Inflection Research

April 23, 2008

EMC & VMware – Solid Results for Q1 2008

Filed under: Investing, Technology — Tags: , , , — semanticzen @ 11:58 pm

Today was a big day for enterprise technology stocks particularly for my holdings with EMC, VMware, Xilinx, F5, and Zebra all reporting results. With the exception of Xilinx, who had decent numbers, all the companies exceeded expectations. I was particularly impressed with EMC because it is such a bellwether for enterprise technology.

EMC is available for a tremendous valuation. On its balance sheet, it has net cash and short term investments of $4.35B: Cash ($5.6B) + LT Investments ($2.25B) – LT Debt ($3.5B). It has a market cap of $33.8B (2.1M shares * $16). The 86% of VMWare that EMC owns is worth $20.6B. Giving EMC a market cap of only $8.85B for a company, that without VMware, had revenue greater than $3B this quarter and net margin easily above 10%.

Metrics for EMC’s Q1 2008

  • Revenue = $3.47B up 17%
    • A record and the 19th consecutive quarter of double-digit growth
  • Net Income = $268.8M / $.13
    • Includes a $79.2M non-cash charge for in-process R&D resulting from acquisitions completed in Q1 (excluding charge, $348M / $.16)
  • Operating Cash Flow = $918.3M up 14%
  • Free Cash Flow = $717.5M up 22%

Financial Highlights

  • Repurchased 36M shares for $557.2M, expect $1 – 1.5B in share repurchases for 2008
  • Q1 2008 acquisitions = $338M
  • Cash & Investments = $7.9B ($4.2B overseas and in VMware)
  • VMware within EMC: Revenue = $438M, Non-GAAP EPS = $.03

Revenue Mix by Divisions

  1. EMC systems up 10% (41% of revenue)
  • Symmetrix up 8%
    • The first enterprise storage vendor integrating flash-based solid state drives into core product portfolio (for Symmetrix DMX-4)
  • CLARiiON up 19%
  • Celerra (NAS) up 50% (this bodes well for NetApp)
  1. Software license & maintenance up 18% (41% of revenue)
  • Software license growth (without VMW) = -5%, but overall good growth on deferred revenue
  • VMware = $438.2M million up 71%
  • Content Management & Archiving = $185.2M up 8%
  • RSA Data Security = $134.9M up 13%
  1. Other services up 30% (18% of revenue)

Revenue Mix by Region

North America up 14% (57% of revenue)

International up 21%, double-digit revenue growth in each of EMC’s regions -Europe, EMEA, Asia-Pacific & Japan (APJ) & Latin America

Metrics for VMware’s Q1 2008

  • Revenue = $438M up 69%
    • US up 65%
    • Intl up 74% (triple-digit growth in Australia and emerging markets including BRIC)
    • Software license revenue = $294M up 73%
    • Service revenue (support, subscription, and professional services) = $144M up 62%
  • Operating Income = $48M vs. $46M (Non-GAAP operating income = $106M up 62%)
  • Net Income = $43M / $.11 vs. $41M / $.12 (Non-GAAP net income = $88M / $.22 vs $.16)
  • Guidance
    • Continues to expect 2008 Revenue up 50%
    • Expects 2008 Q2 Revenue up 55%

April 20, 2008

Altera’s Q1 2008 Results

Filed under: Investing, Technology — Tags: , , — semanticzen @ 10:31 pm

On Wednesday April 16, Altera, the second largest maker of programmable logic devices (PLD) reported Q1 2008 results which were better than expected. The PLD industry is a duopoly controlled by Altera and Xilinx. Xilinx reports next week on Wednesday.

 

Over the next few weeks I’ll be providing a lot of information on the PLD industry and why it is a great investment opportunity. Here is a brief overview of Altera’s results. Revenue and free cash flow were both very good. The next quarter should be good based on a solid book-to-bill, good guidance, growth from new products, and continued progress from the company’s cost structure optimization driven by the new CFO. With PLD’s good market position and Altera’s solid product lineup leading to accelerating design wins Altera is in a great position over the next several years.

Financial Numbers

  • Revenue = $336.1M up 10%, up 4% Q/Q
  • Net Income = $83.9M vs. $65.5 Q/Q
  • EPS = $.27 vs. $.20 Q/Q
  • Cash Flow from Operating Activities = $149.7M

Financial Highlights

  • Book to Bill > 1
  • Repurchased = 15.5M shares for $275M, over past 15 mo’s repurchased $1.5B in stock, average price = $20.44
  • Increased dividend to $.05/ share, from $.04/share
  • Cash = $995M / LT Debt = $350M
  • CapEx = $3.7M
  • TTM ROE = 26%
  • Inventory (Month’s Supply on Hand): Altera = 1.8, Distribution = 1.2

Operational Highlights

  • Altera’s Stratix® III FPGAs awarded International Engineering Consortium’s (IEC) DesignVision Award in semiconductor & IC category for high performance and low power high-end FPGAs
  • Arria™ GX transceiver-based FPGA family received
    • Annual “Product of the Year” award for best value high-performance FPGA from EN-Genius Network
    • Named to EDN magazine’s “Hot 100 Products” list in digital and programmable ICs category
  • Zero-power MAX® IIZ CPLDs received
    • 2008 Editor’s Choice Award by Portable Design magazine in programmable logic category
    • Product of the Year Award from Electronic Products China

Guidance Q2 2008

  • Sequential Sales Growth = 1 – 4%
  • Gross Margin = 65% (+/- .5%)
  • R&D = $65 – 67M, SG&A = $63 – 65M, Other Income = $3M, Tax Rate = 16 – 17%
  • Diluted Share Count = 305 – 310M

April 14, 2008

Using VS 2005 for classic ASP 3.0 Projects

Filed under: Web Platform — Tags: , — semanticzen @ 5:29 am

I was organizing some of my notes and papers today (a laborious task) and came across this document I created a couple years ago. At the time we had recently hired several junior developers and also ran into some serious FrontPage extension issues on our web development testing server.

If you don’t know about FrontPage server extension you are better off. Basically the geniuses at Microsoft thought FTP wasn’t good enough for them so they invented something that wasn’t nearly as good. The developers who maintained classic ASP applications (we are mostly a .Net shop, but off course still have several applications on ASP 3.0) used FrontPage server extensions to connect Virtual Interdev to IIS.

After spending some time troubleshooting the issue I asked the obvious question of why where people still programming this way. I created this step by step guide to help people migrate from Visual Interdev (part of Visual Studio 6.0) to Visual Studio 2005. It is targeted at very junior developers and classic ASP programmers who aren’t familiar with IIS or AD. I haven’t seen anything on the internet that walks the user through this step by step so maybe someone will find this helpful.

Step 1: Install IIS

  • Install IIS
  • Setup ASP.net
    • Run from command prompt: C:\WINDOWS\Microsoft.NET\Framework\v2.0.50727\aspnet_regiis –ir
    • For information purposes here is info on aspnet_regiis
  • Re-boot machine
  • If you are running IIS 6.0, In the IIS Manager, go to the “Web Service Extensions” folder (in the left pane menu under your local computer)
    • Enable
      • Active Server Pages
      • ASP.Net v1.1.4322
      • ASP.Net v2.0.50727
      • Server Side Includes
  • Setup helpful error messages in IIS. This will allow you to see the actual programming error and stack trace when a page throws an error. You can find the instructions to do this here.

Step 2: Setup a Virtual Directory

  • Create a windows directory under C:\Inetpub\wwwroot, I created
  • Open up IIS Manager (can be found in Administrator Tools)
  1. Click on your machines name
  2. Click on the Web Sites folder
  3. Right-click on the Default Web Site
  4. Select New à Virtual Directory
    1. You’ll see the Virtual Directory Creation Wizard, click Next
    2. Create an Alias, click Next
    3. Browse to the windows directory you just created, click Next
    4. Make sure the Read and Run Scripts boxes are both checked, click Next
    5. Click Finish
  5. You will want to setup windows authentication for this virtual directory if your application authenticates the users against Active Directory

Step 3: Create ASP 3.0 File Template in Visual Studio 2005

Step 4: Setup ASP 3.0 Solution in Visual Studio 2005

  • Open up VS 2005
  • From the Menu bar go to: File –> Open Website
    • If you do not see this option
      • Make sure you can use the Visual Source Safe (VSS) explorer to open the development VSS server
      • In VS 2005, go to: Tools à Options (make sure the checkbox Show all settings is checked) à Source Control and select Visual Source Safe from the drop down box
  • In the Open Website Wizard
    • Choose “Source Control”
    • Select the VSS directory where the project resides
    • Select the virtual directory on your local machine that you setup in step 2

Step 5: Setup Application’s Active Directory Groups on Your Machine

  • It first might help to take a look at the Active Directory groups for your application. To view the Active Directory group structure (this is not necessary)
  1. go to: Administrator Tools, choose Active Directory Users and Computers
  2. in the left hand menu pane right click on Active Directory Users and Computers and click connect to domain
  3. in the popup type “{domain name}” and click Ok
  4. in the left hand menu pane expand the menus
  • If you do not see “Active Directory Users and Computers” in Administrator Tools you may want to install the Active Directory Admin Pack. (again this is not necessary)
  • Add the Active Directory groups your application uses to your local machine
    • You can do this by adding them manually (you’ll have to log off and log onto your machine afterwards)

Step 6: Setup Common Components used by ASP 3.0 Applications

  • Install other components your application may use.
    • You may find it helpful to search for “CreateObject” in your application

Your application might be trying to use a version of the MSXML object that is not on your machine. You can download this object from the Microsoft website here. Before installing this object you may want to verify that it is the same version as the one your application is trying to use.

April 1, 2008

Toll Systems – Current & Future State

Filed under: Technology, Wireless — Tags: , — semanticzen @ 12:25 am

Mark IV Industries provides most of thetags and readers for the US weigh and toll stations including PrePass, NORPASS, and E-ZPass which use the CVSN protocol.  These tags operate in the 915MHz frequency using a proprietary air interface. In the Southeast, several toll agencies use TransCore’s RFID equipment. The USDOT is trying to eventually migrate all local state toll systems to a new international IEEE standard called 802.11p. 

tags and readers for the US weigh and toll stations including PrePass, NORPASS, and E-ZPass which use the CVSN protocol.  These tags operate in the 915MHz frequency using a proprietary air interface. In the Southeast, several toll agencies use TransCore’s RFID equipment. The USDOT is trying to eventually migrate all local state toll systems to a new international IEEE standard called 802.11p.  a single system to bypass weigh stations and roll through toll collection booths using E-ZPass, Fast Lane (in California), Pikepass (in Oklahoma), and SunPass (in Florida).

 The 802.11p standard is not expected to be ratified until April 2009 and will use the 5.9GHz frequency.  Mark IV, Genzo, TransCore, and others are prototyping compatible 802.11p products, but it is expected that the 802.11p infrastructure will not be deployed until at least 2012.

Currently National Freight Inc. (NFI) hasa single system to bypass weigh stations and roll through toll collection booths using E-ZPass, Fast Lane (in California), Pikepass (in Oklahoma), and SunPass (in Florida).

 

Currently there would be a lot of value opening these toll systems to commercial transportations companies to help them track their intermodal cargo.

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