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Cannoonball, thanks for the info. Looks like PFNH is bottomed.
Intel sees WiMax project expand to 100 cities:
http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh78949_2005-08-18_22-58-53_n18...
A good read regarding
PFNH technology:
Twenty years ago one chip ran your entire computer. Today you have specialist chips within your computer. The main CPU handles the majority of the processing. However, you may have a special graphics card with an associated graphics chip which helps alleviate the load on the main CPU.
You are looking at a picture of Adaptec's latest and greatest ethernet card. It contains a high tech chip which works on a specialized TCP/IP architecture known as TCP/IP Offload Engine or TOE (techies love acronyms for everything). Both Intel and Broadcom make a similar product.
This ethernet card comes with a highly specialized chip designed to handle the massive amounts of data which can flow in and out of your computer through your network- whether it be your high speed connection at home or your network at a place of business. Without this new high tech architecture, the main CPU helps process the data, which slows down everything else it should be working on. As more information flows through your network, the ethernet card becomes a much tighter bottleneck without the specialized board and chip.
You won't find this new high speed ethernet card in your typical $1,000 Dell computer. The reason is simple. It costs too much. If you go into your local Comp USA you will find that this new high speed ethernet card costs about $650. The one Dell puts in a $1,000 box runs about $60. The cost difference is mostly due to the price of the special high speed chip on the card.
According to Moore's law, processing speed doubles and the prices get cut in half every 18 months. Perfisans is in the business of making sure Mr. Moore's law lives on.
This is the Perfisans specialized microprocessor, more commonly known as a computer chip. It has been in development since 2001. $4.5 million has been invested in the development of this chip, and the majority of the experimentation was done in China, where $4.5 million could equate to $15 million in the US.
In early August Perfisans announced it had completed product development and is currently demonstrating the ACC-1001 Accelerator chip to networking companies world wide.
This is a specialized chip which is designed to be included in the architecture of an ethernet card. It is not faster than any other chip currently on the market, but it is considerably less expensive.
When installed in a desk top computer, processing speed will improve considerably. The smart NICs (network interface cards) will take up to 80% of TCP network processing overhead off network host computers. According to VP Steve Gormley “This frees the rest of the system to concentrate on pumping the payload data,”. “It's a powerful solution that provides meaningful cost-savings and other benefits to users of enterprise networks."
In short, your networked computer will be much faster with this chip on your ethernet card. The chip is so much cheaper that the Adaptec product with the TOE architecture we covered above could drop in cost from $650 to $65. If this is the case, this chip could end up on the cards which are included in the aforementioned $1,000 Dell box.
Today, after the market closed, Perfisans announced the first purchase order for its low cost accelerator chip. DBL Technology LTD, a maker of Voice-Over-Internet Protocol (VoIP) communications equipment based in Shenzhen, China, placed the initial order. DBL is an OEM for the enormous Taiwan and China communication markets.
When using VoIP technology, you are using your computer and the internet to talk over the telephone. Massive amounts of data must flow in and out of your ethernet connection as you talk. Therefore, this is one of the most ideal locations for a specialized chip as VoIP becomes more widely accepted.
Perfisans has now proven it has a bona fide low cost accelerator chip with the first purchase order. As more and more information flows in and out of your computer into your network, the need for low cost versions of these high speed chips will increase.
Looks like delayed market reaction, possible a start of a run here.
Now 0.29 x 0.38 in premarket, wow!
Surprised the market has no reaction to the news. I guess they're all waiting for some contract news.
50 day moving average is at 0.28, so 0.28 has been the support for now.
PFNH News OUT
http://biz.yahoo.com/bw/050816/165304.html?.v=1
This is very interesting to read, I converted the part of the PDF file to this:
Comparative Analysis with Similar [Same-Time] Start-Up Companies
Overview
Start-Up semiconductor company’s require substantial investments [often not less than US$30 million] and
many years [of R&D risks] to bring the design concepts into a marketable product that has commercial value
to the market. There are no guarantees for the products to be successful in the market place. There are
numerous failures and very few winners that can actually bring their design concepts to fruition and even
fewer that can actually transform their finished products into viable revenue generating entities. Often even
[at best case scenarios and “deep pockets”] with multi-millions of dollars of investments and years of R&D
these companies are still not at a point where they have a viable working product.
Examples of “Same-Time” Start-Ups
Astute Networks Inc. [“Astute”] (www.astutenetworks.inc)
The focus of Astute is the storage area networking market. Astute was established in April, 2000 with initial
financing of $23M by venture capital firms and secondary financing on March, 2004 of an additional $15M for
a total of $38M. Given that if at “worst case” scenario the company was to give up 50% equity for this
investment, they would be establishing a market cap of approx. US$76 million. They have developed several
prototype products for the enterprise market according to Astute, although we have no evidence of such as of
yet.
Silverback Networks Inc. [“Silverback”] (www.silverbacksystems.com)
Silverback was formed in July, 2000 and has raised over $32.3 million in three series of financing. The last
round closed on March 2003 for $15 million. The focus is to develop products for storage network systems.
They have a prototype microchip in the market place focusing on the enterprise market. Again, at worst case
scenario the market cap at the time of their capital raise [with an assumed 50% equity position from investors]
would value the company at approx.US$64 million.
Trebia Networks Inc. [“Trebia”]
Trebia was formed in June 2001 and with two financing by venture capital firms for a total investment of
$40M [if we were again to use the assumption that they had to give up 50% equity for this investment, their
market cap at the time would be valued at US$80 million]. Trebia has targeted the Storage Networking
market for embedded processor/gigabit Ethernet technologies. Trebia had some prototype products however
the company has used all $40M raised and closed down sometime in 2003.
Perfisans Holdings [“Perfisans”] (www.perfisans.com)
Perfisans Networks Corporation, a wholly owned subsidiary of Perfisans Holdings {PFNH] a Semiconductor
Integrated Circuit (ASIC) provider servicing the network and storage industry. The company was founded in
February, 2001 and went public through an RTO on the NASD-OTCBB on December 2003. The company is
funded by angel investors who have invested approx. $6.66 million up to the last quarter ended June 30,
2004. Perfisans has its first product gigabit/TOE Ethernet prototype and anticipated sales revenue in the third
quarter of 2004.
Summary of Comparative Analysis of similar [Same-Time] Start-Up Companies
Perfisans was formed in 2001 [without major capital behind it] around the same time as many of the
examples of the other “start-ups” that we have show cased above. The company has only raised $6.66M
during the past three years and with this the company has delivered its first accelerator product in the market
place and is revenue ready [while others have either closed after raising more than US$25 million dollars
and/or are still not at the stage where they have a marketable product]. It is evident that Perfisans has
achieved superior management & engineering success based on this milestone alone.
Examples of successful semiconductor industry start-ups can be seen in companies such as Genesis
microchip, NIVIDIA Corp., Marvell graphic accelerators have proven adept at growing the business model
despite better-resourced competition. It is interesting to note that established competitors such as Broadcom,
while having produced best in class solutions, have failed to drive Marvell out of the market. Marvell has
been able to assume a natural role as a second source to original equipment manufacturer’s (OEMs) seeking
to maintain leverage over Broadcom. This is a example for start-up companies and Perfisans is in a position
to repeat history in the coming years.
Comparative Analysis with Publicly Traded Semiconductor Companies
Overview
We have selected a cross section of sixteen (16) publicly traded semiconductor companies fairly well
representing the standard in this sector. These publicly traded companies are more mature revenue
generating companies and the following is a table summarizing their revenue and various key multiples
normally accepted for evaluating publicly traded companies. The multiples being selected are Price to Sale
multiples and Price to Earnings (P/E) multiple.
In order to produce reasonable and fairer results, we have adopted the 2nd year sales revenue projected by
Perfisans to allow enough time for company products to enter its selling cycle and an anticipated stock price
of $3.50 for meaningful comparison and for analytical purposes.
Semiconductor Publicly Traded Co. Comparisons
*All numbers in millions (except stock price & EPS)
Company Stock outstanding Valuation Annual Price-to-Sale EPS P/E
Price Share Sales Multiple Multiple
Intel (INTC) 21.72 6410.00 139225.20 30141.00 4.62 1.11 19.57
Advanced Micro Devices(AMD) 11.87 354.93 4213.02 3519.20 1.20 0.25 47.48
Broadcom (BRCM) 28.27 261.96 7405.61 1610.10 4.60 0.40 70.68
Genesis microchip (GNSS) 12.43 33.03 410.56 194.33 2.11 -0.21
ATI Technologies (ATI-Toronto) 18.48 95.28 1760.77 1937.40 0.91 -3.53
Realtek (RLTKF) 1.29 652.71 842.00 n/a n/a
Micron Technologies (MU) 11.82 611.48 7227.69 3091.30 2.34 -0.11
Agilient Technologies Inc.-NY 21.41 481.45 10307.84 6056.00 1.70 -2.87
Applied Materials Inc. (AMAT) 16.26 1690.00 27479.40 4477.30 6.14 0.42 38.71
Intersil Corp. (ISIL) 17.66 150.52 2658.18 596.80 4.45 0.54 32.70
Nvidia Corp. (NVDA) 12.76 166.54 2125.05 1909.40 1.11 0.32 39.88
Adaptec (ADPT) 7.04 109.96 774.12 452.90 1.71 0.21 33.52
LTX Corporations (LTXX) 5.09 61.00 310.49 119.40 2.60 0.03 169.67
Marvell Technology Group (MRVL) 22.87 266.23 6088.68 819.80 7.43 0.27 84.70
Cisco Systems Inc. (CSCO) 18.79 6760.00 127020.40 18878.00 6.73 0.70 26.84
PLX Technology Inc. (PLXT) 6.41 26.11 167.37 38.00 4.40 0.02 320.50
Perfisans Holdings 3.50 43.85 153.48 36.54 4.20 0.55 6.36
Average Multiple 3.52 74.22
Note:
All stock prices are recorded as at Aug. 26, 2004 except Perfisans Holdings stock price is selected at $3.50 and
revenues, earning per share, outstanding shares are based on 2nd year projected operation results in 2005.
Summary of Comparative Analysis with Publicly Traded Companies
Price to Sale Multiple
The lowest multiple is 0.91, the highest is 7.43 and the average is 3.52. The median multiple is exactly where
Perfisans multiple is at 4.2.
The Price to Sale Multiple normally indicates a potential increase of the stock value provided there exist sales
volume growth. Perfisans has a slightly over average ratio amongst the comparables and scored right at the
median position. Analyzing publicly traded companies in this section, achieving annual sales volume of
$100M in a relatively short period of time is not an unrealistic assumption. According to management,
Perfisans revenue projection for the first 5 years are realistic estimates and hence indicate strong
appreciation of stock value from this level.
Price to Earning (P/E) Multiple
The lowest multiple is negative, the highest being 320.50 and the average is 74.00. The median is 32.70.
Perfisans multiple is 6.36.
This multiple provides significance of how the market evaluates the growth of a company, with high multiples
normally translated to high-growth potential expected by the market and vice versa. The multiple must be
realistic to reflect the growth pace of the company otherwise indicate the stock of the company at this level is
being over-valued. The semiconductor companies normally are rated with high multiples because the industry
has been proven with very strong growth pace for decades. Perfisans multiple of 6.36 is relatively low
compared to the median point at 32.70 and the average of 74. Perfisans is rated as a start-up company,
hence the growth of the company’s sales revenue is anticipated and growth is expected. The present P/E
multiple is an extremely attractive number and is under-rated in this category.
Perfisans management has projected growth for the next 5 years, as the management has already proven
that they can meet their target benchmarks with relatively limited financial resources to develop and launch
their product line. The timeline for their projections of growth are achievable. Operating as a publicly traded
company is more challenging than a privately owned company, however with proper funding, the
management can attract more seasoned professionals to execute the company’s growth plans.
Income Approach for Perfisans projected 5 year income.
Method of Valuation Explained
The income approach can use pre-tax or after tax net income and we have selected to use the pre-tax
income. Other economic benefit streams are net cash flow to invested capital (debt and equity) or net cash
flow to equity. The cost of capital is the market's required rate of return on the investment. That is the
expected rate of return (yield) that the market required to attract capital to the particular investment. The
approach we took was the present value of discounted net income over five years plus a terminal value.
Discounting is the cost of capital estimate of return on investment. We picked net income over net cash flow
to equity because it is difficult to estimate in projecting performance in a developmental start-up company, in
a relatively new niche market.
The valuation is based on a multiple of net income after taxes for the five (5) years. The fifth year after
considering 10% growths rate perpetually the net income multiple is 4.0 or a 25% return on investment. For
example in year 2005, the net income is $5,041 the 31.8% discount (yield) is a 3.14 multiple or $15.82 million
at a present value of 54.9%. All the years are added to the terminal value year. The terminal value net
income is increased 10% over the fifth year at 4.0 multiple and its corresponding present value is 22.3%. All
the present values are from a chart of present values based on the discount rate (yield) or rate of return. The
discount rate was based in part on the quality of management, the technology, competitive advantage, the
intellectual properties filed for patent protection, the market and its potential growth rate.
Capitalization Rates
Capitalization rates vary among particular sizes and types of businesses and from one period of time to
another. We have utilized a build-up summation method that begins with a pre-tax safe rate of return and is
adjusted for various risk premiums based on the following risk factors:
• Competition (market position)
• Industry and company characteristics and environment
• Financial strength
• Management ability and depth
• Stability of earnings
• National Economics
• Global Economics
In making a determination regarding an appropriate capitalization rate, we have considered many of the
factors affecting the present operation, and future of the company. We have reflected on both the
"systematic" and "unsystematic" risk factors. That is, we have considered the risk involved in operating such
a company in the present-day business, market, economic and demographic environments. Systematic risk is
that portion of risk that is related to movements in the general market rather than to the industry or company
specific factors. Unsystematic risk is that portion that related to the specific industry or company rather than
the general market place.
ESTIMATE OF VALUE ASSUMPTIONS
Cost Of Capital Build up Method
Pre-tax safe rate of return-yield 3.0
Equity risk premium 8.1
Size premium 9.0
Specific company risks * 11.7
Total discount rate to net income 31.8
Less long-term
The Income Approach based on 5-year revenue projections indicate a very high stock value of
$13.14.
We conclude from the above that Perfisans management has achieved superior engineering and
management success during the last 3 years. The company’s stock has been trading in the $1.00 to $2.25
range for the last few months indicating that the market has not yet recognized the potential of the company.
The comparables strongly indicate strong appreciation potential from the projected $3.50/share level as well
with the Income Approach valuation method a share price of $13.14 has been targeted.
Notice "Clarence worked with Avici Systems". Avici Systems was a very hot IPO in 2000. They had some killer products (Core router) to compete with Cisco and JNPR. AVCI and CORV went IPO on the day day, both were very hot network equipment providers, all eyes were on CORV, but on that day, AVCI stole the show, AVCI was priced like $30, but opened at $70s and went to like $100s the same day, sort of like BIDU. AVCI was one of the biggest IPO winners. I traded AVCI from the IPO ($90s) to like $180 in the year of 2000. At that time, AVCI has little revenue, Enron was their biggest customer in the beta testing. but the company was labeled as the little JNPR, there were talks or rumors that CSCO would acquire AVCI for $10 or $20 billion, and AVCI refused the offer.
Five years later, the company did a 4-1 reverse split, the stock is trading at $4-5 range. I bet many shareholders regret the company didn't take an offer from Cisco. The craziness of the year 2000.
AVCI's fundamental is no better than Perfiscans, notice their revenue growth is negative.
AVCI chart:
http://finance.yahoo.com/q/bc?s=AVCI&t=my&l=on&z=m&q=l&c=
AVCI financials:
http://finance.yahoo.com/q/ks?s=AVCI
Income Statement
Revenue (ttm): 27.80M
Revenue Per Share (ttm): 2.173
Qtrly Revenue Growth (yoy): -4.00%
Gross Profit (ttm): 12.41M
EBITDA (ttm): -24.83M
Net Income Avl to Common (ttm): -28.36M
Diluted EPS (ttm): -2.22
Qtrly Earnings Growth (yoy): -57.20%
Meet the Team
http://www.perfisans.com/about/team.aspx
--------------------------------------------------------------------------------
To-Hon Lam
CEO & CTO
Mr. Lam co-founded Perfisans Networks in February 2001, and has acted as its President and CEO since its inception. Mr. Lam successfully launched the Matrox Toronto Design Centre, has managed over 100 software and hardware projects, co-founded Sicon Video, and was responsible for several state of the art ASIC designs at ATI. Mr. Lam brings with him over 21 years of engineering and ASIC design management experience.
Bok Wong
Vice President Operations
Mr. Wong co-founded Perfisans Networks in February 2001, and has acted as its Vice President of Operations since its inception. Previously he co-founded Intervis Corporation, a system on a chip (SoC) design consulting company. Intervis is a multi million dollar company, which designed complex network ASIC chips and processors for companies such as 3COM, Nortel, and Cabletron. Mr. Wong was the principal consultant of Intervis from 1998 to 2000 and Director of ASIC Technology at Trebia from 2000 to February 2001. Mr. Wong has also worked with ATI Technologies, Genesis Microchip, and Philips in Hong Kong.
Chao Kuan
Director Engineering
Mr. Kuan has acted as Director of Engineering since February 2001. He has over 15 years design and management experience in ASICs, FPGA and hardware products. From 1998 to February 2001, he was Vice President of Hardware Development for VIDIX Technologies Corporation. Previously with Leitch Technologies, Mr. Kuan was involved in video server and router design. Mr. Kuan has demonstrated strong leadership and management skills over 15 years. As an entrepreneur, Mr. Kuan developed high performance local area network based video streaming systems.
Clarence Wu
ASIC Technology Manager
Clarence Wu serves as ASIC Technology Manager at Perfisans Networks. He has over 10 years of experience in ASIC design and implementation, including router ASICs and network processors, establishing chip integration and backend design methodology and infra-structure, and he played a major role in the tape out of Perfisans¡¦ first 2G TOE ASIC. Prior to joining Perfisans, Clarence worked with Avici Systems, Motorola (previously C-Port Corporation), Cadence Design Systems, ATI, where he developed their 3D graphic chips for mobile computers, and was the senior ASIC application engineer with NEC Hong Kong.
Sam Wu
Software Manager
Sam Wu serves as Director of Software at Perfisans Networks. Sam has extensive experience in project leadership, hardware and software network system design, voice over the Internet (VoIP) gateway design and IP phone design. Sam is a recognised expert in TCP/IP stack and routing protocols, as well as complex FPGA design for network applications.
I think you all should read this research report, quite impressive:
http://www.runonideas.com/files/clients/pfnh/reports/pfnhanalysis.pdf
Welcome to the board! Now we have four guys in.
Trade4Money, I am quietly buying here....shhhhhh!!! lol...
But still looking to add under 30 cents, taking your advice.
DOC, did you get any shares? I managed to get 10K at 0.33 today, LOL.
Trade4Money, very excellent post!!! Many thanks...
Getting into a great long term hold at the right time is exactly what I am looking for in my stock investments. I greatly appreciate this insight and especially your explanation of the share structure. The fact that preventing dilution is of great concern for the company at this early stage certainly bodes well for all investors. The float will stay the same.
With a float very similar to SWTS, I will plan to quietly accumulate this potential gem on dips. I appreciate your advice not to buy aggressively at the ask.
Wish I knew more Mandarin, haha. Your due diligence so far on Perfisans Holdings and FSP have been first rate and make me feel like I am getting into another SWTS with a similar explosive potential. Thanks very much!
As of yesterday's close, I have made a 400% gain on SWTS and I believe that the party there is just getting started!
Hi, Doc, do you want to expand your SWTS success to this stock? Then grab a million share at 0.30, you'll be in the driver's side, lol. I'm still in gathering info stage. I called their IR yesterday, the IR guy (Alpha) sounded very sincere and honest.
he said after several years of painstaking R&D, they finally got a killer product developed and ready to roll out, their next step is to do aggressive marketing and sales to OEMs, PC/network/telecommunication chip manfacturers etc. He said Asia (especially China) has a huge market for their product. Most PC motherboards are manufacturered in Asia.
When he realized I came from China, he said most engineers and mangement work for the company originally came from Hong Kong and China. He speaks Mandarin too and we started to speak Chinese. I am not surprised that they could sign contracts with eIDS Solutions (ASIA) Ltd and Zhejiang Orient Fibersense Photonics Communication (FSP).
But you must realize this is a start-up company and just ready to expand. They need capital to expand. He said they've three institutional investors fund the company, one is Platinum Group, one is Knight (NITE), I don't remember the 3rd one. He said they issued 40 million shares shares (OS), they need to issue 20 million more shares to these big investors to get the working capital, but the authorized shares are only 50 million, that's the main reason why they filed a proxy to increase AS. He said these big investors are in for the long haul, they wouldn't like to dilute the float and plague the stock price. It won't help their long-term interests.
I would keep an eye on the stock, accumulate it on dips (not aggressive buy on ask). The volume tells me the float is indeed not big, it is acting like a 4 mil float stock.
Here is the info for FSP:
http://www.fsp.com.cn/en/aboutus/profile.htm
FSP Holdings Limited. was founded in Canada and has been a leading worldwide Telecommunication and Data Communication System Solution provider with corporate branches in Canada, China, Hong Kong and Taiwan. FSP brings to the market with a rich selection of passive and active communication components, integrated optical sub-system, test and instrumentations equipment, bio-medical laser modules, intelligent optical modules, next generation MEMS optical switch systems, All-Optical-Network (AON) equipment, Broadband Access Network equipment, IP Telephony system Wireless MAN and LAN systems, Broadband Value Added Services and Engineering Manufacturing Services.
FSP offers a wide range of high quality products and equipment that can be used in broadband access and management. In addition, these high quality products and equipment can enhance performance of full-optic network, wireless network and storage network.
With its advanced technology and marketing management experience, FSP is keen on expanding greater China market. FSP has established several technical, sales, application support and service centers in Beijing, Hangzhou, Guangzhou, Shenzhen and Hongkong in order to better serve the domestic fast-growing telecommunication and network development.
FSP major objective is to be the excellent manufacturer of network components, equipment, systems and services. Its major strategic goal includes: maintaining close customer relationship; aiming for leading position in terms of technology; comprehensive product and service solution; focus on both manufacturing efficiency and product.
FSP welcomes cooperation with communication network system companies, government departments and research institutions, in order to keep up with the ever changing application demands.
Very interesting company, T4$!
Thanks for starting this so soon. I am on board!
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