“Ember on track to ship 10 million chips in 2010″
September 8th, 2010
It is always a treat to read good things about a portfolio company. Now that we have a busy U.S. business, one can no longer confine the morning reading to the domestic print and electronic media.
According to Mass High Tech, Wellington Financial Fund III portfolio co. Boston-based Ember is going to ship 10 million chips this year, having just announced earlier in 2010 that it had produced its 10 millionth chip (see prior post “Ember sells 10 millionth chip” May 4-10) in aggregate since the company’s founding in 2001 — that’s quite the ramp.
Ember produces ZigBee chips, which are used in smart meters, home automation and security systems. These low power devices communicate data wirelessly, perhaps running the network that will make the smart gird work in your house.
You can find ZigBee chips in your power meter, smart thermostat (Toronto’s ecobee) and RF controlled home theater system (Control 4).
Here’s the excerpt from Mass High Tech:
Meanwhile, Boston-based Ember is leading the small but growing ZigBee chip industry. ZigBee is considered the leading technology for the wireless communications behind smart meters and other “smart home” devices. The technologies monitor energy use in buildings with an aim of reducing consumption and cost.
In May, Ember announced that it had shipped 10 million ZigBee chips since its founding in 2001 – the first company to achieve the milestone. Yet the pace is picking up fast; Ember is on track to ship 10 million chips in 2010 alone, said Robert LeFort, the company’s CEO.
Ember’s revenue is on track to grow by more than 300 percent this year from 2009, with the company now seeing revenue of $9 million to $10 million per quarter, LeFort said. Ember achieved profitability in the first quarter of this year, and has grown its staff to 50 from 40 over the last several months, he said.
Ember’s existing VC investors include: DFJ, Grandbanks Capital, New Atlantic Ventures, Polaris Venture Partners, RRE and Vulcan.
Congrats to the Ember team on the fabulous momentum.
MRM
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Funding opportunity for semiconductors, displays, and solar PV startups
September 7th, 2010
Looking to raise capital? This comes from our allies over at Canada’s Venture Capital & Private Equity Association:
Invitation for Funding Submissions – two days left!
The Canadian Consulate in San Francisco/Silicon Valley, in partnership with the Canadian Venture Capital Association, CVCA, wants to bring an opportunity to your attention. We have been working with Applied Ventures LLC, the venture capital arm of Applied Materials, Inc., which has expressed interest in receiving information from early-stage Canadian companies in the technology sectors described below.
Applied Ventures invests in or partners with early-stage technology companies which promise to deliver high growth and exceptional returns with technologies that can advance or complement Applied Materials’ areas of core expertise. Its objective is to help to develop technologies and markets which stimulate the growth of applications for semiconductors, displays, solar PV, and related products and services. Applied Materials is the global leader in nanomanufacturing technology solutions for the electronics industry with a broad portfolio of innovative equipment, service, and software products.
Applied Ventures is accepting submissions from Canadian VC portfolio companies which would benefit from strategic association with Applied Materials. All submissions should fit the technology sectors described below and should be by way of a 2-page profile document which provides basic company information along with a clearly defined value proposition for the technologies and business models involved. Submissions should not contain any confidential or proprietary information. Upon conclusion of the submission period, September 9, 2010, Applied Ventures will undertake a review process, and companies/VC’s will be advised accordingly.
Applied Ventures would like to receive submissions from companies in the following technology sectors:
1. Solar Technologies – Thin film PV, crystalline PV, wafering, metrology, materials, products and equipment in the solar value chain
2. Solid state lighting – LEDs, substrates, metrology, novel device designs, thermal management, light engines
3. Energy conservation technologies and software – Commercial-scale energy efficiency, smart buildings, smart materials, sensing, software controls and analytics
4. Novel memories – Next-generation data storage devices, novel materials, novel architectures
5. Lithography technologies – Advanced lithography solutions
6. Energy storage – Advanced batteries and energy storage systems
7. Displays – Next generation display technologies, front planes, back planes, equipment, materials
Please send all submissions to submissionsappliedventures@cvca.ca by close of business Thursday, September 9, 2010.
**Note: This communication is not an offer to buy any securities nor a solicitation of offers to sell any securities.**
MRM
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Dundee: RIM — Recession vs. Soft Landing
September 7th, 2010
The headline caught my eye, I must admit.
Although Canadian equity research analysts are maligned for not being sufficiently critical of our home-grown success story, Research In Motion (RIM:TSX, RIMM:Q), the following snapshot from Dundee Securities sees the forest for the trees. For as long as I can remember, RIM has traded based upon headlines. But that doesn’t mean primary research should be discounted for long term tech investors:
Share price reflecting a 45% cut in EPS
· Is RIM really trading at 7x earnings? The market doesn’t think so. Companies that are growing double digits, both top and bottom line, generally don’t trade at 7x earnings. Over the past 6 months, numerous reports have shown that RIM’s competitive position is deteriorating. iPhone and especially Android are gaining share while the BlackBerry’s base of loyal customers is being eroded. As such, we believe it is fair to say that the market does not believe forward earnings consensus.
· We believe the stock is reflecting a 45% cut to forward EPS. Using Nokia and Motorola as benchmarks, we believe that shares are currently reflecting a forward EPS of around $3.30 as opposed to current consensus of close to $6.00.
· Investors have punished RIM far more aggressively and far more quickly than we saw with either of Nokia or Motorola. As of August 31, RIM’s stock has dropped 50% relative to the NASDAQ from its recent peak in September 2009. What did Nokia and Motorola look like after their respective 50% share price declines?
· It took RIM 342 days to fall 50%. It took Nokia 772 days and Motorola 383 days. At the 50% retracement level, Nokia’s device revenues had fallen 27% and operating margins were down 11 percentage points. Motorola’s device revenues were down 36% and operating margins were down 18 percentage points. RIM’s device revenues are up 17% and operating margins are up 7 points.
· Yes, RIM is losing market share but investors selling the stock today are pricing in a collapse akin to Nokia/Motorola. Yet, RIM’s fundamentals are vastly superior to Nokia/Motorola’s at the time of their 50% retracement levels.
· Maintaining BUY rating. RIM’s competitive positioning has clearly weakened. Now the question is are we going to see a recession scenario akin to Nokia or Motorola or are we going to see a soft landing whereby RIM’s fundamentals do slow but not irreparably. We are in the soft landing camp for the following reasons: i) Torch sales have been disappointing but not disastrous. Torch should in fact cause AT&T’s BlackBerry shipments to grow 50%+ in the coming months; ii) Various OS 6 products, including Torch in other geographies, should help to offset the deterioration in the core business, iii) The Tablet remains a significant unknown variable. While it is too early to gauge success, we would be hard pressed to say that any upside whatsoever is being reflected in the shares, iv) well positioned in emerging markets like India, China, Latin America and others given the NOC infrastructure and prepaid capabilities.
· We rate RIM a BUY/High Risk with a US$65 target based on our DCF. The stock currently trades at 7.7x our FTM EPS forecast.
MRM
(disclosure – I own RIM)
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Some gentle advice for the Fall capital-raising season
September 3rd, 2010
The roads are busier, the weather has turned, a line-up has suddenly appeared at Jimmy The Greek’s for a morning Western sandwich. This can only mean one thing: the Fall business season is upon us.
We had a really good call yesterday regarding a new deal opportunity, and it struck me that there are some similarities to good first outings. The CEO and CFO of the would-be portfolio company were both on, and their experience in dealing with venture capital folks shone through. Herewith, are the few takeaways for everyone planning to raise capital this fall (not all of these lessons arose yesterday, btw):
- provide the financials and corporate overview in advance; you want people to have the chance to think about your business before you tell the story (see prior post “5 tools to make raising capital easier” Sept 3-08)
- ensure the forecast doesn’t project $1 billion of revenue four years out (do I have to mention this every time?)
- CEO does business and market overview, CFO does financial affairs, cap table, $ needs
- plan on 30-60 minutes for the intro call; no one has 90 minutes to hear a story for the first time, unless things are going so well that you’ve been asked 75 different questions
- don’t start off by asking about the fund’s background, who the limited partners are, etc.; that’ll either be relevant or it won’t be, but one has to assume that the call is happening ’cause the VC firm thinks their might be a fit “stage-wise”
- however, that doesn’t mean you shouldn’t ask about the fund’s process: that’s a polite angle to use to understand where you might stand, and how quickly the fund can move if it wanted to
- don’t belittle your current VCs, their funding situation, or commitment to the story (see prior post “Do’s and Don’ts of raising capital” Jan 14-08)
- propose a sensible timeline to the proposed capital raising process; fire drills suggest you’re either disorganized, there’s been a materially adverse event, or you’ve been turned down aplenty and have run out of time
- don’t start negotiating the deal terms
- keep track of which firms you’ve spoken to in the past: this can be handy 6-18 months later
The good news is that people are taking meetings and deals are closing. Customers are buying. Firms are growing. M&A is back on. VCs know this, and, from what we’ve seen, are ready to do business.
MRM
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Now about that payment reminder, Manulife
September 1st, 2010
It was inevitable. What to do about my insurance?
Each Fall, I get a series of polite notices from my insurers at Manulife, reminding me that my Family Term payments are due. Like any responsible, self-employed father with an admiration for George Bailey, I’m worth more dead than alive.
This payment cycle forces a moment of particular reflection. Not that I don’t need the insurance. But am I safe to stay with Manulife (MFC:TSX)? Just today, MFC shares rose 5.56% on the simple news that the Dow Jones closed handily above the 10,000 mark. It seems that momentum traders trade Manulife as though it is one of those double-leveraged ETFs that either climbs twice as fast, or drops twice as far, as the overall market.
Odd for a 120 year old insurance company, but that’s Manulife’s unfortunate lot these days.
According to its website, Manulife is “Strong”. Definitely something that I was counting on 9 years ago when I started to collect their policies. But is it? The stock quote tells me otherwise, but that’s old news of course.
Just last quarter, the net loss amounted to $2.4 billion. Mark-to-market accounting may have been the culprit there, and its not that we weren’t warned of this reality by former Manulife CEO Dominic D’Alessandro (see prior post “D’Alessandro: fair market value accounting is ‘perverse”” Sept 30-08). That $2.4 billion was a bit more than the $2 billion in new equity that CEO Donald A. Guloien recently added with the promise/justification that Manulife needed a “fortress” balance sheet.
Reminds me of how quickly Citibank eviscerated the capital they raised from ADIA in 2008.
Not that we needed to be reminded how quickly things can change, but boy, how quickly things can change. It was less that two years ago that Manulife was putting capital up to help keep long-standing quarry CIBC out of the ditch (see prior post “CIBC offering rumours prove true” Jan 14-08). And I was ruminating about how easy it would be for Dominic to swallow the bank whole, since Manulife was sporting a market cap. that was 3x CIBC’s in December 2007 (see prior post “Will Manulife come to CIBC’s rescue?” Dec 19-07). Today, CIBC’s market cap. is 30% higher than Manulife’s. Talk about missing the boat.
With $27.804 billion of shareholders’ equity as at June 30th, my stewards on Bloor Street can lose $2.4 billion for a few more quarters to come before things start to look bleak at Manulife. Mind you, if interest rates drop further, and the Dow has a hard time staying above 10,000, these quarterly $9.599 billion increases in actuarial liabilities could become regular appearances.
I can’t say I fully understand how this is all the new CEOs fault, however. He was, of course, CFO prior to his promotion. One of the reasons why I’ve always been a fan of Dominic’s (see prior post “Which public company CEO do you trust?” Sept 25-08) was that he seemed so closely associated with the daily cut and thrust of Manulife’s buisness. And now, I hear that that libelist TT has a story in the National Pest about how Dominic can’t believe how things have turned so badly, so quickly. Weren’t, one must ask, these invasive policies written some years ago? Liabilities that University Avenue-based actuaries might say could not have been laid off, and therefore weren’t appropriate for an insurance company to take on in the first place?
If things get worse for MFC, the window might just open for RBC CEO Gord Nixon. As much fun as he may be having doing a life insurance start-up, would he not rather start with a sales force of 45,000 in 22 countries? Absolutely.
I know that current federal law prohibits a merger of RBC and Manulife, but I doubt that Finance Minister Jim Flaherty would rather that AXA or Allianz buy it. Minister Flaherty undoubtedly appreciates that Manulife is two or three bad quarters away from needing to do something big. Right?!?
And if you know anything about Canadian bank CEOs, they don’t buy distressed assets of any chunky size. Finance Dept.’s public servants certainly can’t expect RBC to wait ’till Manulife is on its heels before they make their move. RBC’s shareholders wouldn’t go for it at that point. Ironically, it is only a stable Manulife that is a viable merger partner for a made-in-Canada solution.
Which brings me back to my payment reminder. I’m cutting the cheque tomorrow on the basis that, either way, things will be fine. I hope and expect Manulife’s deep management team to work things out for the comfort of their customers and shareholders. And, if market forces make that increasingly impossible, I’m fully expecting Minister Flaherty to recommend to the PM that the “Seven Independent Pillars” strategy will have to be amended in the blink of an eye.
Let’s not repeat the Confederation Life debacle.
MRM
(disclosure – we own RY in our household; this post – like all blogs – is an Opinion piece)
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