1 / 70

General Body Meeting 10/6/10

General Body Meeting 10/6/10. Agenda. Announcements Headlines Tech Sector Conviction List Telefonica Pitch. Goldman Sachs Junior Board. October 20 th 10:30AM Location TBD. Buying shares. You are dropped as a junior analyst after today if you still have not invested. iGo Inc. Headline.

schuyler
Télécharger la présentation

General Body Meeting 10/6/10

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. General Body Meeting 10/6/10

  2. Agenda • Announcements • Headlines • Tech Sector Conviction List • Telefonica Pitch

  3. Goldman Sachs Junior Board • October 20th 10:30AM • Location TBD

  4. Buying shares • You are dropped as a junior analyst after today if you still have not invested

  5. iGo Inc. Headline

  6. iGo Update • iGo awarded Cisco Flip Video accesories • Flip Ultra has 13% camcorder market • Awarded new patents in September • Using primary side circuit • Individual outlet shut offs • Dual-USB charger • Earnings out 10/22

  7. Macro Headlines

  8. European Worries • Moody lowered Spain’s credit rating • AAA---Aa1 • Growth expected to lag (1% for several years and 20% unemployment) • Gov’t proposed 7.9% budget cuts and increased taxes • Ireland expected be downgraded again in Jan • Credible cuts vs decreased tax revenue • Anglo Irish Bank Bailout-$46B (total $68B)

  9. Japan • Central bank of Japan push rates to 0% • Bought $60B risky assets (corporate bonds, REITS) • Attempt to battle a strong Yen • Keep at virtually 0% until ends deflationary pressures • Expect Fed to engage in quantitate easing • Estimated in the area of $1 trillion

  10. Energy Headlines

  11. Hydraulic Fracturing • “Fracking” – the process in which natural gas is extracted by means of pressure-drilling a mix of water, sand, and chemicals more than a mile vertically and horizontally into the earth (99.5% sand and water, .5% chemical) • Currently used in more than 90% of 450,000 natural gas wells without any incident • Fracking is exempt from the Safe Drinking Water Act, which means it is currently not federally regulated • Debate: Does fracking end up polluting water, thereby harming plants, animals, and humans, during the release of chemicals? • EPA (Environmental Protection Agency) is doing a study to be completed in 2012 that will study the health and environmental effects of fracking

  12. What This Means for Energy • It is estimated that 60-80% of new wells need fracking to remain viable • Ban on fracking will mean less reserves and higher natural gas prices • Possible step forward for other cleaner and greener technology (wind, solar) • However, because the report will come out in 2012, this will most likely not affect the companies that we currently invest in (something for current freshman and sophomores to look into )

  13. BP New Executive, New Outlook • New CEO Robert Dudley • Reorganization of firm’s exploration and production business into three divisions – exploration, development, and production • Improved Safety Standards – New Safety Division headed by Mark Bly with additional powers to oversee and audit the company’s operations; internal police force • Remains to be seen if the safety procedures will be implemented

  14. Technology Sector Conviction List

  15. BSQUARE (BSQR) Zach Peskin

  16. BSQUARE - Overview • Expertise in embedded systems • Products: • TestQuest Pro: a test automation tool • SDIO Hx: integration of peripherals with smart devices • Expertise with hardware and software • Major project: Ford’s Synch

  17. BSQUARE - Financials • Market Cap: $33.5 Million • Revenue: $75.5 Million • Gross Profit: $13.5 Million • Quarterly earnings growth: 1,041.7% • Cash per Share: $1.51 • Zero Debt

  18. BSQUARE – Catalyst • Ford (or other automobile maker) could acquire BSQR • BSQR finds another large customer

  19. Verizon (VZ) Josh Lyons

  20. Verizon Communications (VZ) • US-based communications services provider • Broadband, wireless, and wireline services • Over 91.2 million business, government, mass market, and wholesale customers • Wireless voice, data services and other value-added services, voice, internet access, broadband video and data, next generation Internet Protocol (IP) network services, network access, long distance and other services • Price at 10/5/2010, $33.57 (52wk range: 25.99-34.13)

  21. Verizon Communications (VZ)

  22. Investment Themes • Net Neutrality: power to the carriers • Joint Google + Verizon proposal • Mobile ISP internet to not be covered by guaranteed neutrality • Carriers able to discriminate on what content goes over their network • Potential to charge premium fees for access to premium online services • Tremendous power for cellular carriers to exploit high value users • Verizon, AT&T, etc, to no longer be a ‘dumb pipe’ • Significant new revenue stream, the effect of which will be compounded by the continuing rise of mobile internet • Verizon to win the 4G war • First rollout of LTE • SIM-based technology • Largest, most stable network • Highest smartphone data rates • End of unlimited data • Rise of Android, CDMA iPhone • Android growth • Exclusive devices, Droid Series • Verizon iPhone in field test stages • Forecasted: January 2011 • Projected 12m annual sales

  23. Telefonica S.A. (NYSE: TEF) Samantha Dong Alex Friedman ShashankSamala Ali Yazdi John Yoshida

  24. LatAm Telecom Market

  25. Telecom in Mexico • GDP: $1.09 trilliun; Population: 112 million • Mobile Penetration rate: 43% • Currently monopoly economy • Fixed line: 94% by Telmex (AMX) • Mobile: 80% by Telcel (AMX) • Growing competition from 3G spectrum auctions • Nextel got government wireless license

  26. Telecom in Brazil • GDP: US$ 1.58 Trillion; Population: 192 million • Mobile Penetration rate: 90.55%

  27. More Opp. in Brazil Market

  28. Brazil – Market Trend • Mature local fixed voice • Lower traffic per terminal (FMS in traffic) • Continued expansion in mobile market • Strong competition • Strong market evolution: pre-paid (naked SIM card) market • Broadband growth accelerating • Competition in areas that concentrate high-end clients • 3G changing dynamics of industry

  29. Fixed lines Vs. Mobile

  30. Why Not AMX?

  31. AMX Overview • Leading telecom provider • Biggest in Mexico, second in Brazil • Wireless, Fixed line, broadband, etc. • Pitched Sep 2008 • Strong presence in Latin America. • Looking for a long term investment: 1-2 years • Price Target at end of 1 year: $60 (22.4% gain)

  32. Performance • 12% return after 2 years $ 54.29 $ 48.61

  33. Breakdown 1 As of June 2010

  34. Recent News – Integrated Service • Fixed line in Mexico: Telmex • Fixed line in Brazil: TelmexInternacional (Embratel), NETC

  35. Brazil • Wireless: Claro • 26% market share, 46.9 million wireless subscribers • Embratel (TII) – Claro (AMX) Merger • Represent 85% of total synergies: cost reduction • Synergies are offset by premium paid • Decreased Revenue forecasts by elimination of intercompany transaction

  36. What We Don’t Like • Focus on less attractive markets • Mexican Market • Growing competition potential hurts AMX • Fixed Line Market • Weaker presence in Brazil wireless market • Stock Valuation

  37. Why TEF?

  38. Company Overview • One of the world’s largest telecommunications companies by market cap. (115.66B) • Activities include fixed and mobile telephony businesses, while its broadband business is the key growth driver underpinning both. • Growth strategy is focused on the markets in which it has a strong foothold: Spain, Europe and Latin America

  39. Market Size Globally

  40. Latin American Market Telefonica Latin America • Fixed telephony accesses = 24,514.90 • Internet and data accesses = 7,911.50 • Mobile accesses = 141,822.20 • Pay TV = 1,735.40 • Total accesses = 176,102.80 Top Latin American Countries (% of total accesses) • Brazil – 71,353.90 (40.54%) • Argentina – 22,396.90 (12.72%) • Mexico – 18,687.50 (10.61%)

  41. European Market Telefonica Europe • Fixed telephony accesses = 3,563.7 • Internet and data accesses = 4,382.4 • Mobile accesses = 45,217.00 • Pay TV = 194.10 • Total accesses = 54,541.60 Top Telefonica Europe Countries (% of total accesses) • UK – 22,255.6 (40.80%) • Germany – 22,006.90 (40.35%) • Czech Republic – 7,672.00 (14.07%)

  42. Spain Market Telefonica Spain • Fixed telephony accesses = 13,663.90 • Internet and data accesses = 5,823.0 • Mobile accesses = 23,879,10 • Pay TV = 747.80 • Total accesses = 47,117.90

  43. Total Accesses by Market * Total Accesses in Thousands

  44. Brazil’s Operations in 2009

  45. Telefonica/Vivo Deal • Jul 28 – Bought Portugal Telecom’s 60% stake in Vivo, Brazil’s largest wireless company, for EUR 7.5B, adding to its’ 40% stake before the deal • Strengthened position in the booming Brazilian market EPS and FCF accretive from 2010: +€3.5bn impact in net income in 2010 derived from the business combination achieved in stages in Vivo • €2.3/2.7bn1 from operating synergies and benefits from Telefónica’s management model • Additional €1/1.5bn1 savings from financial and tax synergies (so total of about 4bn saved due to synergies) • Limited Impact on leverage (0.3x)

  46. Telefonica/Vivo Revenues • First half of 2010: Brazil TEF Revenues – 4.877B EUR, of which 1.825B EUR from Vivo and the rest from Telesp. • Second half of 2010 est. - From the acquisition and assuming 5% growth, expected second half revenues – 7.67B EUR, of which 4.62 B EUR from Vivo.

  47. Brazil Market Cont.

  48. Some stats on Vivo • Vivo reported 56.0 million accesses at the end of June 2010, increasing its customer base by 19.6% year-on-year. • First-half wireless data revenue increased 70.2% year-on-year, 81.5% in the second quarter. Data revenues now account for 17.4% of service revenues (+6.3 percentage points year-on-year)

  49. EWZ Vs. TEF Vivo Acquisition

  50. Financials and Valuation

More Related