Twitter, Inc. Initial Review BUY

US$52.91 BUY 
Target: 62.00

Twitter is the world’s leading real-time one-to-many
communication platform for discovering and sharing unique
content. With over 270 million global monthly users, Twitter has a
diverse user base including influential individuals such as world
leaders, celebrities, athletes, and leading organizations such as
sports teams, media outlets, and brands. Each Tweet is limited to
140 characters of text, and can conclude photos, videos, and

Technology — Internet
Investment recommendation
We believe Twitter is early in defining what is possible as the world’s
real-time interest sharing platform. The evolution will likely be bumpy,
but the platform should continue to become more mainstream. Slowing
user growth is a challenge, but we believe the company has levers to
pull to fight back. Meanwhile, our positive stance is based largely on the
engagement and monetization momentum we expect over the next few
quarters. We believe this should lead to upward estimate revisions as
Twitter benefits from engagement and monetization groundwork that
has been laid over the past year.
Investment highlights
 Users & engagement may be mixed – MAU growth may not
accelerate, but logged-out users could tilt the discussion favorably;
engagement metrics should rebound in Q3 & Q4.
 However, monetization holds significant upside – Twitter monetizes
at less than half the level of Facebook, but newer ad products
should help it catch up fast.
Our $62 price target is based on 45x our 2018 EPS estimate, discounted
to present at a rate of 10%. We note that our estimates do not include
potential dilution from yesterday’s announced convertible debt offering.
On a growth-adjusted EV / Revs basis, TWTR trades at a significant
discount to peers.
User growth may disappoint, especially in the U.S. where monetization
is highest; platform shift to voyeurs (away from Tweeters) may impact
advertiser interest; new ad products may fail to gain momentum.

Stratasys BUY Target Price $150

SSYS : NASDAQ : US$120.63
Target: US$150.00

Stratasys Ltd. is a global provider of 3D printing solutions,
including a wide range of 3D printers, consumable print
materials and services. Stratsys Ltd. was formed with the
merger of Stratsys and Objet in a stock-for-stock merger
completed in December 2012. The combined company
has an impressive portfolio of 3D printing and direct
digital manufacturing solutions.
All amounts in US$ unless otherwise noted.

Transportation and Industrials — Manufacturing Technology
Investment recommendation
SSYS management laid out a solid case for driving strong top line organic
growth (25%+ over next 3-5 years) during Monday’s analyst day in New
York. Momentum remains healthy at the high end for Fortus and
Connex3, which is likely to yield strong follow-through materials sales
and gross profit, while new product introductions are continuing at a
rapid pace (41 in 2014) and should keep the channel invigorated. The
presentations also clearly illustrated compelling synergies between a
recently expanded service bureau capability (Solid Concepts and Harvest
acquisitions) and strategic sales efforts for hardware and materials that
address the desire of large global customers to explore the full range of
3D printing’s ROI potential in their manufacturing and design activities.
We are reiterating a BUY rating and $150 price target, and see EuroMold
(late November) as a looming positive catalyst for SSYS based on 10+
additional new product introductions to be made during the show.
Investment highlights
 SSYS at the analyst day announced the launch of two new Connex1
and Connex2 printers at lower price points to complement the
Connex3 printer that has strong customer traction. The new printers
add increased functionality and share a common family platform with
Connex3 and replace the Eden Series of Connex printers. Additionally
SSYS announced the launch of the new FDM ASA outdoor material
offering targeted at automotive applications. Management expects to
announce more than 10 new products at EuroMold this November.
 Stratasys reiterated its 2014 guidance for revenue of $750-770M
compared to our estimate of $759.6M and consensus of $758.8M and
EPS of $2.25-2.35 compared to our in-line estimate of $2.31.
Management reiterated a long term revenue target of 25%+ growth
with long term operating margins of 18%-23%.

Workday Raising Target Price to $110

WDAY : NYSE : US$90.30
Target: US$110.00

Workday provides enterprise-scale, cloud applications
that deliver the core functions for global customers to
manage the human capital and financial resources of an
organization. Solutions include: HCM, Financial
Management, Payroll, Time Tracking, Procurement,
Employee Expense Management, etc. Workday was
founded by the former founders of PeopleSoft in 2005
and is headquartered in Pleasanton, CA.

Technology — Enterprise Software — Software as a Service
The obvious comment is that Workday’s EV/revenue multiple is high. What is less
obvious is that the likely decay of this multiple to a more reasonable, 6-8x forward
estimates could take longer to reach than expected. The combination of marquee
customer wins in HCM (like BofA in the quarter), new referenceable logos for
Financials, and success with the firm’s Analytics add-on could keep revenue growth
faster for longer than expected. Our only small nit is that we would like to see a
continuation of profit upsides from this management team so that they can
demonstrate that they deserve to be compared to, which was more
profitable at WDAY’s current revenue level. We believe investors should own at least
a partial position in this industry-altering firm in any growth-oriented portfolio.
 Another meaningful upside. Workday reported Q2/15 revenues, calculated
billings, and FCF loss of $186.8M (+74% y-o-y), $206.3M (+56% y-o-y) and
$37.4M, which were respectively $9.8M, $21.3M, and $35.0M ahead of our
estimates. Subscription revenues grew 77% y-o-y, and non-GAAP EPS loss of
($0.11) was $0.04 better than our forecast.
 Color from the call. After bringing HP, the firm’s largest customer to date, live in
Q1, WDAY announced that it signed an HCM deal with Bank of America and its
300k employees in Q2, now making that firm its largest customer. WDAY ended
the quarter with >700 HCM customers and nearly 100 Financials customers.
While the firm saw strength across the board, management noted particularly
strong results in Europe and within Financial Services, including two Fortune
500 deals in that sector. Lastly, WDAY’s services ecosystem continues to grow
nicely, with both HP and CSC announcing plans to build deployment practices.
 Guidance increased again. WDAY guided Q3/15 estimates above the Street and
increased F2015 revenue targets by ~$25M. F2015 bookings growth is expected
to be roughly 60% and non-GAAP operating losses were trimmed to the high
single digits. Longer-term, management did note that the firm does not expect to
be non-GAAP profitable in F2016, which shouldn’t come as a surprise.

Microsoft Has Nearly $93 Billion In Overseas Cash

And It’s Reduced Its Tax Bill By Almost $30 Billion
– what are you doing about reducing your taxes ?

Microsoft’s stash of cash stored overseas, not subject to U.S. taxes, is growing.

In its latest regulatory filing, the software giant said it has now stockpiled $92.9 billion offshore and that this money could have cost the company $29.6 billion in taxes, but didn’t.

That compares to $76.4 billion from the previous year, worth an estimated tax bill of $24.4 billion, according to a report released in May from Washington think tank Citizens for Tax Justice.

Here’s the exact language Microsoft used in the filing to discuss its offshore cash:

As of June 30, 2014, we have not provided deferred U.S. income taxes or foreign withholding taxes on temporary differences of approximately $92.9 billion resulting from earnings for certain non-U.S. subsidiaries which are permanently reinvested outside the U.S. The unrecognized deferred tax liability associated with these temporary differences was approximately $29.6 billion at June 30, 2014. Income taxes paid were $5.5 billion, $3.9 billion, and $3.5 billion in fiscal years 2014, 2013, and 2012, respectively.

Just to give you an idea of how much money $30 billion is, that’s how much Microsoft’s home state of Washington will spend in two years, reports International Business Times’ David Sirota, who first noticed Microsoft’s increase in offshore cash.

Foreign Sales Mean No U.S. Taxes
U.S. corporations don’t have to pay taxes on income they earn overseas as long as they also spend that money overseas. If they try to “repatriate” the money — bring it back to spend in the U.S. to, say, pay shareholder dividends or hire new employees or make an acquisition — they are taxed at a high 35% rate, less any taxes they already paid on the money in the country where it was earned, according to the CTJ.

However, like all things taxes, it’s not that simple.

There’s been growing debate over how some companies assign income to overseas subsidiaries. For instance, a company can license patents to foreign offices that have lower tax rates. When the company sells a product that relies on those patents, it gets to assign at least some of that money to the foreign office and not pay U.S. taxes on it. That’s true even if the tech was originally invented in the U.S.

In 2012, Microsoft top tax person, Bill Sample, explained during testimony to a Senate subcommittee looking into the offshore tax situation. He said:

The legal ownership of intellectual property developed as a result of our research and development activities generally resides with Microsoft Corporation in the U.S. In accordance with Internal Revenue Code Section 482 and applicable Treasury Regulations, our three foreign ROC [regional operating centers] groups, Ireland, Singapore and Puerto Rico, license the rights to use the relevant intellectual property to produce and sell Microsoft software products in their respective regions.

Lots Of Companies Do It – you can too
Microsoft certainly isn’t alone in stockpiling cash overseas, out of the reach of the IRS.

Fortune 500 corporations have stashed nearly $2 trillion in offshore accounts, saving about $550 billion in taxes, the CTJ says.

Microsoft isn’t even the biggest cash hoarder. That would be Apple. In September, Apple reported it had $137.7 billion in offshore accounts. The CTJ report also found that Cisco had $48 billion, HP had $38 billion, Google nearly $39 billion, and Oracle $26 billion offshore, based on each company’s latest annual report as of May.

And plenty of non-tech companies do the same: GE with $110 billion, Pfizer with $69 billion, and so on, says CTJ.

However the tech industry, led by Microsoft and Apple, are the poster children. The CTJ raised this red flag in its report:

A large number of the biggest corporations appear to be increasing their offshore cash significantly. 105 of the companies surveyed in this report increased their declared offshore cash by at least $500 million each in the last year alone. Eight particularly aggressive companies each increased their permanently reinvested foreign earnings by more than $5 billion in the past year. These include Apple, Microsoft, IBM, Google, and Cisco.

None of this is illegal. Far from it. A corporation owes it to its shareholders to keep its tax bill as small as possible.
What these companies want is an overhaul of regulations that will permanently reduce the tax rate on repatriated cash.

They would also welcome something called a “tax holiday” which would give them a one-time pass to use the cash in the U.S., paying little to no taxes on the money.

Cisco CEO John Chambers has been advocating for a tax code overhaul on offshore cash for years.

Early last year, he even went so far as to say that Cisco would stop hiring U.S. employees or acquiring U.S. companies if the tax law wasn’t changed. That turned out to be an empty threat. Cisco has since acquired U.S. companies including its $2.7 billion acquisition of Sourcefire last year.

A Catch-22
Using the offshore loophole to avoid paying U.S. taxes is also a Catch-22. Unless corporations can convince the U.S. to let them use that money without the high tax rate, or they give up and pay it, they can’t touch the money at home.

When asked for comment on this story, Microsoft PR pointed us to a portion of Bill Sample’s 2012 Congressional testimony:

Microsoft’s tax results follow from its business, which is fundamentally a global business that requires us to operate in foreign markets in order to compete and grow. In conducting our business at home and abroad, we abide by U.S. and foreign tax laws as written. That is not to say that the rules cannot be improved–to the contrary, we believe they can and should be.

In our view, the U.S. international tax rules are outdated and are not competitive with the tax systems of our major trading partners. These rules all too often provide a disincentive for U.S. investment.

Opting Out Of Paying Taxes
In 2012, Cutler shifted the company’s ( Eaton) domicile to Ireland through an acquisition of Cooper Industries Plc, a company run from Texas that had gained a foreign address through a 2002 inversion. With the help of the new domicile, Cutler predicts his company’s tax rate will be about 5 percent this year.

The Tax Haven System : Introduction
A system for tax minimization is how my mentor amassed his first fortune.

THE SYSTEM was domestic – I have now expanded that to concentrate on offshore tax havens as a system to minimize taxes to allow for wealth retention and creation.

Our system involves the multi-layered use of incorporation, trusts, foundations and bank accounts as reflected in client needs for security and tax minimization.

THE BOTTOM LINE We can assist you at saving tax dollars – IF you will stop ” thinking it over” and take action.

There can be no standard reply as to which is the best offshore jurisdiction.

That answer actually depends upon the anticipated use of the offshore company, upon the personal and business circumstances of its owners and upon variety of tax regulations in force in the countries where the offshore company will engage in business.
Contact Information

Information must proceed action and that is why we offer a no cost / no obligation inquiry service.


or Call Jack direct at 604-858-3202 – Pacific Time 9:00 – 5;00 Monday to Friday

The main intention of our website is to provide objective and independent information that will help the potential investor to make his own decisions in an informed manner. To this effect we try to explain in a simple language the different processes and the most important figures involved in offshore business and to show the different alternatives that exist, evaluating their pros and cons. On the other hand we intend – in terms of offshore finance, bringing these products to the average citizen.

Do something to help yourself – contact Jack A. Bass now !


BRDR : NASDAQ : US$13.25
Target: US$18.00

Technology — Internet
Borderfree’s second quarter as a public company was another strong
one. eCommerce revenue grew by 34%, accelerating meaningfully from
19% in Q1. The key driver appears to be lower shipping costs as the
company expands local market fulfillment options, which is driving
higher conversion of shoppers into purchasers. We continue to view
Borderfree as a long-term, stable growth opportunity.
Key points
Bullish: eCommerce revenue accelerated, beat our estimate, and
guidance was raised for the year; EBITDA margin was 4.3%, 370
bps ahead of our estimate driven by stronger mix of eCommerce
revenue; Fulfillment revenue (which represents a pass-through of
the cost of fulfilling an order, so lower is better!) was lower than our
estimate as the company achieved local market fulfillment
Bearish: The company added only two net new merchants in the
quarter (however, we believe that in H1 ~8 small merchants
accounting for less than 0.3% of GMV were turned off); lower total
revenue guidance may create some noise (although this is a
significant positive operationally and eCommerce guidance was
Estimate changes: We are changing our 2014 and 2015 total
revenue non-GAAP EPS to $140M/$0.16 and $168M/$0.20 from
$142M/ $0.10 and $172M/$0.18.
Our price target remains unchanged at $18.00 and is based on 2.7x our
2015 revenue estimate of $168M (down from $172M) and 5.3x our 2015
e-commerce revenue estimate of $88M (up from $86M

Blackberry : The Horse Race Has Started – Still time to place your bets

Blackberry was named one of Canada’s contributions to the world Canada Day July 1. Note that last week Jack A. Bass Managed accounts bought in at $ 10.02 . Yes it’s better to be lucky than smart but it is great to be both. Now an army of pundits is trying to forecast – are we seeing  a Blackberry Revival ?


The danger is more to the shorts – falling for their own scenarios of doom and not recognizing the tape action is moving against them. Time will tell.


Below Average
As of 02 Jul 2014 at 11:35 AM EDT.


Open 10.70 P/E Ratio (TTM)
Last Bid/Size 10.71 / 28 EPS (TTM) -11.39
Last Ask/Size 10.72 / 94 Next Earnings 26 Sep 2014
Previous Close 10.52 Beta 1.18
Volume 8,379,623 Last Dividend
Average Volume 32,790,616 Dividend Yield 0.00%
Day High 10.88 Ex-Dividend Date
Day Low 10.61 Shares Outstanding 526.9M
52 Week High 12.18 # of Floating Shares 500.0557M
52 Week Low 5.44 Short Interest as % of Float 19.19%

The iPhone didn’t do anything for China Mobile either. In April, China Mobile reported down first-quarter profits, partially due to the added burden of iPhone subsidies.

Analysts have predicted that the China Mobile deal could help Apple move an additional 10 to 30 billion iPhones this year.

The iPhone revenue slide in China was only eclipsed by its loss in the U.S.

According to Kantar’s latest research, covering March to May 2014, iOS held a 32.5 percent smartphone OS sales share in the U.S., down 9.4 percent from the 41.9 percent it held during the same period in 2013.

Meanwhile, Android saw substantial gains in both the U.S. and China. In the U.S., Kantar reported Android saw a 9.9 percent annual increase and, in China, a whopping 11.3 percent annual increase, taking it up to 82.7 percent total OS sales share.

Much of Android’s success belongs to Samsung. The report says the company’s new Galaxy S5 was the second biggest selling smartphone in the U.S., behind the iPhone 5S. But in terms of total brand share in the U.S., Samsung controlled 36.8 percent of sales to put it in first ahead of Apple, with 32.5 percent.

BlackBerry managed to boost its share of smartphone sales in the U.S., climbing 0.7 percent annually to claim 1.3 percent. Windows Phone fell 0.9 percent annually in the U.S., from 4.7 percent to 3.8 percent.

Advanced Micro Devices Update

AMD : NYSE : US$4.06

Target: US$5.00


Technology — Hardware – Semiconductors and Related Technologies
Investment recommendation:

We believe AMD’s diversification strategy
positions the company to drive solid top-line growth and a return to
sustained profitability despite PC market headwinds. In fact, we are
comfortable with the lower gross margin of recent sales, with shared R&D
costs and minimal marketing expense for semi-custom gaming designs
making this new business accretive at the operating line. Long term, ARM
servers offer opportunity for re-entry into a growing $12B+ market and an
attractive call option on AMD shares. Nearer term, we believe consensus
underestimates GPU share gain and new semi-custom opportunities.


We resume coverage of AMD with a BUY rating and $5 price target.

Investment highlights
 Diversification strategy: Reduce PC exposure from 90% in 2012 and
70% today to 50% exiting 2015 by investing in five key growth markets

Concerns: Risks of a re-accelerating secular decline in PCs remain as
AMD is still roughly 70% exposed. Sustainability of strong semi-custom
console launches at Sony and Microsoft needs to be proven. Pursuit of
ambidextrous ARM/x86 strategy could distract focus, limit features of
individual designs, and potentially cause operating expense growth.
 We introduce our 2014/15 revenue and non-GAAP EPS estimates of
$6.07B/$0.22 and $6.31B/$0.32, respectively.
Valuation: Our $5 price target is based on shares trading at roughly 16x
our 2015 non-GAAP EPS estimate.


NVIDIA Corporation Update

NVDA : NASDAQ : US$19.03

Target: US$19.00 


Technology — Hardware — Semiconductors and Related Technologies
Investment recommendation: We believe NVIDIA’s transformation from a
PC-leveraged GPU supplier to a growing, diverse visual-computing company
is complete. In fact, with focused investments in gaming and professional
tiers, PC platform GPU sales are still growing despite market headwinds.
Layering on new GPU applications in emerging markets including big data
analytics, GRID, and automotive, we believe NVIDIA is well positioned for
solid core growth. However, these new markets are still nascent and could
take time to drive meaningful growth considering the need to replace a large
patent settlement revenue stream expiring in 2017. Given the recent share
price move and this overhang to operating earnings, we cannot justify a
premium multiple. We resume coverage with a HOLD rating and $19 target.
Investment highlights
 Growth drivers: GPU sales should continue to outperform the PC sector
by focusing on premium gaming and professional development tiers. In addition, investments in software and Shield position NVIDIA strongly for emerging Android gaming platforms. New opportunities to leverage
NVIDIA’s core GPU technology in automotive and mobile (Tegra), cloud
virtualization (GRID), and high performance computing (Tesla)
applications are compelling and should generate high margin and sticky
revenue streams as these markets mature.
 Patent licensing strategy to replace current IPR stream yet to be proven:
Management is confident in plans to more broadly monetize NVIDIA’s
portfolio of over 7K patents. However, with a current IP settlement
stream from Intel of $66M/quarter set to expire in 2017, NVIDIA’s new
IP licensing program is tasked with replacing a substantial portion of
the company’s operating earnings. Until investors are given clarity
around timing and scope of future IPR, we believe NVDA shares could
have limited upside despite solid prospects for core and new business
growth, diligent expense controls, and more aggressive capital returns.
 Estimates: We introduce our F2015/16 revenue and non-GAAP EPS
estimates of $4.56B/$1.18 and $4.75B/$1.29, respectively.
Valuation: Our $19 price target is based on shares trading at roughly 15x
our F2016 non-GAAP EPS estimate


MiX Telematics Limited

MIXT : NYSE : US$9.90
Target: US$19.00

MiX Telematics is a leading global provider of fleet and mobile
asset management solutions delivered as SaaS to customers in
over 100 countries. The company’s products and services provide
enterprise fleets, small fleets and consumers with solutions for
safety, efficiency and security.

Technology — Communications Technology — Software
Investment recommendation:

MiX Telematics reported Q4/F2014
results with subscription revenue and adjusted EBITDA ahead of our
estimates. Further, MiX issued F2015 guidance with subscription
revenue slightly above our estimates but adjusted EBITDA slightly below
due to ramping investments to drive longer-term growth. Given its
strong balance sheet, we believe MiX is investing to drive growth in
markets such as North America and South America to drive accelerated
recurring revenue subscription growth exiting F2015 and beyond. We
believe MiX has a strong solution for its targeted customers and has
strong long-term growth drivers. Therefore, we believe MiX’s current
valuation versus its competitors represents an attractive entry point. We
reiterate our BUY rating and $19 price target.
Investment highlights
 MiX reported Q4/F2014 results with a subscriber base of 451k and
subscription revenue of R233M ahead of our 448k/R222M
estimates. Subscriptions grew 25.3% Y/Y and subscription revenue
grew 24.9% Y/Y.
 Given MiX’s strong base of fotune 500 companies -

Valuation: Our $19 price target is based on shares trading at a multiple
of roughly 14x EV/adjusted EBITDA based on our F2016 estimates

CRM : NYSE : US$52.89

Target: US$65.00

Technology — Enterprise Software — Software as a Service
Investment thesis
We would build or expand positions in CRM shares because we believe this firm
has the highest quality franchise among cloud software firms we follow.
Meanwhile the stock’s valuation looks reasonable at 35x 2015E EV/FCF for a
25-30% grower.
Investment highlights
 Salesforce posts another upside quarter. CRM reported Q1/15 revenues and
non-GAAP EPS of $1.227B and $0.11, which were respectively $17M and a
penny ahead of our estimates. Revenues grew 37% in the quarter, and
calculated billings of $1.03B were nicely ahead of our $995M estimate and
up 35% compared to a year ago. Total backlog (billed and unbilled) ended
the quarter at $7.1B, which is up 34% versus Q1/14. Lastly, CRM generated
FCF of $413M (+80% y-o-y), or $0.64 per share, which was well ahead of
our $0.49 estimate in the firm’s seasonally strong cash collection period.
 Outlook: F2015 ranges increased again. CRM increased its F2015 revenue
and non-GAAP EPS outlook by ~$50M and a penny. The firm expects to
deliver 125-150 bps of operating leverage (to somewhere in the 10-11%
range) and deliver operating cash flow growth in the mid-20% range. Our
new F2015 revenue and FCF estimates of $5.3B and $802M are up roughly
$55M and $30M respectively and imply 31% growth and 15% FCF margin.
Valuation and price target
We are slightly lowering our CRM price target to reflect the broader valuation
correction in cloud software. Our new $65 target is based on a 6.3x EV/revenue
multiple and 40x EV/FCF based on our F2016/C2015 estimates plus roughly
$1.2B in prospective net cash and assuming ~650M shares outstanding



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