they had begun investigating Zynga for breach of fiduciary duty.

Meanwhile, Facebook’s executives took a conservative approach on Thursday, declining to offer their own forward-looking predictions.

The entire social media space may seem like a disaster, but it’s perhaps that public markets have yet to see the right stocks

In light of Zynga’s bad miss, Wall Street analysts said that the lack of forecasts sapped investor confidence.

“The entire social media space may seem like a disaster, but it’s perhaps that public markets have yet to see the right stocks. Firms like Groupon, Facebook, and Zynga require very aggressive user acquisition and the Average Revenue Per User is much lower,” said Steve Place, a founder of options analytics firm investingwithoptions.com.

“However, if we look into different verticals of the social media space there are some decent ideas.”

He cited real-estate site Zillow Inc, now almost double its IPO price.

But on Sand Hill Road, the mood these days is decidedly more subdued, a focus on returning to fundamental value.

“We’ll see more discipline on private investments,” with more focus on the sustainability of any competitive advantage a company has, said Roelof Botha, a partner at Sequoia Capital.

“There are private companies that we are investors in that have underlying defensibility and business models for which you do want to stretch on valuation,” Botha added.

At Bay Partners in Palo Alto, partners have already noticed a certain dialing-back of the swagger with which some entrepreneurs walk into their office.

“I feel a little bit of humility, a little bit of reality creep in,” said partner Salil Deshpande, whose investments include Buddy Media, which was sold to Salesforce.com for US$689-million earlier this year. Early-stage entrepreneurs who a few months ago might have argued their nascent companies were worth US$5-million might today accept a valuation of $1 million, he said.

Mayfield’s Chang expects a hit to companies with what he calls “lumpy” business models — less predictable, consumer-oriented businesses that rely on advertising and virtual goods, like Facebook and Zynga. Those businesses, he says, are reliant on their popularity with the public, a fickle group.

“The scariest is easy-come, easy-go revenue, kind of like Groupon,” he said. “It can ramp up quick, but disappear quickly too.”

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