In August I posted an opinion on why R&D subsidies in the technology sector are currently an ineffective tool to support technology innovations and posed some general solutions to re-energize investment into all industries that commercialize Intellectual Property (I/P), including information technology, communications, life sciences, cleantech, and instrumentation. It is also posted on the DVC SmallTech Newsletter.
In essence, the RES Free Thinking post offered the following solutions:
Cyberplex exceeds analyst expectations again while fundamentals solidify
From an operational perspective, Cyberplex beat consensus forecasts, extending the Google/Cyberplex trend to seven quarters.
Yesterday Cyberplex (CX.TO) reported Q3 sales of $28.2 million, a 158% increase over Q3 2008 sales of $11.2 million and a 10% sequential increase over Q2 2009 sales of $25.7 million. Analysts were expecting a sequential decline in sales due to historically weak Q3 related to seasonality in media spending. Seasonality trends were broken for this quarter, and revenue was reported approximately 28% ahead of consensus forecasts. The Company reported net income of $0.7 million, or $0.01 EPS for the quarter, which was a 12.5% year-over-year increase from Q3 2008 net income of $0.6 million. Because a vast majority of its revenue is recognized in U.S. dollars, and it reports in Canadian dollars, the company continues to struggle with currency volatility related to the relationship between the U.S. dollar and the Canadian dollar. The company reported $1.6 million in foreign exchange losses for the quarter despite attempting to apply FX hedging programs this quarter. Management still needs to get a handle on this issue. The company reported $2.7 million in EBITDA ahead of FX adjustments, which was a 390% improvement over Q3 2008 EBITDA before FX of $0.6 million. This was also ahead of consensus. The Company is demonstrating earnings leverage from operations, although due to currency risk, it is not necessarily being reflected in net income for this quarter.
This was a cash flow neutral quarter, and the company exited Q3 with $21.4 million of cash.
Yesterday Cyberplex (CX.TO) reported Q3 sales of $28.2 million, a 158% increase over Q3 2008 sales of $11.2 million and a 10% sequential increase over Q2 2009 sales of $25.7 million. Analysts were expecting a sequential decline in sales due to historically weak Q3 related to seasonality in media spending. Seasonality trends were broken for this quarter, and revenue was reported approximately 28% ahead of consensus forecasts. The Company reported net income of $0.7 million, or $0.01 EPS for the quarter, which was a 12.5% year-over-year increase from Q3 2008 net income of $0.6 million. Because a vast majority of its revenue is recognized in U.S. dollars, and it reports in Canadian dollars, the company continues to struggle with currency volatility related to the relationship between the U.S. dollar and the Canadian dollar. The company reported $1.6 million in foreign exchange losses for the quarter despite attempting to apply FX hedging programs this quarter. Management still needs to get a handle on this issue. The company reported $2.7 million in EBITDA ahead of FX adjustments, which was a 390% improvement over Q3 2008 EBITDA before FX of $0.6 million. This was also ahead of consensus. The Company is demonstrating earnings leverage from operations, although due to currency risk, it is not necessarily being reflected in net income for this quarter.
This was a cash flow neutral quarter, and the company exited Q3 with $21.4 million of cash.
Bridgewater Systems Q3 2009 - Beats Consensus Forecasts and Increases FY Guidance.
This morning Bridgewater Systems reported Q3, 2009 earnings and subsequently discussed the results and outlook during an analyst call. Analysts are likely to view the results and the business outlook as positive for the stock.
Net income for the quarter was reported at $1.7 million or $0.07 EPS, ahead of consensus forecasts of $0.05 EPS. Revenue was reported at $15.8 million, a 53% increase over prior year Q3 revenue of $10.3 million and ahead of consensus forecasts of $14.6 million for the quarter. Gross Margins contracted sequentially to 64% from Q2 2009 Gross Margins of 75% and from Q3 2008 Gross Margins of 75%. The gross margins contraction is related to the deployment of the Widespan contract and activities related to various trials and deployment preparations associated with various recent contract wins - basically scaling costs. Management expects Gross Margins to continue in the mid-60s range until H2 2010, when it anticipates that Gross Margins will expand to a target of 70% where it is expected to stabilize.
Net income for the quarter was reported at $1.7 million or $0.07 EPS, ahead of consensus forecasts of $0.05 EPS. Revenue was reported at $15.8 million, a 53% increase over prior year Q3 revenue of $10.3 million and ahead of consensus forecasts of $14.6 million for the quarter. Gross Margins contracted sequentially to 64% from Q2 2009 Gross Margins of 75% and from Q3 2008 Gross Margins of 75%. The gross margins contraction is related to the deployment of the Widespan contract and activities related to various trials and deployment preparations associated with various recent contract wins - basically scaling costs. Management expects Gross Margins to continue in the mid-60s range until H2 2010, when it anticipates that Gross Margins will expand to a target of 70% where it is expected to stabilize.
Bridgewater Systems (BWC.TO): More Takeover speculation
Since some Boardroom maneuvering earlier this year, there has been some speculation of a takeover of BWC. Here is some more detailed speculation reported on by Andrew Willis - all in quotes.
From Andrew Willis
Bridgewater (BWC-T9.940.212.16%) is in the wireless software business, and sports at $240-million market capitalization. Backers include tech billionaire Terry Matthews. Earlier this year, the company was targeted by money manager Crescendo Partners, with a proxy fight ending peacefully and Crescendo executives joining the Bridgewater board.
As this boardroom activity played out, Bridgewater posted increasingly strong results. The company is winning new telecom clients and rolling out a new business model that draws more recurring revenue from existing customers, a list that includes most of the major global phone companies. The stock is up 241 per cent over the past 12 months.
Now National Bank Financial is speculating that Ottawa-based Bridgewater could be on the receiving end of a bid from Nokia Siemens Networks.
While the concept isn’t new - Bridgewater has long been seen as a potential target - National Bank Financial analyst Kris Thompson is taking an aggressive view on what’s coming, as he predicts a bidding war is in the offing.
“We've been suggesting that Bridgewater would be an acquisition target of NSN for many months for both its technology and key customer Verizon Wireless,” said Mr. Thompson in a report on Tuesday. He then added: “Also recall that we've suggested that Cisco would likely defend its evolved packet core position by acquiring Bridgewater if Nokia Siemens Networks were to bid for the company.”
National Bank Financial has a $13 target price on Bridgewater, and an “outperform” ranking, with "above average” risk rating."
Disclosure: I own shares of BWC.
Could Multiplied Media Be "The Next Big Thing"?
Last week, the DVC SmallTech Newsletter identified ten breakout smallcap technology stocks for YTD 2009. Many of those intersect with the RES Free Thinking Top 5 picks for 2009. Investors in all of those stocks are smiling so far as we enter the last two months of the year. Alas, but there may be one more stock that could make a lot of noise over the next few months.
Just in time for Holloween: A Few Spooky Stats YTD 2009.
Here are some random statistics from various sources:
Canadian Tech Sector
TSX/TSXV technology sector listings September 2009 - 284 including 5 new listings. Down from 310 at the beginning of the year. A 9% drop.
YTD deals in the TSX Tech Sector - 83
Mean deal size: $5.05 m
TSXV deals - 71 with a mean deal size of $1.3 million
TSX deals - 12 with a mean deal size of $27.3 million
YTD Cleantech deals
Mean deal size: $13.5 m
Top performing sector YTD TSX: InfoTech at 69%
(Source: TSX)
Canadian Tech Sector
TSX/TSXV technology sector listings September 2009 - 284 including 5 new listings. Down from 310 at the beginning of the year. A 9% drop.
YTD deals in the TSX Tech Sector - 83
Mean deal size: $5.05 m
TSXV deals - 71 with a mean deal size of $1.3 million
TSX deals - 12 with a mean deal size of $27.3 million
YTD Cleantech deals
Mean deal size: $13.5 m
Top performing sector YTD TSX: InfoTech at 69%
(Source: TSX)
Posts
