3/22/2010 TONIGHT'S AGENDA
Upcoming SlideShare
Loading in...5
×
 

3/22/2010 TONIGHT'S AGENDA

on

  • 470 views

 

Statistics

Views

Total Views
470
Slideshare-icon Views on SlideShare
470
Embed Views
0

Actions

Likes
0
Downloads
3
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment
  • Datacenters allow companies, governments, and other large entities to store, modify, and distribute large amounts of data. Because of the complex baseline infrastructure required, data centers benefit hugely from economies of scale. A colocation company provides the hardware infrastructure that houses and connects customers’ servers. The colocation provider does not own the actual servers or maintain the software that runs on them. Network Neutral refers to a particular type of colocation in which customers are not pressured into purchasing their network bandwidth from any particular service provider. By creating a facility where any Internet Service Provider can provide bandwidth, Equinix creates a much more competitive offering for customers. Equinix was founded upon a realization of the economies of scale involved in data centers. By providing businesses with a cost effective means of having their own datacenters and obtaining communications bandwidth cheaply, Equinix has attracted a customer base over 2,800 strong. The data exchange between these customers, referred to as “interconnect,” has become extremely valuable, and only increases in value as more customers are added. It is the value of these interconnections that provides Equinix with an unmatched sustainable competitive advantage in its industry.
  • Changes in internal management in 2007 have resulted in steadily improving Gross and Operating Margins through the present. Revenue Growth was mitigated in 2009 mostly by the worldwide economic recession and temporarily decreased IT spend. It’s also important to bear in mind that these numbers reflect the performance of an international company with colocation facilities in North America, Europe, and Asia Pacific. This combination of strong growth and presence in every major worldwide market is something that no competitor has been able to match.
  • Switch and Data is a fairly big competitor in the U.S. market. The acquisition will help Equinix increase its capacity at already thriving locations, as well as expand into secondary U.S. markets. It also enables much sooner growth than the construction of new facilities would. It is expected that growing Cloud Computing and Software as a Service companies will seek colocation centers further from major cities to decrease the cost of large operations. By moving out to the edges of the network and establishing low-latency connections to the internet backbones now, Equinix will be excellently positioned to capture increased demand from these customers. Because of their differences, the two companies are very complementary in terms of building a unified global offering moving forward. Equinix customers will gain increased access to smaller local markets in the U.S., and Switch and Data customers will leverage the international footprint of Equinix’s facilities. Equinix is the strongest performing competitor in colocation, and appears very well positioned to take advantage of emerging trends in the high-tech field. It would be a strong component of any well-rounded technology portfolio.

3/22/2010 TONIGHT'S AGENDA 3/22/2010 TONIGHT'S AGENDA Presentation Transcript

  • 3/22/2010
  • TONIGHT'S AGENDA
    • Portfolio Update
    • Sell Research in Motion
    • Today in Tech
    • Elevator Pitches
  • PORTFOLIO UPDATE Anthony Vitiello
  • RECENT TRANSACTIONS
    • Sell 300 Shares of IBKR @ $16.30 on 3/16/2010
    • Sell 100 Shares of ADP @ 44.45 on 3/16/2010
  • ALL-STARS 3.81% 3.05% 2.04% 2.10% 1.68%
  • DOGS 5.75% 3.83% 3.03% 1.29% 2.31%
  • LARGEST HOLDINGS
    • Winn Dixie Stores: 5.40%
    • Research in Motion 5.12%
    • USG Corporation: 4.89%
    • jetBlue Corporation: 4.86%
    • Waters Corporation: 4.56%
  • RESEARCH IN MOTION (RIMM)
  • WHO ARE THEY?
    • Research in Motion (RIMM) is Blackberry
      • Hardware- Blackberry Phones
      • Software- Operating system, Browsers etc.
      • Service- EDGE network
  • STRENGTHS
    • Dominant player in the “smart phone” sector at about 40%
      • Smart phones are gaining market share in the Cell Phone market
    • No encroachment on core market - Business
      • Room to grow
        • Majority of Sales are US/Canada
  • WEAKNESSES
    • Recent trends have shown iphone higher growth rates
      • BlackBerry Storm is closest competitor but not as Dynamic
    • < 1% Market Share in Asia
    • Less dynamic interface
    • Margin strength losses
      • Potential for margin compression
  • WHY SELL RIMM?
    • Primary Impetus: 20% gains
      • Purchase price $61
      • Sell Price 73.50
        • (Guarantee a strong return and put the capital to use on a less precarious position)
    • Vulnerability to tech sector volatility
      • Rapid product replacement tempo
      • Unpredictability of competition
      • Physical Capital exposure ( vs. intellectual)
  • TODAY IN TECH Michael Polark
  • AGENDA
    • Tech Trek
    • The Cloud
    • Social Media
    • Mobile Revolution
    • Elevator Pitches
      • 3 Slides, 3 Minutes
  • TECH TREK
    • 2 nd semester course ending with spring break field study in Silicon Valley
      • Professor Gallaugher
      • How does a firm go from start-up to blue chip?
    • Built through BC alum network
    • Highly recommended, fall application deadline
  • FIRMS VISITED
    • Intuit
    • Digg
    • Salesforce.com
    • GigaOm/True Ventures
    • Socialtext
    • Jay Hoag/Technology Crossover Ventures
    • Hewlett-Packard
    • eBay
    • Apple
    • WePay.com
    • Smule
    • Google
    • Facebook
    • Tallwood Venture Capital
    • Equinix
    • Electronic Arts
    • Intel
    • Yahoo!
    • Sequoia Capital
  • THE CLOUD
    • Old Software Model
      • Updates Periodically; Hosted on own Servers
      • Large Infrastructure Build out
      • Not Broken, Few Big Players
        • Oracle, SAP,
    • New Software Model
      • Applications exist ‘in the cloud’
        • Software as a Service (SaaS)
      • Startup Costs Virtually Zero—Multi-Tenancy
      • Continuous Redesign
      • Adoption Accelerated by Recession
      • Salesforce.com
      • Green?
  • SOCIAL MEDIA
    • Facebook, LinkedIn, Twitter
    • Value in Network
      • Monetization of User Base Difficult
    • Advertising Model Sustainable?
      • Search vs. Social
    • Social Gaming
      • Zynga (Hottest Potential IPO After Facebook)
        • Playfish Purchased by Electronic Arts
      • Facebook: Cash Flow Positive?
  • MOBILE REVOLUTION
    • Smaller Devices, Smaller Chips
      • Faster, More Energy Efficient
    • Smartphone Platforms Spur Development
      • App Economy; OS X vs Android
      • $17.5 billion industry in two years ($5bln –CNBC)
    • Location Based Marketing
    • Search Alliances
      • Will Apple Partner with Bing to Block Google?
  • A FEW MORE TO MENTION…
    • Infrastructure Buildout
      • How will all this data travel and connect?
    • PC Cycle (~4 years)
      • Tracks new releases of Windows
      • Recent momentum behind semiconductors (INTC)
    • Big Data?
      • How will new influx of data be managed/stored?
    • Netbooks, Tablets, iPad
  • EQUINIX, INC. (EQIX) Connecting the World’s Information Andrew Moore
  • Network-Neutral Colocation Provider
    • Colocation
    • Multiple companies’ servers in the same data center
    • Interconnection (interaction) among clients
    • Scalability and performance benefits
    • Efficiency and cost improvements
    • Network Neutral
    • Access to several network service providers
    • Unhindered, competitive bandwidth pricing
    • Facilitates Peering , a synergistic networking benefit
    • Overall Purpose
    • Connect providers and users of the internet in efficient ways that save time and money while increasing performance and providing a uniform hardware platform for data management
  • Revenue and Margin Growth 2004-2009
  • Acquisition of Switch & Data
    • Key Facts
    • October 21, 2009 – Acquisition announced
      • $689 million for 80% EQIX stock and 20% cash
    • Expected to close in Q2, 2010
    • 6 U.S. markets ⇒ 16 U.S. markets (inc. Top 10)
    • Noteworthy Benefits
    • Avert creation of a global competitor
    • Provide natural growth while opening doorways to Cloud Computing and SaaS markets
    • Additional capacity for currently strained IBX centers (New Jersey, Silicon Valley, and Dallas)
    • Expansion to secondary U.S. markets including Atlanta, Denver, Miami, Seattle, and Toronto
  • ELEVATOR PITCH Michael Polark
  • A TURNAROUND STORY
    • Will Not Take Down Google
    • New Management + Renewed Focus on Core Competencies = Continued Margin Expansion
    • Bing Partnership
      • 10 years
      • $650 Million in Cost Savings
      • Back End (Crawl) Outsourced
      • Focus on Search Experience
    2005 2006 2007 2008 2009 21.1% 14.6% 10.0% 0.2% 6.0% Google Yahoo! Microsoft 65.7% 17.3% 10.7%
  • VALUE
    • February 2008 Unsolicited Offer by MSFT to buy YHOO for $44.6 Billion Rejected
      • Current Market Cap of $23 Billion
    • Strong Balance Sheet Supported with $3.2 Billion in Cash and No Long Term Debt
    • Research & Development
      • 2005: 10.4%; 2009: 18.7%
    • Trades at 1.8x Book Value
      • Google Trades at 5x Book
      • 3.5x Gives Us a $40+ Billion Valuation
  • ADVERTISING IN THE US…
    • … Is a $550 Billion a Year Business
      • Internet has 30% of Viewership
      • But just 10% of the Revenue
      • Move to Mobile still Unsolved
    • Yahoo is #1 in Display Advertising
    • New Management Led by Carol Bartz
      • New Regime = Operators Focused on Execution
        • 41 year old CFO Tim Morse (BC ‘91)
      • Old Regime= Creatives and Engineers
  • ELEVATOR PITCH Anthony Vitiello
  • CONSTANT CONTACT: BACKGROUND
    • CTCT is an diversified email marketing services provider
    • Helps companies outsource mass emails
      • Direct Marketing, Surveys, New Updates
    • Key Numbers:
      • Market Cap:$658.2MM
      • Gross Margins 71%; Recent EPS $0.00 to $0.05
      • 35% Top line growth forecasted for : Combination Volume + ARPU growth
  • CONSTANT CONTACT: THESIS
    • Economics work for CTCT and customer
      • Cheap direct marketing; ancillary revenue drives ARPU growth
    • Huge untapped Market for email marketing
      • 2% of email marketing is outsourced; CTCT size
    • “ Noise” reduction in company earnings
      • Higher S&M spend, VC unwinding holding
  • CONSTANT CONTACT: THESIS
    • Massive short ratio: 67.9% float currently short
      • 25> to cover, considerable short squeeze potential
    • Recurring Revenue stream = stable annuity biz
      • Managing churn rates down going forward
    • Highly scalable model—adds at no marginal cost
      • Operating leverage as economy turns
  • ELEVATOR PITCH Mario Morales
    • What they do:
    • CDMA chips. Superior frequency utilization on wireless cellular products.
    • Wireless Networks
    • Smart-phone interface, small electronics software
      • Snapdragon
    • Licensing Partnerships (about 33% of Revenue)
      • Motorola, Nokia, Panasonic, Samsung, Sony
      • Royalties from smart-phone sales worldwide
    QUALCOMM (QCOM)
  • BUSINESS OVERVIEW
    • Share Price $40.47
    • 21% oper. Margin
      • Historically around 30%
    • 19B in cash
      • (roughly $12/share)
    • 3 times book
      • 30x earnings
    • D/E  1:3
    • 68% of CDMA chip market
    • 70% of the chipset revenue came from cellular baseband market
    • $3b buybacks, company sees its own stock as cheap
    • 2009 drop in earnings
    • Margin compressions (one time costs, other costs constant)
  • POTENTIAL PROBLEMS
    • Samsung and Nokia have begun to enter contracts with other CMDA suppliers to limit exposure
    • Average Price per device is declining (Potential for Margin Compression)
    • Growth in iphone and therefore infineion (iphone chip supplier)
    • Revenue dependency on cellular device
  • ELEVATOR PITCH William Berkery
  • ELEVATOR PITCH: QUALITY SYSTEMS INC. (QSII)
    • Designs and markets healthcare information systems to Dental and Medical practices
    • Under subsidiary NextGen the company provides electronic medical records software
    • Provides exposure to both tech and healthcare sector with a stable company in a growing industry
  • AT A GLANCE
    • Market Cap: 1.75 Bn, 1,250 employees
    • P/E: 37.6
    • No debt
    • 28.79% ROE
    • All medical records computerized by 2014
  • FAST GROWING INDUSTRY
    • Only 8% of hospitals, 17% of doctors now use electronic medical records
    • Concern over valuation: 10x book? P/E of 37.6? However industry P/E is 62, closest competitor MDRX at 54 times earnings
    • Little evidence to support cost savings Obama claims, but QSII stock has excellent potential
  • ANNOUNCEMENTS & HOUSEKEEPING
    • Market Game– Keep Trading!!!
    • Tee Shirt Ideas– Email vitiella@bc.edu