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



ADSK : NASDAQ : US$48.32
Target: US$60.00

Autodesk is a global design software company that sells
high-function, low-cost 2D and 3D computer-aided design
(CAD) applications. The firm also provides visualization
and simulation tools, which in conjunction with the
company’s design apps, enable customers to experience
their ideas early in the design process through the
development and analysis of virtual prototypes.


Technology — Enterprise Software — Applications
Investment thesis
There are enough company-specific changes, augmented by what we believe
will be a multi-year macro tailwind in commercial construction, that ADSK
appears poised to resume an advance that we believe will take the stock back to
its old nearly $60 highs in fairly short order. We are equally bullish about the
possibility of a multi-year transition to a more predictable model that we
forecast to easily clear the 30% operating margin threshold in calendar 2017.
 Best-in-class portfolio. Taken as a whole, we believe ADSK has the design
industry’s most complete Design, Simulation and Visualization suite.
 Model switch means greater predictability and likely higher realized per
customer revenues. Much like the Adobe transition, we expect Autodesk’s
transition to begin slowly, if not occasionally haltingly, and then accelerate,
pushing recurring revenues to nearly 80% in late calendar 2017.
 Optionality from cloud PLM and simulation. Design collaboration, which is
really what PLM is, is tailor made for the cloud. Simulation, especially for
small- and mid-sized firms without dedicated CPU capacity, is also a great
use case for cloud. ADSK is the largest firm with credible cloud offerings in
these areas.
 A lot of moving parts, but the relevant ones subscription growth and cash
flow growth should move in the right direction. Specifically, our long-term
modeling says subscriptions and cash flow advance at a mid-to-high teens
pace for the next five years. In CY17/FY18E Autodesk should evolve to
become a less cyclical 30% non-GAAP, 32-35% operating cash flow margin
business with gradually accelerating mid-single-digit to total revenue growth.

 Therefore, we believe ADSK deserves consideration for a growth portfolio. While we
are not making a “called shot” on the quarter, it would not surprise us that ADSK’s
management will make sufficiently positive commentary on Thursday night’s earnings
call that the stock could advance on Friday.
Valuation and price target
Our new $60 price target (up from $52) is based on a 23x multiple applied to our
F2016/C2015 FCF per share estimate of $2.32 plus approximately $6.00 in prospective net
cash per share.
For perspective, looking out further, if we use this same 23x multiple, which could prove
conservative as investors give ADSK full credit for the transition to subscription, on
F2018/C2017 estimates, which we will be looking at in ~18 months, it implies a stock in
the $75-80 range. The math is roughly $3.07B in F2018 revenue at a 30% operating
margin, taxed at 25% over 245M shares, plus $11-13 per share in prospective net cash per
share. This implies a >50% return from current levels over the next 18-24 months

Akamai Technologies BUY

AKAM : NASDAQ : US$54.53
Target: US$68.00

Akamai provides content delivery and cloud
infrastructure services for accelerating and improving the
delivery of content and applications over the Internet,
ranging from live and on-demand streaming videos to
conventional web content, to c-commerce tools. The
company is headquartered in Cambridge, Massachusetts

Telecommunications — Telecommunications
Investment recommendation
Akamai once again managed to produce yet
another quarter of above-expectations growth and margins with a
solid outlook for Q2/14. Even though the company has reiterated
its H2/14 margin guidance for 40%-42%, we note they have
consistently beat their margin forecast for the past six quarters.
Strong volume growth and reported traction in the security
business should continue to provide investors with confidence that
the company will continue to produce solid double-digit top-line
growth with improving margins.
Investment highlights
 Managing expectations – delivering results – As has been the
case with the company for the past six quarters, guidance
beyond the next quarter was once again muted with the
expectation for margins to return to 40%-42%. Q2/14 revenue
estimates call for $464-478mm with slightly lower margins.
 Volumes trends remain strong – Although we had speculated
that recent traffic trends were supported by continued Internet
video growth, the strength appeared equally strong from
software downloads as well as gaming.
 Reasonable valuation relative to history – Currently priced at
8.8x 2015E EBITDA, we find the stock to be attractively
valued, especially given accelerating growth trends


Twitter Update

Twitter stock slumps 50 percent as Goldman, Deutsche Bank still say `buy’

13 hours ago – Reuters
Twitter stock slumps 50 percent as Goldman, Deutsche Bank still say `buy’By Supantha Mukherjee and Saqib Iqbal Ahmed(Reuters) – Twitter Inc investors who heeded the advice of high-profile banks such as Goldman Sachs Group Inc and Deutsche Bank AG to buy the social media company’s shares might be kicking themselves.

Much more accurate calls were made by Wells Fargo, Atlantic Equities , Macquarie Research, and Jack A. Bass ,who advised clients to get out of the high-flying stock about the time it peaked in December.

On Wednesday the stock fell as low as $37.24, 50 percent below its peak of $74.73 the day after Christmas, wiping almost $18 billion off Twitter’s market capitalization.

The downgrades, and the subsequent swoon by the stock, reflect concern about slowing growth in Twitter’s user base and the company’s ability to reverse the trend. Year-on-year growth in the number of Twitter users has fallen for five straight quarters, and the company said on Tuesday that its 255 million monthly users, on average, appeared to check the service less frequently than a year ago.

That in turn has fueled doubts that Twitter could one day attract as many users as Facebook Inc’s 1.2 billion, or match its much larger rival’s power as an advertising vehicle. It’s also raised questions over whether it can sustain growth over the long term. While no one is suggesting Twitter will lose its consumer cachet as happened to companies such as MySpace or Orkut, neither can anyone guarantee that as tastes change newer rivals won’t usurp it.

“Can they become a mainstream company? That’s the open question,” said Ben Schachter, the Macquarie Securities analyst who downgraded Twitter’s stock to “underperform” on December 27 – the day after it peaked.

It’s a far cry from the enthusiasm that greeted the company when it debuted on the New York Stock Exchange on November 7 and its shares soared 73 percent over the offering price. There was no let-up for the next two months, as the stock scaled fresh highs with little or no news to justify the valuation.

That got some analysts worried. Schachter, speaking to Reuters on Thursday, recalls a “runaway momentum.”

ePlus BUY Target Price $65

PLUS : NASDAQ : US$50.01
Target: US$65.00 

ePlus is a direct marketer and authorized reseller of IT
solutions from several large OEMs, including Cisco, HP,
VMWare, NetApp, EMC, Citrix, Apple, Dell and Microsoft.
The company offers a range of solutions focused on data
center, storage, security, cloud enablement and IT
infrastructure. Headquartered in Herndon, VA, ePlus was
established in 1990 and incorporated in 1996.


Technology — Hardware — Semiconductor Devices and Related
Investment recommendation
We reiterate our BUY rating and $65 price target following PLUS’s 1.57
million secondary share offering. We expect PLUS shares to benefit from
the increased public float and we see potential for upside to revenue and
EPS as advanced technology solutions continue to see healthy demand
from big data, mobile device management, security and other drivers.
We are adjusting our estimates off of PLUS’s preliminary MarQ results.
Investment highlights
 PLUS completed a secondary offering of 1,573,913 shares at
$50/share with an option for the underwriters to purchase an additional
236,087 shares. PLUS will repurchase 400,000 shares at $50/share,
lowering the total shares outstanding to 7.6 million shares compared to
the prior 8 million share count.
 PLUS expects MarQ revenue to be in the range of $255 million to
$261 million compared to our prior estimate of $264 million.
Management highlighted the 8% to 10% Y/Y revenue growth was driven
by strong demand for IT products and services from their large
customers. PLUS expects EPS for the MarQ to be in the range of $1.00 to
$1.06, well above our prior $0.81 estimate.
PLUS’s price target of $65 is approximately 12x our C2014 EPS estimate
of $4.84 plus net cash of $5.07 per share.

3D Systems Target Price $ 75

DDD : NYSE : US$45.26
Target: US$75.00

3D Systems is a leading provider of rapid 3D printing,
prototyping and manufacturing solutions used to create
product concept models, precision and functional
prototypes, master patterns for tooling, and end-use
production parts for direct manufacturing. 3D Systems’
products allow complex three-dimensional objects to be
manufactured directly from computer-aided design and
manufacturing (CAD/CAM) software tools.

Investment recommendation
We reiterate a BUY rating on strong top line growth and a looming
recovery for margins and earnings growth. While DDD has been under
pressure along with the rest of the 3D printing space, we believe positive
new product ramps, margin expansion, and earnings upside could act as
positive catalysts in the ensuing quarters. Our price target is reduced to
reflect multiple compression likely to afflict growth stocks in 2014,
although we continue to expect strong share appreciation from these
Investment highlights
 DDD reported Q1/14A (Mar) earnings this morning. Revenues and
EPS were $147.8 million and $0.15 compared to consensus
estimates of $145.5 million and $0.15. Revenue increased 45% Y/Y
(-5% Q/Q) driven by 28% Y/Y organic growth and included 53% Y/Y
growth in Printers and Other products, 41% Y/Y growth in Print
Materials and 38% Y/Y growth in Services.
 Management reiterated their 2014 targets, with a revenue
expectation of $680M to $720M (+36% Y/Y at $700M mid-point)
compared to our prior $710M and the $701M consensus
expectation. Guidance includes $80 million to $120 million in
Consumer revenues and $25 million to $50 million in Phenix metal
printer sales. Non-GAAP EPS is guided to $0.73-$0.85 compared to
our prior expectation of $0.83 and consensus expectation of $0.81.
DDD’s price target of $75 (was $100) is 8x our 2015 sales estimate of
$950.5 million.


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