One Familys Blog: 11/07

Top 10 Large Caps In Our Radar

Stock	Market Cap	Price	Yield	Profile	Pros	Cons
Costco (COST)	29.26B	67.40	0.86	One of the largest membership based consumer shopping center. Trading only slightly below the peak of $70.	Strong Balance Sheet. Relative affluence of Costco shoppers. A third of the stores are in California and so there is opportunity for store growth across US and internationally.	Housing collapse could have a negative impact down the line.
Conoco Philips (COP)	128B	80.04	2.05	Big integrated oil major. Trading at about 15% below the peak of $90.	Proven reserves of 35B barrels. Burlington Resources acquisition should help it maintain 10% oil production growth. Trades at a revenue multiple of well below 1 – profit margin may be less compared to other oil majors. COP’s 12 US refineries are being upgraded. It is being preferred over other oil majors by a lot of Guru portfolios. This is one of Buffet’s relatively new holding.	All oil companies are vulnerable to recession. Profit margins have been historically low compared to other oil majors and may remain so.
American Express (AXP)	68.97B	58.98	1.22	Large credit card issuer popular at best as a business expense card in corporate America. Trading at about 18% below the peak of $66.	This should work well as a core defensive holding. Clientèle tend to be affluent with a spending mindset. It is one of Buffet’s big (18% of issued shares) long-term bets.	The stock may see a little more downside as housing problems continue and credit card delinquencies keep rising. Slowdown in consumer spending is a big risk for all credit card companies and American Express is not immune to such a situation.
WellPoint Inc. (WLP)	48.11B	84.21	None	BlueCross/BlueShield licensee in several states. Also serving as Unicare and has a Medical insurance business. Prior to 2004, the company was known as Anthem. Trading slightly below the recent peak of 86.	Baby boomer retirement should provide growth for the foreseeable future. The political inclination of giving people tax breaks for health insurance should also fuel growth.	Health insurance premiums doubling every 7 years is a damper for future growth.
Home Depot (HD)	48.2B	28.56	3.15	World’s largest home improvement retailer. Housing woes have taken its toll on the stock.	The stock trades at an attractive PE of 12.93 comparable to its projected growth rate.	Extended downturn in housing is a big risk as growth is dependent on consumers buying and improving their property. The company has ambitious worldwide expansion plans and that has its associated risks.
Burlington Northern Santa Fe (BNI)	28.28B	83.52	1.53	One of the largest railroad companies in America.	Railroads may have a cost-advantage going forward given the rising gas prices for truckers who is their primary competition. Recently Buffet started accumulating this and now holds 18% of the company.	Downside risk if oil prices come down significantly.
Johnson Controls (JCI)	22.93B	38.62	1.35	Operates in building energy efficiency (heating, ventilation and air-conditioning – HVAC); automotive (instrument panels and consoles) and power solutions (battery OEM and after market).	Electric batteries and energy efficiency are growth areas. International expansion may become a growth opportunity eventually.	Automotive unit growth is hard to come by. Since that low margin business accounts for a large portion of the revenue, profit margins for the whole company is affected.
Harley Davidson (HOG)	11.60B	48.02	2.50	Produces heavyweight motorcycles, parts, accessories, clothing, and collectibles under the Harley Davidson and Buelle brand names. Additionally, it also has a financial services wing which provides wholesale financing to dealers and retail financing in the form of installment lending to new and used motorcycle owners. Trading well down from 76 after warnings about slowing sales volumes.	It is a proxy for investing on US consumer spending. International expansion is a nascent growth opportunity.	Significant sub-prime exposure in the Harley Davidson Financial Services (HDFS) business.
Moody’s (MCO)	9.73B	37.66	0.85	Debt rating, Issuer rating and certain other associated products. The stock is down from $70 amid concerns regarding conflict of interest. The issue at stake is the accuracy of ratings given to mortgage backed securities offerings in the wake of the sub prime meltdown.	The business is a monopoly overseen by Nationally Recognized Statistical Rating Organization (NRSRO). Resolutions on the conflict of interest issue gaining ground are favorable to the company: · Requiring underwriters of mortgage securities to use a third-party reviewer to ensure information on loans given to investors is accurate. Requiring workers at rating agencies to have a stipulated waiting period before they commence working at investment banks.	Senators questioned the business model as the debt issuers paying the rating agencies are like a film production company paying a critique to review the movie and then using the review in advertisements. The resolution should be to force the business model to be investor funded. NRSRO is also a source of the problem as Moody’s is not penalized for rating inaccuracy – a free market model that enforces accountability is the solution. It is unlikely that these changes will happen but the risk does exist.
The AES Corp. (AES)	14.62B	21.85	None	Globally diversified electric utility. Active in both power generation and distribution.	Wind farms and green house gas emission offset projects along with the global reach should allow sustained growth.	The global business expansion almost resulted in a bankruptcy in the 2002 timeframe. AES Analysis says 20% growth may be conservative - a risky investment for a utility.

Comparison Of Vertically Integrated Chinese Polysilicon Based Solar Module (PV) Manufacturers

Vertical integration in this context refers to integrating the different steps in the Polysilicon Based Solar Module production process. Module production involves four steps in chain event:

Use the raw material sand (SiO2) to produce a very pure form of silicon called polysilicon.
Use polysilicon to produce wafers and ingots.
Use wafers and ingots to produce solar cells.
Use solar cells to produce solar modules.

Manufacturers are yet to immerse in vertically integrating the whole process. There are a few getting their feet wet - Trina Solar, Yingli Green, Suntech Power, and Canadian Solar.

Trina produces solar modules from polysilicon and has plans in the offing for very large scale polysilicon manufacturing.
Yingli also has business plans along similar lines. They are yet to announce any plans to produce polysilicon.
Suntech is focused on the wafer to module business currently.
Candian Solar started out focused solely on producing solar modules from cells but since then has expanded to wafer to solar cell production line and has announced plans for a polysilicon to wafer and ingot line.

The table below compares these 4 manufacturers:

Manufacturer	Suntech Power (STP)	Trina Solar (TSL)	Yingli Green (YGE)	Canadian Solar (CSIQ)
Level Of Vertical Integration as of EOY2007 (Announced)	Wafer to Module 100% Integrated Business	100% Integrated Ingot & Wafer, Cell, and Module Business	100% Integrated Ingot & Wafer, Cell and Module Business	Cell Capacity at 25% of Module Capacity. No Ingot & Wafer Production Capacity
Procurement for 2008 projected production	Longer-term wafer contracts with fixed price to account for most of the production.	70% raw material is in place.	Unknown – majority of raw material may be in place.	90% raw material in place.
Projected Vertical Integration going forward	Same	Same. Announced Polysilicon production plant board approval.	Same	Cell and Ingot/Wafer capacity to reach 60% & 10-15% of module capacity respectively by summer 2008.
EOY 2007 Module Capacity (Announced)	540MW	150MW	200MW (Q3 2007)	400MW
2007 Module Shipment Expectation	365MW	75-80MW	135-140MW	80MW
EOY 2008 Module Capacity (Projected)	1GW	350MW	400MW	400MW by Summer 2008.
2008 Module Shipments (Projected)	>530MW	>200MW	>275MW	>200MW
2007 Revenue Expectation	$1.3B	$290M	$500-510M	$285-295M
2007 Net Earnings Expectation	$160M	$32M	$54.61	($2.7M)
2007 Per Share Earnings Expectation	$1.04	$1.38	$0.43	($0.10)
2007 Net Profit Margin	12.3	11	10.92	(0.95)
2008 Revenue (projected)	$1.9-2.1B	$650-750M	$800-900M	$650-750M
2008 Net Earnings (Projected)	$254M	$71M	$107M	$30M
2008 Per Share Earnings (Projected)	$1.65	$3.09	$0.84	$1.11
2008 Net Profit Margin (Projected)	13.37	10.92	13.38	4.6
Forward P/E	38	12.3	29	13.11

Suntech has the edge in most aspects with the closest rival Yingli lagging well below 50% in terms of integrated capacity. On the raw material procurement side, Suntech has procured most of its needs through long-term supply contracts. Yingli may be close too although the exact figures remain unannounced. Trina is at 70% for 2008 and may encounter high spot pricing to procure the rest of the raw material. Canadian Solar claims to have procured 90% of the raw material. Raw materials needs are different for each company. For Canadian Solar it is a mixture of polysilicon, wafer/ingots, and solar cells, for Yingli and Trina it is just polysilicon and for Suntech it is wafers.

Summary:

Since the solar modules produced by these manufacturers are technically similar, the difference in profitability is largely determined by the raw material acquisition costs and efficiency in the production supply chain. Vertical integration along with raw material acquisition through long-term supply contracts is the solution the bigger manufacturers are opting for. The downside to long-term supply contracts is the risk of raw material prices falling as supply approaches or exceeds demand.

There are a couple of business risks associated with the whole group:

Competition from pure-play solar manufacturers.
Competition from solar manufacturers that use a material other than polysilicon as the base raw material.

Pure-play solar manufacturers have to their advantage the ability to concentrate on one step thereby realizing better efficiency and ultimately better profit margins. Such solar companies include MEMC Electronic Materials (WFR) and LDK Solar (LDK) in the polysilicon and wafer production business and JA Solar Holdings (JASO) and China Sunergy (CSUN) in the cell to module business. Eventually, some of these manufacturers may become part of vertically integrated businesses.

Competition using raw materials that are alternatives to polysilicon comes from manufacturers such as First Solar (FSLR), which uses cadmium telluride (CdTe) and Ascent Solar (ASTI), which uses copper-indium-gallium-diselenide (CIGS). There are also a number of other technologies that are in early stages of development. First Solar has profit margins well beyond the polysilicon based producers because of lower raw material and production costs. The projections are for the company to grow at an even faster rate keeping cost advantages intact. However this is a moot point. The real challenge for the polysilicon manufacturers is to reduce costs in the production chain swiftly to compete with all such technologies successfully. The biggest advantage that polysilicon manufacturers have is the abundant availability of raw material at the very basic level – silica (found as sand or quartz)

Canadian Solar and Trina Solar have the biggest upside, given the low forward P/E. An announcement regarding procurement of the remaining raw material requirements at reasonable prices for 2008 should allow Trina Solar to reduce the gap in valuation. Canadian Solar is projected to have very low net profit margins. Skepticism surrounding the net profit margins the company will realize going forward is a major reason for the valuation gap.

Related Posts:

1. Trina Solar (TSL) - Stock Analysis.
2. LDK Solar (LDK) - Stock Analysis.
3. Solar Manufacturer Comparison (STP, TSL, YGE, CSIQ).
4. Suntech Power Holdings (STP) - Stock Analysis.

Christmas at Montecito-Sequoia Lodge, Kings Canyon National Park – Review

We lodged at this park for Christmas Eve and Christmas Day during the Holidays in 2006. The all-inclusive package deal was priced at $149 for adults, $89 for children ages 5-12, and $20 for kids under the age of 4 on a per diem per person basis. Our accommodation was at the Sugar Pine lodge, a minute away from the main lodge. The room is very basic with a bunk bed and queen size bed with a smallish bath attached. Since then, owners have changed hands and a renovation is complete - the rooms are upgraded - the rustic atmosphere & basic nature remain. Our room was used primarily to sleep in as the rest of the time was completely used up by the activities that were included in the package.

We arrived around 3 PM at the place after a drive of around 4 hours from the Bay Area. Finding a good place to eat lunch on the way was a challenge even with the help of our GPS and we settled for a Denny’s restaurant in the Clovis/Fresno area. The lodge itself was a breeze to locate although the last few odd miles were snowed in. The maintenance crew had cleared the roadway but a 4-wheel drive and/or snow-chains are recommended. Checking in was smooth but getting all our stuff to the room was an ordeal as the parking lot was a little distant and instead of driving closer to the lodge we foolishly decided to lug our belongings from the parking lot using a trolley. The pathway was snowed in and without snowshoes at that time the going was tough. A hint we learnt from other vehicles parked in the lot was to point the windshield wipers out before leaving the vehicle. It will get buried under the snow the next day and odds are high that the windshield motor will get overloaded when you try to clear the snow.

Food is buffet style with dinner served from 5 PM at the main lodge. Coffee, sodas, and snacks are available round the clock in the kitchen area. Dining area is an extension of the main lobby with round tables for eight through out. The adjoining activities area is another large room with its own fireplace, media-center (TV, karaoke equipment, etc), ping-pong table, and cabinets full of board games. The rest of the space is used as an extension to the dining area complete with round tables for eight. Drinks can be purchased from a small counter in the activities area. Ice creams and desserts were aplenty in the main lobby. Buffet food is very good with a broad array of choices. We had vegetarians in our group and they also found the food very appealing. Our older kid who is very picky about food had a good time too as she was able to find things to her liking, given the extensive options.

Some sort of a planned group activity follows dinner. The night we arrived the planned activity was to build a gingerbread house from scratch. This was a great experience for the kids as they appreciated the process of mixing the dough, decorating it with goodies, all the way through baking “all by themselves”. The following night was the Christmas program. The staff started off with a few hilarious standup comedy shows, and Christmas carols in karaoke style. The guests followed this up with some fine performances interspersed with a few from the kids. At the end of the night Santa Claus arrived and gave a photo opportunity for every kid and no kid was denied a present. As for daytime activities, there were several choices. Some, like the dog sled were not included in the package. The first day we signed up the kids for skiing lessons in the morning and for tubing in the afternoon.

The staff had an art program that kept them occupied in between. Mountain access passes were included in our package but we chose to sled in the morning. We had brought sleds with us but rentals are available at the ski shop. The sledding hill is fairly small and overlooks the frozen lake. A popular choice is to go cross-country skiing while the staff handles the kids. The following day, the kids went snowshoeing. Later we took the kids to explore the mountain a little bit, built a snowman, and did more sledding before walking back to main lodge for lunch. Hung out around the deck area in the afternoon along with the kids, enjoyed the beautiful view for a while. It was hard to believe it was already time to leave. Overall, we rate this as the most relaxing experience we have ever had at a vacation with the kids. The kids were occupied for most of the daytime and the fact that we didn’t have to worry about food choices for our picky kids was the crowning glory!

Summer weekly camps are another popular family option in this resort. General rates are fairly steep although it is all-inclusive (activities, food, and board) - $3295 for a family of four per week for a cabin. There are discounts for the first few weeks and the last two weeks - the rates for the discounted weeks are 7% or 14% of the general rates depending on the week. Overall, even considering our frugal mindset, these are good deals as most everything is taken cared off for around $120 per person per day and discounts can further lower that cost.

Last Updated: 01/2015.

ClickSoftware (CKSW) – Part 1 - Introduction

ClickSoftware is primarily a Workforce and Service Optimization software solutions provider based out of Israel. Before the disappointing 2007 Q3 results the stock traded at a 52-week high of $6.84. The shortfall in revenue translated into a significant pullback and the stock now trades at about 30% below that peak. Even after the pullback, the stock returned 60% in the last year and over the last 5 years the stock price soared 20 times. This performance however is overshadowed as the stock trades about 35% below the price per share at the time of its IPO in June of 2000. Here is a look at the company’s financials over the years:

Year	2007(Projected)	2006	2005	2004	2003	2002
Revenues	$41M	$32.43M	$24.08M	$22.71M	$22.41M	$15.75M
Software license	42%	37%	34%	47%	47%	45%
Services	58%	63%	66%	53%	53%	55%
R&D Expenses	14%	13%	13%	12%	9%	18%
Net Income (loss)	$0.12	$0.08	$(0.07)	$0.03	$0.06	$(0.40)

Revenue has more than doubled in the last 5 years giving it a compounded annual growth rate (CAGR) on a revenue basis of about 15%. 2006 saw a revenue growth rate of about 35% and 2007 growth is expected to be slightly below that level. ClickSoftware has managed to be only marginally profitable over the years. It is projected to have a net income of $0.12 per share this year and close to $0.20 per share next year. That level of profitability will result in a forward PE of 24 at the current price. They are expected to grow at a 30-35% revenue and earnings growth going forward.

Software license as a percentage of total revenue has consistently clocked in below 50%. It dropped as low as 34% in 2004 before rebounding to the current run rate of 42% for fiscal 2007. To see margin improvement, it is imperative that management focus on driving that number up to the 75% range to be allied with highly profitable software enterprises.

ClickSoftware (CKSW) Analysis:

1. ClickSoftware (CKSW) - Part 1 - Introduction.
2. ClickSoftware (CKSW) - Part 2 - Business Issues.
3. ClickSoftware (CKSW) - Part 3 - Outlook.

Passive Income Opportunities – Part 6 –Employer Plans

Employee Stock Purchase Plans (ESPP), Employer Profit Sharing Plans, and Employer 401K contributions are the easiest ways to generate passive income, provided one is employed. Amongst these, profit sharing plan is automatic since virtually no action is required on the employee’s part to avail this benefit. ESPP and Employer 401K contributions on the other hand require opting in. The process of opting in can vary by plan.

Profit sharing plans puts in a percentage of the salary to an employee account – the percentage is derived from a formula that is tied to the company’s profit. Most common downside with profit sharing plans is that the contribution makes its way to the employee’s retirement account, usually the 401K account. Generally this is in the guise of shares in the company’s common stock. A vesting period for these shares is more of the norm. A critical aspect of this is that employees tend to overlook the need to diversify out of company stock.

In a typical ESPP plan, opting in requires signing up and assigning a percentage of salary (limited to $25K/annum fed mandated maximum) as the amount to be used to purchase the stock. During the offer period (usually 6 months) the money will be accumulated in a company account and it can be equated to receiving a portion of your salary at the end of the 6-month offer period as opposed to every 2 weeks. The benefit is that the stock is purchased at a discount (typically designed so as to be over 5%) at the end of the offer period. By selling the stock at the end of the offer period, passive income is realized. The downside with ESPP is that one has to forgo part of the salary during the offer period.

For Employer contributions to a 401K plan, opting in requires signing up and assigning a percentage of salary (limited to $15.5K/annum fed mandated maximum plus $5K/annum catch-up contributions for those over 50) as the amount the employee contributes to the account. Employer contributions to such plans are designed such that the percentage contributed is dependent on the employee contribution. A common plan is employer contributing 50% of up to 5% of the employee contribution. In this scenario, passive income of 2.5% of the salary is realized by opting to contribute 5% to the 401K plan.

The downside with all of these passive income strategies is that once the rat race is successfully exited, the income steam also ceases. Hence, the strategy should be to use these income streams as building blocks for other forms of passive income while still in the rat race.

Related Posts:

Last Updated: 01/2015.

Asure Software (ASUR) – Part 3 – Workspace Management – Can It Be The Holy Grail?

Globally, Software as a Service (SaaS) in the workspace management space is a segment experiencing tremendous growth. The company’s NetSimplicity and iEmployee product suites provide an automated easy to use self-service unit, which showcases in-depth domain expertise in HR benefits, time tracking, scheduling, and asset management areas. The calculated focus on small to medium size businesses and divisions of large enterprises should allow the company to seed the market as it seeks to set the business up for growth.

Here is a look at the Asure’s NetSimplicity business, a product the company built up in the last few years while pursuing the patent monetizing route:

Year	Revenue	YOY Revenue Growth
2004	1M	NA
2005	2M	100
2006	2.8M	40
2007	4.3M	54

As of October 2006, Asure is lean with a head count of only 37 employees. The business started operating in the black and generated about 100K in cash during the last quarter. The expectation is to grow the revenue close to the $6M range in fiscal year 2008 per the 4th quarter earnings call.

The iEmployee acquisition roughly doubled the business. The purchase price of $10.7 million at slightly more than twice the revenue is reasonable considering the business has 15% bottom line net income. The 8-K filing indicates the cash consideration was roughly $6.6M and the remaining portion was funded through roughly 5M shares of Asure stock. This brings the total outstanding shares to roughly 31M and cash tapers to about $30M.

The combined business is expected to rake in recurring revenue in the 70% range. This welcome rain brings predictability to the company’s business moving forward. The initial expectation is that the combined business will generate cash in the 2nd half of next year but there the guidelines provided stops short. During the 4th quarter earnings call, it was indicated that such guidance would be forthcoming in the November timeframe.

Asure is valued very low since it is unclear how the business will perform as time progresses. Once the business track for the upcoming year is in place much of the uncertainties surrounding revenue, profitability, and growth expectation should get cleared up. If the company can turn profitable it will get valued per the projected growth expectations. Until then, investors will stay in limbo taking solace that the valuation is cheap…

Asure Software Analysis:

Passive Income Opportunities – Part 5 - Pension Plans

There are two general types of pension plans:

Defined Benefit, and
Defined Contribution.

Defined Benefit Pension plans are fast disappearing from corporate America and are being replaced with defined contribution plans such as cash balance plans, 401Ks, and profit sharing plans. These deposit a certain percentage of the salary directly to the employee’s 401K-plan account. The primary difference between these plans is that a defined contribution plan has individual accounts while a defined benefit plan does not.

Pension plans provide passive income during retirement. With defined benefit plans, the actual payment received monthly during retirement is predefined as it is based on a plan dependent formula. Social Security is an example of such a plan. With defined contribution plans, the monthly income realization at retirement is not automatic, but is an option – essentially what you are left with is a cash balance against which an annuity can be purchased to realize passive income.

The one big downside with pension plans is that in general one can start realizing this income to its full potential only after reaching retirement age.

Related Posts:

Last Updated: 01/2015.

Asure Software (ASUR) – Part 2 – Building A Business In The Face Of Losses And Delisting Threat

Asure received a Notice Of Delisting from Nasdaq on 8/31/2007. This is the second time in the last two years that the company came under such scrutiny. The first of these was on 8/11/2006 and the company came into compliance when the stock stayed above $1 for an extended period of time between November 2006 and March 2007. Delisting is a risk that needs to be managed and can be achieved by:

Ensuring the stock stays above $1 for 10 consecutive trading days before February 25, 2008,
Undergoing a Reverse Stock Split. This in essence decreases the number of shares by a factor while moving the share price upwards by that factor,
Using the Nasdaq Appeals process by shifting to the Nasdaq Capital Market therby gaining an additional 180 days within which to achieve the minimum per share stock price.

Asure has achieved compliance as of Friday October 12 as its shares closed above $1 for 10 continuous days between October 1 and 12. Even though the immediate threat of delisting is at bay, the risk exists as long as the share price hovers just above the $1 level.

Asure has more than $6/share in tax-loss as a carry forward in its balance sheet. It has placed a valuation allowance against this and so this can potentially be viewed as a hidden asset from which value may be drawn under certain conditions. Acquiring companies with current earnings would work in its favor as that may allow it to tap into the tax-loss carryover. Further, this may allow the company to negotiate a better deal in an acquisition, as the company’s offer can be considered more lucrative when the tax benefit is taken into account.

The balance sheet is strong with $35M in cash and with no debt Asure has the opportunity to grow the new business organically and through acquisitions. To become a leader in the SaaS workspace management space and realize sustainable growth, it will have to gain critical mass as quickly as possible. It is evident the company will be pursuing more acquisitions. The competitive landscape is busy with prominent players like Microsoft, SalesForce.com, etc along with specialized vendors such as ClickSoftware Technologies Limited (CKSW).

The last part of this article will look at the Asure’s new SaaS workspace management software business and outlook going forward.

Asure Software Analysis:

Passive Income Opportunities – Part 4 – Investments In Top Dividend Paying Stocks

Stock and mutual fund dividends rank high as passive income sources. Passive income comes into play automatically as soon as you stake claim to securities that pay dividends. Adding another feather is that the dividends have appreciation potential that ensures inflation is kept in check. This link shows the list of dividend aristocrats (25 consecutive years of increased cash payments) from the S&P 500 index. Below is a list that shows the historical compounded annual growth rate (CAGR) of dividends of the companies in the S&P 500-dividend aristocrat index over the 10 years through EOY 2011:

Symbol	Company	Dividend CAGR
MMM	3M Co	6.1
ABT	Abbott Laboratories	9.18
MO	Altria Group	6.49
BUD	Anheuser-Busch Cos	9.76
ADM	Archer-Daniels-Midland	10.84
ADP	Automatic Data Proc	13.25
AVY	Avery Dennison Corp	6.66
BAC	Bank of America	12.91
BCR	Bard (C.R.)	5.24
BBT	BB&T Corp	10.15
BDX	Becton Dickinson	12.95
CTL	CenturyTel Inc	4.69
CB	Chubb Corp	7.18
CINF	Cincinnati Financial	11.09
CLX	Clorox Co	9.6
KO	Coca-Cola Co	9.28
CMA	Comerica Inc	8.36
ED	Consolidated Edison	1.00
DOV	Dover Corp	7.73
EMR	Emerson Electric	5.93
FDO	Family Dollar Stores	11.14
FITB	Fifth Third Bancorp	15.69
FHN	First Horizon Natl	10.55
GCI	Gannett Co	7.73
GE	Genl Electric	10.84
GWW	Grainger (W.W.)	10
JNJ	Johnson & Johnson	14.2
JCI	Johnson Controls	11.12
KEY	KeyCorp	5.68
KMB	Kimberly-Clark	8.24
LEG	Leggett & Platt	9.9
LLY	Lilly (Eli)	7.83
LOW	Lowe's Cos	27.77
MTB	M&T Bank	24.22
MCD	McDonald's Corp	19.74
MHP	McGraw-Hill Companies	8.58
NUE	Nucor Corp	37.64
PEP	PepsiCo Inc	11.61
PFE	Pfizer Inc	16.44
PPG	PPG Indus	4.34
PG	Procter & Gamble	10.73
PGR	Progressive Corp	5.82
STR	Questar Corp	4.51
RF	Regions Financial	8.31
ROH	Rohm & Haas	8.3
SHW	Sherwin-Williams	12.16
SIAL	Sigma-Aldrich	13.11
SLM	SLM Corp	18.27
SWK	Stanley Works	4.48
STT	State Street Corp	13.87
SVU	Supervalu Inc	2.72
SNV	Synovus Financial	13.07
TGT	Target Corp	12.02
USB	U.S. Bancorp	12.56
VFC	VF Corp	10.65
WMT	Wal-Mart Stores	22
WAG	Walgreen Co	11.74
WWY	Wrigley (Wm) Jr	5.33

Inflation rate over the 10 years through 2011 is under 3%. The list shows dividend growth outperforming inflation by a wide margin for most companies.

Related Posts:

Last Updated: 01/2015.

Asure Software (ASUR) – PART 1 – Transforming a Classic Patent Troll

Asure Software formerly Forgent Networks dealt in the business of designing, manufacturing, and selling multimedia conference systems. By the third quarter of 1995 the stock reached its peak at $26/share. The company had an impressive headcount of 482 employees. The VTEL brand was well established and they had a rapport with resellers and a vested interest from Intel. This rosy outlook saw a volte-face from 1996 onwards as the business experienced low margins along with low growth. Initially price competition contributed to this woe but later Internet based technologies with much more flexibility proved overwhelming. Below is a table that shows how the company’s multimedia conference business unwound from 1995:

Year	Revenue	Earnings	Comments
1995*	$98M	(0.21)	Average Selling Price showed very little increase even though large group conference systems were being sold a lot more than smaller group ones. One saving grace was that a secondary offering brought in $57M and enabling the balance sheet show cash holding of over $100M.
1996*	$97M	(0.87)	Average Selling Price dropped about 15%. Adding more damage was the fact that the selling price was coming despite the company selling more of the high-end large conference systems. Even with the added revenues from the Integrated Communications Systems (ICS) group acquisition the total revenue came in below 1995 figures.
1997	191M	(2.45)	Compression Labs Incorporated (CLI) acquisition for 8.4M shares of stock in May 1997. At that time,CLI was being sued for patent infringement related to video conferencing networks by Datapoint. The share price had slipped to $5 reflecting the companies shrinking growth prospects.
1998	180M	0.12	Blamed merger transition issues for the shortfall in revenue.
1999	152M	(0.66)	Significant drop in revenue. Stock price hovers between $4 and $6.5/share in the 4th quarter. Company recognizes the effects of Internet based technologies providing better solutions at lower overall cost. Acquired the Internet startup Vosaic to enter that market. That acquisition brought in the core team that claimed designing the first multimedia web browser.
2000	134M	0.09	Further drop in revenue. Company formed 2 business units and announced a major restructuring and termination of 34% of employees.

1995 & 1996 financials are for 7-months as the company shifted financial year to July of every year as opposed to calendar year.

The following summarizes the financials of the company after fiscal 2000:

Year	IP Revenue	Software Revenue	Net Income/Share	IP %
2001	0	103K	(1.31)	0
2002	31M	0	(0.25)	93.3
2003	49M	0	0.32	90.8
2004	14.8M	1M	(0.83)	94
2005	7.9M	2M	(0.26)	80
2006	12.1M	2.8M	(0.14)	89
2007	36.2M	4.3M	0.47	81
2008(P)	NC	12M	NC	NC

Between 2002 and 2007 the primary source for revenue was IP licensing.

In 2001 the company divested its products and services business, its main revenue sources. In 2002, the company announced they are an enterprise software and services provider although there was little revenue to show for it. However they did have a new Video Network Product (VNP) announcement, a software program that allowed management of an enterprise’s video network. Through the Global Scheduling System (GSS), they entered the scheduling arena in the enterprise software space. The company also announced its intention to drive revenue from its Intellectual Property (IP) licensing business. By 2004, these two product lines re-branded as ALLIANCE were written off and a charge taken. In October 2003, the company announced the acquisition of Network Simplicity Software. The Meeting Room Manager (MRM), Visual Asset Manager (VAM), and certain derivative products of MRM together formed the NetSimplicity suite of products. With the software business the company is strategically looking to develop a profitable business outside of Intellectual Property (IP) licensing. As of fiscal 2007, the focus is software, an acknowledgement that the IP business is well past the prime. The iEmployee acquisition is the initial step in this regard.

Asure Software Analysis: