3/22/2010 TONIGHT'S AGENDA

3/22/2010

TONIGHT'S AGENDA

Portfolio Update Sell Research in Motion Today in Tech Elevator Pitches

PORTFOLIO UPDATEAnthony Vitiello

RECENT TRANSACTIONS

Sell 300 Shares of IBKR @ $16.30 on 3/16/2010 Sell 100 Shares of ADP @ 44.45 on 3/16/2010

ALL-STARS

3.81%

3.05%

2.04%

2.10%

1.68%

DOGS

5.75%

3.83%

3.03%

1.29%

2.31%

LARGEST HOLDINGS

Winn Dixie Stores:5.40%

Research in Motion5.12%

USG Corporation:4.89%

jetBlue Corporation:4.86%

Waters Corporation:4.56%

RESEARCH IN MOTION (RIMM)

WHO ARE THEY?

Research in Motion (RIMM) is Blackberry Hardware- Blackberry Phones Software- Operating system, Browsers etc. Service- EDGE network

STRENGTHS Dominant player in the “smart phone”

sector at about 40%Smart phones are gaining market share in

the Cell Phone market

No encroachment on core market - BusinessRoom to grow

Majority of Sales are US/Canada

WEAKNESSES

Recent trends have shown iphone higher growth ratesBlackBerry Storm is closest competitor but

not as Dynamic

< 1% Market Share in Asia

Less dynamic interface

Margin strength lossesPotential for margin compression

WHY SELL RIMM?

Primary Impetus: 20% gains Purchase price $61 Sell Price 73.50

(Guarantee a strong return and put the capital to use on a less precarious position)

Vulnerability to tech sector volatility Rapid product replacement tempo Unpredictability of competition Physical Capital exposure ( vs. intellectual)

TODAY IN TECHMichael Polark

AGENDA

Tech Trek The Cloud Social Media Mobile Revolution Elevator Pitches

3 Slides, 3 Minutes

TECH TREK

2nd semester course ending with spring break field study in Silicon Valley Professor Gallaugher How does a firm go from start-up to blue chip?

Built through BC alum network Highly recommended, fall application

deadline

FIRMS VISITED

• Intuit• Digg• Salesforce.com• GigaOm/True Ventures• Socialtext• Jay Hoag/Technology

Crossover Ventures• Hewlett-Packard• eBay• Apple

• WePay.com• Smule• Google• Facebook• Tallwood Venture

Capital• Equinix• Electronic Arts• Intel• Yahoo!• Sequoia Capital

THE CLOUD Old Software Model

Updates Periodically; Hosted on own ServersLarge Infrastructure Build outNot Broken, Few Big Players

Oracle, SAP, New Software Model

Applications exist ‘in the cloud’ Software as a Service (SaaS)

Startup Costs Virtually Zero—Multi-TenancyContinuous RedesignAdoption Accelerated by RecessionSalesforce.comGreen?

SOCIAL MEDIA

• Facebook, LinkedIn, Twitter• Value in Network

– Monetization of User Base Difficult• Advertising Model Sustainable?

– Search vs. Social• Social Gaming

– Zynga (Hottest Potential IPO After Facebook)• Playfish Purchased by Electronic Arts

– Facebook: Cash Flow Positive?

MOBILE REVOLUTION

Smaller Devices, Smaller Chips Faster, More Energy Efficient

Smartphone Platforms Spur Development App Economy; OS X vs Android $17.5 billion industry in two years ($5bln –CNBC)

Location Based Marketing Search Alliances

Will Apple Partner with Bing to Block Google?

A FEW MORE TO MENTION…

Infrastructure Buildout How will all this data travel and connect?

PC Cycle (~4 years) Tracks new releases of Windows Recent momentum behind semiconductors

(INTC) Big Data?

How will new influx of data be managed/stored? Netbooks, Tablets, iPad

EQUINIX, INC. (EQIX)

Connecting the World’s Information

Andrew Moore

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Network-Neutral Colocation Network-Neutral Colocation ProviderProviderColocation

• Multiple companies’ servers in the same data center• Interconnection (interaction) among clients• Scalability and performance benefits• Efficiency and cost improvements

Network Neutral• Access to several network service providers• Unhindered, competitive bandwidth pricing• Facilitates Peering, a synergistic networking benefit

Overall Purpose• Connect providers and users of the internet in

efficient ways that save time and money while increasing performance and providing a uniform hardware platform for data management

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Revenue and Margin Growth 2004-Revenue and Margin Growth 2004-20092009

Acquisition of Switch & DataAcquisition of Switch & DataKey Facts•October 21, 2009 – Acquisition announced

• $689 million for 80% EQIX stock and 20% cash•Expected to close in Q2, 2010•6 U.S. markets 16 U.S. markets (inc. Top 10)⇒

Noteworthy Benefits•Avert creation of a global competitor•Provide natural growth while opening doorways to Cloud Computing and SaaS markets•Additional capacity for currently strained IBX centers (New Jersey, Silicon Valley, and Dallas)•Expansion to secondary U.S. markets including Atlanta, Denver, Miami, Seattle, and Toronto

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ELEVATOR PITCHMichael Polark

A TURNAROUND STORY

Will Not Take Down Google New Management + Renewed Focus on Core

Competencies = Continued Margin Expansion

Bing Partnership 10 years $650 Million in Cost Savings Back End (Crawl) Outsourced Focus on Search Experience

2005 2006 2007 2008 2009

21.1% 14.6% 10.0% 0.2% 6.0%

Google

Yahoo!

Microsoft

65.7% 17.3% 10.7%

VALUE February 2008 Unsolicited Offer by MSFT to buy

YHOO for $44.6 Billion Rejected Current Market Cap of $23 Billion

Strong Balance Sheet Supported with $3.2 Billion in Cash and No Long Term Debt

Research & Development 2005: 10.4%; 2009: 18.7%

Trades at 1.8x Book Value Google Trades at 5x Book 3.5x Gives Us a $40+ Billion Valuation

ADVERTISING IN THE US…

…Is a $550 Billion a Year Business Internet has 30% of Viewership But just 10% of the Revenue Move to Mobile still Unsolved

Yahoo is #1 in Display Advertising New Management Led by Carol Bartz

New Regime = Operators Focused on Execution 41 year old CFO Tim Morse (BC ‘91)

Old Regime= Creatives and Engineers

ELEVATOR PITCHAnthony Vitiello

CONSTANT CONTACT: BACKGROUND

CTCT is an diversified email marketing services provider

Helps companies outsource mass emails Direct Marketing, Surveys, New Updates

Key Numbers: Market Cap:$658.2MM Gross Margins 71%; Recent EPS $0.00 to $0.05 35% Top line growth forecasted for : Combination

Volume + ARPU growth

CONSTANT CONTACT: THESIS

Economics work for CTCT and customer Cheap direct marketing; ancillary revenue drives

ARPU growth Huge untapped Market for email marketing

2% of email marketing is outsourced; CTCT size “Noise” reduction in company earnings

Higher S&M spend, VC unwinding holding

CONSTANT CONTACT: THESIS

Massive short ratio: 67.9% float currently short 25> to cover, considerable short squeeze

potential Recurring Revenue stream = stable annuity

biz Managing churn rates down going forward

Highly scalable model—adds at no marginal cost Operating leverage as economy turns

ELEVATOR PITCHMario Morales

What they do:

• CDMA chips. Superior frequency utilization on wireless cellular products.

•Wireless Networks

• Smart-phone interface, small electronics software

•Snapdragon

•Licensing Partnerships (about 33% of Revenue)

•Motorola, Nokia, Panasonic, Samsung, Sony

•Royalties from smart-phone sales worldwide

QUALCOMM (QCOM)

BUSINESS OVERVIEW Share Price $40.47

21% oper. Margin Historically around 30%

19B in cash (roughly $12/share)

3 times book 30x earnings

D/E 1:3

• 68% of CDMA chip market

•70% of the chipset revenue came from cellular baseband market

•$3b buybacks, company sees its own stock as cheap

• 2009 drop in earnings

•Margin compressions (one time costs, other costs constant)

POTENTIAL PROBLEMS Samsung and Nokia have begun to enter

contracts with other CMDA suppliers to limit exposure

Average Price per device is declining (Potential for Margin Compression)

Growth in iphone and therefore infineion (iphone chip supplier)

Revenue dependency on cellular device

ELEVATOR PITCHWilliam Berkery

ELEVATOR PITCH: QUALITY SYSTEMS INC. (QSII)

Designs and markets healthcare information systems to Dental and Medical practices

Under subsidiary NextGen the company provides electronic medical records software

Provides exposure to both tech and healthcare sector with a stable company in a growing industry

AT A GLANCE

Market Cap: 1.75 Bn, 1,250 employees

P/E: 37.6 No debt 28.79% ROE All medical records

computerized by 2014

FAST GROWING INDUSTRY Only 8% of hospitals, 17% of

doctors now use electronic medical records

Concern over valuation: 10x book? P/E of 37.6? However industry P/E is 62, closest competitor MDRX at 54 times earnings

Little evidence to support cost savings Obama claims, but QSII stock has excellent potential

ANNOUNCEMENTS & HOUSEKEEPING

Market Game– Keep Trading!!! Tee Shirt Ideas– Email

vitiella@bc.edu