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Semelhante a Nyssa 2010 presentation
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Nyssa 2010 presentation
- 1. Bitstream Inc. (NASDAQ:BITS) Feb 5, 2010
- 2. Agenda Executive Summary Company Overview Investment Thesis Valuation Methodology Investment Risks Q&A Bitstream – “CLEAR Fonts, BLURRY Future.”
- 3. Recommendation: SELL 12-month price target: $5.18 (40% downside) 1) Core business erosion over next 3-5 years 2) New Mobile Browsing Venture is likely to disappoint 3) Sky high multiples are headed for a fall Bitstream: Clear Fonts, Blurry Future… Bitstream – “CLEAR Fonts, BLURRY Future.”
- 4. Agenda Executive Summary Company Overview Investment Thesis Valuation Methodology Investment Risks Q&A Bitstream – “CLEAR Fonts, BLURRY Future.”
- 5. Company Overview: BITS and pieces Bitstream – “CLEAR Fonts, BLURRY Future.” Source: Company Documents and Student Analysis.
- 6. Agenda Executive Summary Company Overview Investment Thesis Valuation Methodology Investment Risks Q&A Bitstream – “CLEAR Fonts, BLURRY Future.”
- 7. Investment Thesis: I. Core businesses losing market share Products lack competitiveness Customers moving toward proprietary products Absence of pricing power Bitstream – “CLEAR Fonts, BLURRY Future.”
- 8. Investment Thesis: II. Mobile browser likely to disappoint Late entrant into an over- crowded market Small and inactive user base On the losing end of a technology arms race 42 M 450 3 M 27 Opera BITS Monthly pageviews per download Number of Downloads Bitstream – “CLEAR Fonts, BLURRY Future.” Source: Company Documents and Student Analysis.
- 9. Projected Revenue Mix 0% 10% 20% 30% 40% 50% FY 09E FY 10E FY 11E FY 12E FY 13E FY 14E FONT TECH FONTS PUBLISHING TECH MOBILE TECH Bitstream – “CLEAR Fonts, BLURRY Future.” Investment Thesis: Source: Company Documents and Student Analysis.
- 10. -150% -100% -50% 0% 50% 100% FY 09E FY 10E FY 11E FY 12E FY 13E FY 14E FONT TECH FONTS PUBLISHING TECH MOBILE TECH Projected Operating Income Mix Bitstream – “CLEAR Fonts, BLURRY Future.” Investment Thesis: Source: Company Documents and Student Analysis.
- 11. III. High price due for a fall • Stock up over 50% in ~ 90 days since launch of mobile browser • EBITDA Multiple Skyrocketed from 13.5x to 22.0x • Yet fundamentals remain unchanged $4 $5 $6 $7 $8 $9 J-09 A-09 J-09 O-09 J-10 BITS Price New Mobile Browser launch 22.0x 13.5x Bitstream – “CLEAR Fonts, BLURRY Future.” Investment Thesis: Source: Company Documents and Student Analysis.
- 12. Agenda Executive Summary Company Overview Investment Thesis Valuation Methodology Investment Risks Q&A Bitstream – “CLEAR Fonts, BLURRY Future.”
- 13. 2005A 2006A 2007A 2008A 2009E 2010E 2011E EV/EBITDA BITS Peer Average BITS is trading at a premium to peers Source: Company Documents and Student Analysis. Bitstream – “CLEAR Fonts, BLURRY Future.” Valuation: Market Approach
- 14. -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 12% 14% 2008A 2009E 2010E 2011E YOY Revenue Growth BITS PeerAverage BITS is trailing in Revenue Growth Valuation: Market Approach Source: Company Documents and Student Analysis. Bitstream – “CLEAR Fonts, BLURRY Future.”
- 15. 2008A 2009E 2010E 2011E EBITDA Margin BITS Peer Average EBITDA Margins below Peer Average Bitstream – “CLEAR Fonts, BLURRY Future.” Source: Company Documents and Student Analysis. Valuation: Market Approach
- 16. Discounted Cash Flow Valuation forBitstream Dollars in thousands, except per share FY 09E FY 10E FY 11E FY 12E FY 13E FY 14E Free Cash Flow to the Firm 1,257$ 2,021$ 2,054$ 2,020$ 2,267$ 2,431$ WACC @ 10 .53% 0.905 0.819 0.741 0.670 PerpetuityGrowth 4.5% Terminal Value @ FY 14E 42,116 Enterprise Value 35,036 Less: Long-Term Debt 0 Add: Non-Operating Assets 17,431 Equity Value 52,467 DCF Value Per Share $5.12 Projected Fiscal Years Bitstream – “CLEAR Fonts, BLURRY Future.” Source: Company Documents and Student Analysis. Valuation: Discounted Cash Flow
- 17. Valuation Summary Bitstream – “CLEAR Fonts, BLURRY Future.” Source: Company Documents and Student Analysis.
- 18. Agenda Presentation Summary Company Overview Investment Thesis Valuation Methodology Investment Risks Q&A Bitstream – “CLEAR Fonts, BLURRY Future.”
- 19. Risks to our recommendation External factors: • Faster than expected economic recovery • Weaker dollar • Market inefficiency • Takeover risk Internal factors: • Improved operation efficiency • Signing new large contracts • Technology innovation • Stock buy back or dividends Bitstream – “CLEAR Fonts, BLURRY Future.”
- 20. Agenda Presentation Summary Company Overview Investment Thesis Valuation Methodology Investment Risks Q&A Bitstream – “CLEAR Fonts, BLURRY Future.”