$2 billion would be around $19 per fully diluted PRKR share. Even a $500 mil award equates to almost $5 per share. But don't forget this suit only covers U.S. chip sales, or around 20% of QCOM's total chip revs. PRKR will also likely seek an injunction to prohibit QCOM from shipping products with infringed technology into the U.S. Such an injunction would provide a huge incentive for QCOM to settle globally. Finally, it is likely that QCOM has not indemnified phone-maker customers; PRKR could seek damages from them as well. Your $8-10 target sounds way too low, I think PRKR goes to the $20s, but it might take some time.
Nice catch, thanks. Haven't seen DeBello in a conference since March, so he should have a lot to talk about.
What a strategy! Makes way too much sense. I like people like dow and mtheis though, because they give me buying opportunities even though all the new information is positive. Oh look, I may have just bought the last of mtheis' position ahead of the earnings catalyst... lucky me!
Sentiment: Strong Buy
Nice post, but I would offer a few additional thoughts. First, it's important to note that the USAA point man on the MITK relationship left USAA to head IT for another bank shortly before the contract was up for renewal. (One of many disgruntled managers to leave under the new management, I'm told. He also contracted with MITK almost immediately after joining the new bank.) I think the cost of migrating USAA to the next generation platform was more than $400K per. I heard it was more like several million, and the new liaison simply kicked it upstairs.
MITK actually tried pretty hard to settle early...even replaced the head of sales in an effort to be accommodative. But attempts at settlement were one-sided, so MITK retaliated with charges under the Lanham Act.
My view is that it was better to do the offering before the hearings ramp up this fall. Recall that hearings are scheduled for November. In the meantime, the additional $15mil gives MITK the horsepower to "go the distance" against a much larger company. If USAA thought they could impair MITK's business in any way or that MITK would simply roll over and acquiesce, then it's clear that they overplayed their hand. Because MITK's product is wildly popular with users, and the added cash ensures MITK can afford to pursue its own counter-charges. I think USAA has much more incentive to make a more accommodative settlement now that MITK has additional cash.
Sentiment: Strong Buy
Because it's grossly undervalued on the basis of future profits and cash flows. The real question is why has it taken so long to get started...$30 by year-end is my best guess.
I think Wikipedia's description is more accurate. Look a deal usually needs to be at least 2-3x oversubscribed to go up after pricing. When you see IPOs double on the first day, they are usually10-20x oversubscribed. In other words, the book runner has 10-plus mil shares in indications for every one million shares of stock. An extra 15% isn't going to keep the stock from going up. No one worries about a stock going up after a deal anyway, but the last thing a company wants is to sell even more stock at the discounted price.
The more common problem with secondary offerings is that the stock breaks price to the downside, and all the buyers are pi$$ed at the company and the underwriters. The short enables the underwriters to support a cold deal with a "syndicate bid" at the deal price if necessary. But if the stock does not break price and instead rises, the underwriters can still cover the short by exercising the Shoe at the deal price. That's what happened with MITK.
Yes. It's a legal method for underwriters to stabilize new issues by shorting up to 15% of the issue on the offering. If a weak offering breaks the deal price, the underwriter can then support the issue at the deal price without losing money by covering that short. In MITK's case, the stock didn't break the deal price, so the underwriter can cover the short by exercising the over-allotment option. Google "Greenshoe" for a full description. This deal went fine; just needs to digest the new shares and wait for earnings.
Company has already issued a press release and filed a prospectus...what exactly do you want? The deal went fine, as evidenced by a decent bounce in the stock. I'm confident the stock was well placed with long-term growth investors and not traders and shorts. Cash is to be used for general purposes, financing receivables, litigation expenses, etc. Recall they have guided to $3.3-$3.7 mil revs and $5.5-$6.0 mil costs and expenses, plus legal expenses in the F3Q...they are still net users of cash. So they would need cash sometime anyway.
Also, this deal gives them "staying power" in the USAA suit. And if USAA expected this suit to impair MITK in any way, it's clear that strategy hasn't worked. This cash, combined with MITK's success with mobile deposit and growing traction with other products, would make a settlement all the more attractive to USAA. In any case, the quarter is over, and the quiet period has begun. Don't expect any more commentary until earnings. But relax...MITK is probably going to double revenues for each of the next 2-3 years. Stock will be much higher if that happens.
It's index funds rebalancing portfolios to reflect the new Russell 2000. Russell 2000 is the most widely used benchmark for small-cap mutual funds and money managers. The Russell 1000 is also a popular benchmark for large-cap managers. Together they comprise the Russell 3000. Index funds seek to match their benchmarks exactly in up or down markets, and so use computer-driven algorithms to pick stocks and portfolio weightings which will achieve that goal . Since the Russell was reconstituted today, new additions had to be added as close to the close as possible. Indexers, market makers and arbs have been setting these trades up all day, then execute them at or after the close. Rebalancing can sometimes lead to price dislocations in the short term, but it doesn't appear to have been significant in MITK's case.
By the way, if this dow18k clown doesn't know this, then he's a pretender. Experienced small-cap investors usually know all about it.
If OCZ was going out of business, it would already be gone. Now they've taken out a lot of costs, introduced great new products, and signed collaborations with NTGR and MLNX in the enterprise segment. I always thought OCZ was undervalued relative to sales and IP, if only it could survive and prosper.
So now WDC bought troubled STEC for over 2x sales net of cash. MU and STX have to be watching! If STX buys OCZ, MU is in trouble with its Crucial SSDs. So what's it worth? If revs are $250-300 mil, 2Xrevs would be $7-$9 per share. Looks like a pretty good risk/reward profile to me...
I have to admit that using decimals in the forecast is kind of a joke. But I've built a model which captures (1) what little we know about transaction growth and revenue per transaction, and (2) migration toward industry average expense ratios. With 25%-plus transaction growth and 90%-plus gross margins, this company can print money in just a few years. Your $18 target is easy. Thanks for all your valuable info!
My estimate for the coming quarter is $4.027 mil, based on 35% sequential growth in software revs and 4% growth in services. I also think F4Q will be over $5 mil, and F2013 revs will exceed $15 mil. If anything, these estimates are conservative. Street completely missed the revenue lag between contract signings and deployments last year, so everyone is gun-shy with the estimates. But over half the signed banks have now deployed MRDC, and the service is wildly popular with end users. MPBP is impossible to model, but definitely won't hurt. The question is when they reach profitability. If they get Sales and Marketing down below 30% of revs and R&D below 35%, I think maybe they could break even on a non-GAAP basis in the 4Q. F2014 revs should more than double, and we should be solidly profitable each quarter. It's a shame the Street didn't stick with MITK, because it's really starting to work.
Too much work...MITK is still probably a 5-bagger over the next 2-3 years. Much of the move will come in brief 15-25% moves. Why risk missing it, only to pay a higher tax rate?