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alea, I managed to go check out the wave-infosec-utube and it was a bit more striking in its apparent officialness. The statement was clearly scripted, clearly authorized. While the unknown base for the factor makes the material amounts pure speculation, it is clear that management chose to make the case for current double digit growth. Given how sporadic Wave revs are with the timing of a single renewal throwing trendlines aflutter, the simpler argument of growth is the important issue to try to parse at this point.
There is actually a fair bit of info out there, so I suppose maybe its worth the time scratch together a spreadsheet once again.
Obviously there is an ongoing cash flow crisis with no end in sight, but a couple quarters of growth could draw a line towards that end. Certainly the potential for meaningful OEM bundling from somebody other than Dell would be huge.
It is the sort of thing that gets me to going through P:S guesses again.
Definitely want to see the Q1 report given the uk 25% statements.
yup,
spears shall be shaken, shields shall be splintered ... and beans, don't forget the beans, beans shall be counted
tkc, I've got
2013 Q1 1.3m all europe
2013 Q4 1.6m all europe
so Q1 to yaQ1 is .32-.39m (all europe)
and Q4'13-Q1'14 is .4-.48m
toss in asia and one picks up .1-.2
If NA was flat that would be about 7% (Q4-Q1).
more or less
so, nice number but,
was an interval described? QoQ, YoY, DoD, CoC, MoM, EoE ?
tkc, just trying to be realistic, there was softness in Q4 billings that indicates much of the QtoQ was simply the timing of maintenance renewals. Now, there are 3 large customers, and hence 3 opportunities for such renewals in any given year but as memory serves GM was multiyear ... but I simply don't keep track like I used to (correlates largely to exposure).
Certainly 5% QtoQ spells an entirely different picture, but my money is on the pennies from Samsung - there is where the cfbe be. 5% Qto Q drops the ye qrtly cf deficit to $1m from 1.5m (roughly) .... it takes about 10% Q to Q of direct sales to carry all the water on its own, the thing needs Samsung bundling (to largely pick up the slack of Dell bundling erosion, erosion consequent in part to Credant, a relationship perhaps a consequence of Wave neglect/intransigence/poor focus).
I simply don't see evidence of 10% Q to Q, or evidence of 5% for that matter.
Of course there are asteroids in the universe, and Solms did carrot dangle a ye asteroid notion of sorts. As he seems carrot averse, it gives something resembling an asteroid or at least a meteor at least a double digit percentage chance of making landfall.
I mean, he has been hiring gov-beltway types and did really say he expects something measurable from govs plural by ye. Given Wave's current sales, I put measurable at around 500k for the US, half that for UK (cause they are commies).
technofunkomentally speaking,
(techno part first)
WAVX has finally put in a local bottom from the BigVolumeSpikyThing. Took a few days. Doesn't mean anything, but there it is.
(now funkomental part)
There has been ample time for the ATM to move some at better than a buck, but I can't parse what the ATM had available.
There is the 1/3rd rule, and there were statements of amounts available on a particular date, and statements about amount used to date but I struggled on quick glance to know which thingys referred to 12-31-2013 and which thingys were more to-date-report-date (ca 3-13-2014).
There was $6m and change by the 1/3rd rule, and there was $5m and change of ATM activity 1-1-2014 to 3-13-2014 and I don't know the relationship between the 6m and 5m on the timeline. So, if somebody does that would be good.
Low end is they had $1m left to use under the 1/3rd.
End of Q was 2.1m, ATM good for $6m and change, that gives $8m and change, burn $2m and change per Q, runway 1 cy. Expect cash on hand end of Q1 ca. $6m ... then $4m Q2 and so on till broke at ye ... which ... presumably ... on a Q by Q basis affords a 1/3rd rule recalculation. Modest growth in revs(2.5% Q to Q) buys $1m and change over the year with a final Q cf deficit of say $1.5m.
So, at 10 cents a unit, Wave would need to find 15m new units per Q to bundle minimal software in, or should a bundle be a little more enabling maybe 3m units a Q.
That would establish the core business cfbe with astroids then actually being what they kinda coulda shoulda been in the past (cushion and money for prudent investment, or, heaven forbid, something that could show up as a GAAP g+.
So, is Samsung going to ship 3-15m units per Q at .1-.5/unit by the time Q1 2015 rolls around??? That is the question. If so, then this thing becomes speculative investment grade that could reasonably start to see P:S > 5 (or even 10 in underlying growth rates were adequately robust).
Expecting diluted shares out to be ca 50m by then, one could imagine (in this perfect storm) a STABLE SP ca. $2.5, or $5 if the growth rates looked robust (say 20%+ yoy).
Yes, the long and short of it is IMO that anything resembling getting a handle on dilution-for-day-to-day-operations and anything QoQ, YoY growth and one would reasonably expect P:S 5-10x, and if the underlying growth rate was comparatively impressive with decent margins, then 10-15x.
I pretty much do all my WAVX SP speculation based on P:S, and with that it seems that anything resembling some c.f. stability re:day-to-day (the pennies recurring being central to this) then one can get towards the 1/2 billion mcap without doing too many kool-aid body shots.
And it seems with 1/3rd rule and such they may well need to get these thing to line up w/in a year.
Obviously any asteroid strikes are unpredictable (as is their outcome).
tkc, I have yet to observe what I would call SP stability, and am somewhat more pessimistic on SMB type sales growth. Q4 billings did not impress. But at some point Samsung should ship some TPMs. One may forget but at some time prior to Dell dwarfing everybody else out, BRCM was a reported 10% customer (but pennies).
alea, I'm interpreting this:
http://www.wave.com/buzz/pr/wave-systems-begins-shipping-its-management-software-samsung-electronics%E2%80%99-tpm-security-chips
as recurring bundling of TSS at a minimum for a minimum royalty reminiscent of BRCM, perhaps less than a dime.
Obviously, they could just give it away, but I am fully biased towards the idea that they will recover at least the BRCM level of royalty on the least common denominator BRCM type deal. As the deal was a SKS deal, I expect it to be for a remarkably small amount (pennies) with SKS purring at night about flags ... but recurring nevertheless, and based on previous investment with nil COS.
alea, it seems to me that all that is being revealed is that
1. they plan to sell a significant amount of what they do have within the next year, and on that the price model is pretty well established
2. they plan to begin to sell things later that are comparatively new on which they are giving no indications of a pricing model
3. they plan to bolster their Dell-like relationships with other OEMs ... but so far it looks more HP-like
It seems they likely have the cash to get through the cy, more or less, and that pretty much would exhaust the 1/3rd rule in any event , so for the most part it is basically a "trust me" situation, one that has been the case ever since a number of bean counters pointed to the divergence of revenue and expenses that was so stunningly and willfully run off a cliff.
I think the lack of clarity speaks towards what is, their back is to the wall and they must land some big deals in the cy of which the revenue structure is pretty well understood, and the rest is simply too vague for current speculation both in timing and in structure.
It is just not an investment grade sandbox right now and I can't see that it will be for some time.
On the flip side, yesterday's activity gave some indication of just how crazy this low float low mktcap thingy can get were they to actually serve meat.
for some time I've felt folks who say this thing could 5 or 10 bag in a week were stuck in 15 y.o bubble fantasies, but yesterday gives pause.
I have to rethink this equity.
Technofunkomentally speaking WAVX is scrambling to find a 'new normal', which until found could as easily be the old normal as not.
One has the head bangers (equities that are banging their heads testing resistance )and bum thumpers (equities that are thumping their bums testing support).
WAVX is more of a bummer than a header for the time being, the sawtooth channel of lower highs and lower lows.
While it is fanciful for longs to hope that the ATM cashed a couple mill shares in the 1.90s, fact is it would seem difficult for a cfo to be so prescient, but perhaps dumping blocks on the way up and down gave a couple million shares with an SPA of >1.50, and there is no question that $3m in the treasury would be a good thing.
Most importantly the entertainment value of WAVX has appreciated considerably, it had been a long time since it did one of the bat-crazy volume blows on snooze PR. One has to love that stuff.
Once the retrace set in my technofunkomentalism put support at 1.48, (curiously the same value my own program provided some supply) but 1.48 does seem to be putting up a bit of a struggle albeit on diminished volume. As the algorithms follow the volume on the way out the door I suppose we might see where it wants to trade for the day.
A hilarious article from thestreet on a different board claiming MU trading up (0.5%) on the backs of a partnership with WAVX. (Written by an algorithm apparently).
ATMs must love HFT,
when the HFT programs go all bat-poop crazy the ATM can slide in without making a blip ... I mean, assuming that is what is
given the float and the vol,
this thing could land anywhere tomorrow with closing the gap being as likely or more likely than anything else.
currently it is just an algorithm wrestling match, there is no decider in the building.
yup eom
I'm invariably left with the feeling that perhaps I've just gotten too old and thick to parse those pearls. Either way I shouldn't be left wanting to restate essentially everything he has ever said or written. In this case it was clearly passed across the desk of another and it still leaves me feeling odd.
And I see Trippi is back on board.
speaking of mashed potatoes
"At Rivetz we strive to provide solutions that will delight the user and also provide real provable security value in the transactions. Raising the consumer’s expectations for simple transactions with best in class safety. Setting the bar for modern commerce and driving the users desire to adopt a better and simpler commercial relationship with any service. A relationship that meets the privacy, safety, and simplicity expectations that invite the user back for more."
whew
yea, pretty sure the point was not worth making,
but it seems that getting all dressed up in technogeek expert garb and then saying something is technically without merit because there are not long lines of customers and that it is proprietary just seemed to be making mashed potatoes of language.
but (s)he doubled down, so I surrender. I got no bones with badgering awk or anything, but for a second it seemed like somebody might illustrate an idea only to have it buried in a heap of technical arguments about long lines.
so it goes.
it seems awk seems to think there is a place to sell server software, essentially a key server that allows enterprise administration of dlp over content distributed internally or externally. That sounds like great fun, but doesn't seem novel to me, but I must admit I don't know much about enterprise maintenance of encryption keys for access to a hybrid of local and remote data.
I certainly wasn't defending (or attacking) the scrambls property, but rather foolishly trying to moderate boundaries for perhaps some critical consideration.
To the extent that one supposes Bill assigns value to Wave properties via feedback from customers instead of visionaries, then it would seem some customers out there have expressed some interest in scrambls-like functionality. The difficulty is (for Bill, I hope he knows) is that many many have for a very very long time been perfectly happy to express interest in Wave's projects ... at Wave's expense. Or maybe he is wise to that and there is some real interest out there. expats notion that the end-game would be for enterprise to give keys to Wave as per the scrambls beta seems rather naive, and it seems almost certain that awks notion is more in keeping with the vision ... to sell scrambles server to organizations that would like to .be able to exert dlp on content internally and externally presumably as an add-on to customers who are going in and on with TPMs and ERAS.
So the damn breaks on the back of Chronomancy.
alea, it would seem the some of the ideas are testable, one could kill a weekend pawing through the 10ks of a collection of small companies and see if this COSO statement is comparatively common.
Not that I am so inclined, definitely a rainy day with nothing to do project.
tkc/wavey, I certainly wouldn't be surprised if the next CC did not involve the new CFO directly addressing the COSO clause and essentially pledging to get that stain removed from future reports.
It would seem to me it would be a bit embarrassing to be the signatory of a report with such embellishments in consecutive years.
If the books are bad it may be too big a hill to climb to remedy the issues. Initially I thought the COSO clause came with the SFND acquisition, but it would seem at some point one draws a black box around that and moves on.
No doubt such hubris interferes with WAVX being a genuine investment grade publicly traded equity.
cypher, at the level of the first approximation I would assume that it would be in increasing sales of what thye currently sell ... some SFND dlp, ERAS, and TDM. They lost a fair bit of TDM with SKS wandering about doing his vision thingy (Dell now uses Credant ...). Wave predated Credant in the Dell relationship, Credant had dlp stuff (some licensed from SFND) and worked it into drive management. Dell decided to reduce ESC licensing fees, increase Wave TDM fees knowing that they were walking away from Wave for TDM and bought Credant. Dell likely found Wave to be a scrambled partner.
A more aggressive and better focused and managed Wave and the whole Dell>Credant thing could be a different story.
So ...
1) SEDs volumes do appear to be increasing, I'm seeing SED requirements being phased in with a number of customers, and expect that growth in SED management tools is a reasonable place to expect revenue growth.
2) dlp seems to be flat with Wave, but it has a pretty high beta, so perhaps stabilizing dlp at the high end of its oscillation is a reasonable place to expect at least sales stability if not growth.
3) ERAS ... a tougher nut to crack, and while the future is mobile the PC infrastructure is remarkable insecure and it as a platform is not going anywhere. Phones are not going to replace PCs in the workplace for some time. It is a reasonable place to expect revenue growth.
4) Basic TPM enabling for Samsung should generate some revenue, the amounts are entirely uncertain, but the investment in that is completely made, margins should exceed 95%.
The sum of those parts should get the company to cash flow positive.
Real money comes from getting significant adoption of TC, which has always been the case, but one that can be more reasonbly pursued from cfbe +
Preplanned gutting of Wave and Bagalay ?
So, piecing together the whisperwire has the following:
Len Veil
Brian Berger
Rich Lee
SKS & MS
(in no particular order)
all variously moonlighting, developing start-ups, seeking to privatize assets and so on.
Then SKS got canned and pretty much everybody else that was double-dipping.
The whisperwire is the Bagalay blew the whistle on this larceny(IMO) with the help of Frankenburg. The heavens know The Gilder is and always has been all about self-serving visions and grand schemes of self-appointed personal awesomeness (IMO). Bushnell? Who knows.
The 10k indicates Berger might sue - and the 10k goes on to say that Wave has told Berger not to steal anything. Perhaps the 10k should admonish people to not murder, commit arson and so on as well - what the heck.
The 10k finds the books to be illegible.
SKS was fired shortly after a 3% dilution to pay Rich Lee for moonlighting (as memory serves all IMO).
Frickin precious.
The irony? Bagalay was the only one voted off.
I'm not a legal person and don't know what constitutes 'cause' but I did not think incompetence was among the things that qualify. Things need to be improper - against the law or against the employee contract/company rules (all IMO). I don't know if Wave had any rules much less rules related to performance. With a CFO one may well be able to find something improper to use as a stick to claim cause, but I just don't know.
Is there underlying meaning in canning on the last day of the Q? Given that Feeney has a parachute and all that (unless one takes the 'cause' angle) how does it all hit the books on AP etc.?
alea, yup,
that COSO bit from the 10k did not make for good reading. I was left with the impression that the 10k was more or less saying:
Wave: "This is what we think the numbers are, but we have no idea."
KMPG: "Our independent auditing agrees that these numbers might well be the case, but we have no idea ... and readers should know that - know that neither Wave nor KMPG can make heads or tails of the books."
NW, FWIW the 10k seemed to indicate that BB was considering suing, but not that a suit was filed ... I don't know if ts a fait accompli, but the last bit about Wave more or less stating in the 10k that they advised BB not to steal anything suggested it was less than a squishy love fest.
alea, I have never heard of the 1/3rd rule, but it seems this time around Wave is constrained on their ability equity finance by factors other than market willingness. It seems the confluence of mcap (sub 75m) and amounts sought bump into a rule. So my back of the napkin landed more or less where tkc landed, they have about a year if all stays more or less the same. I don't know if the 1/3rd rule applies just to ATM facilities or what, but I have never seen a disclosure that they may be prevented from issuing shares by rule. Obviously other avenues of capital restructuring are likely on the table, but it does seem that disclosures indicated that their are now limits to Wave's printing press. It seems that perhaps something as simple as a doubling of SP (which would clear the 75m mcap) would disencumber them of the rule, but that while simply may not be easy.
On a separate matter I find Berger's threat of a lawsuit remarkable, not the notion but the amount. What were they paying this guy such that he claims $180k+ in lost wages over the course of a couple months?
... the costs of restructuring.
the company's and auditor's discussion I found to be, uh, remarkable
It seems the company and auditor are basically saying something to the effect of:
"we'll sign the books with the caveat that neither we nor Wave have a clue what they may or may not mean because, basically, they are a stinking pile of it"
It seeems the ATM must soon be turned off:
At the time of the December 18, 2013 financing, we were required to calculate the amount of capital we were allowed to raise in accordance with the General Instruction I.B.6. on Form S-3, otherwise known as the "one-third" rule. The one-third rule restricts the amount of capital that can be raised in a 12-month period provided that the registrant's aggregate market value of the common equity held by non-affiliates is less than $75 million. As of March 11, 2014 our approximate aggregate market value is $42.4 million. As a result of the December 18, 2013 financing and the application of the one-third rule, the funds available on the 2013 shelf registration statement were reduced. Until we attain an aggregate market value of $75 million or more for shares held by non-affiliates, our available funds under the 2013 shelf registration statement will remain restricted to the one-third rule computation. To determine the amount available under the one-third rule for future financings, the aggregate market value of the common equity is calculated using the price at which the common equity was last sold, or the average of the bid and asked prices of the common equity as of a date within 60 days prior to the date of filing. As of March 11, 2014, approximately $11,718,000 in gross proceeds remains under the 2013 shelf registration statement, however we are restricted to $6,721,000 as of such date due to the one-third rule. The total funds available under the 2013 shelf registration statement are allocated to the At the Market Sales Agreement with MLV which may be utilized for future financings.
It hasn't all been peaceful:
Brian Berger, a former employee of Wave who was terminated on November 1, 2013, has indicated that he may file a lawsuit against the company for unpaid compensation and penalties in the amount of approximately $181,810.53. The parties are currently in discussions regarding Mr. Berger's claims and the Company is evaluating its defenses. The Company has also advised Mr. Berger that he may not misappropriate Wave's proprietary technology and information and that the Company has reserved all of its rights with respect to any such activities.
RoT, you probably right that it's more than .25, but I seem to remember the last renegotiation that raised the royalty on things used (TDM e.g) but lowered the price on what is seems nobody uses (ETS) sent the royalty for ETS south of 75 cents, suppose I could look it up. Then, of course, Dell went with Credant for drive management, so the whole story about how the new Dell deal was going to be a winner went up in smoke, they simply raised the royalty on what they were going to no longer buy and lower the royalty on that which they were going to still buy. I don't know who Dell uses to bundle biometrics functionality, but that paid decently if I remeber so if Wave is the biometric vendor then that would fill in some of the $3m.
Snackman, yours is slightly stronger wording,
this is the quote:
We have -- I won't go into too much detail, but we're seeing progress on the government side, both in the U.S. and the U.K. And we believe we will start to see some credible sales from both those governments before this year is over.
yes, it is a carrot, a modest carrot, but a carrot.
I call a "credible sale" anything in 6 digits and the language "we believe we will start to see some" gave an incremental flavor to it, perhaps even of the larger pilot type but not as strong as "will be credible deals with the British and American Governments THIS YEAR".
on the Samsung bundling ...
the basic "minimal" features figure to be in the sub-dime a chip area. While one cannot speculate on Sam's volume, they generally move a lot of stuff.
Comparing it to Dell bundling would be a mistake IMO, we are talking more like BRCM bundling. Dell bundling was OEM bundling, not chip bundling. Solms was careful to discriminate these two things, and BRCM was pennies a chip. Basically it is the TSS and it interacting adequately with bios to have an "on" switch (IMO).
Basic client side management is more like the Dell OEM deal, which has fallen in value to around 25 cents as memory serves, but at least 25 cents can add up while the pennies thing barely buys doughnuts.
All of that said it seems the market is now fully there for SED sales and management. Attestation is at least entering the vocabulary.
tkc, yup.
The shakeup is visible in SGA, RD and SBC. The "guidance" seemed to be that they are done as far as net cutting of exp. So it is really just about sales growth to close the 2.5m gap. As they are apparently focusing on large customers (spooky to me, I felt SKS' transition away from SMB some time ago laid part of the groundwork for the fiasco) it seems on e would continue to see rather bumpy cash flow ... land a big deal, go very positive, no big deal next Q go negative etc. GAAP however would be more stable as the continue to defer recognition of large customers.
So, it they pulled a GM type $10m deal(s) in Q3 then Q4 would go to b.e. (even GAAP b.e. with any growth elsewhere at all), and it would presumably keep it that way for a few Qs.
Folks would invest in that. Wave is currently selling for around 1x sales. Anything resembling business management and growing sales would move that to 5x sales without too much trouble if the specter of equity to fund day to day was alleviated.
So the bullish case is this time next year they are reporting revs of $9m, gain/loss of 0.00, 50m shares outstanding trading at 5x sales (mktcap 180m), SP $3.6. That bullish case is based on carrots as there were apparently carrots (its funny, my ears must have completely filtered out the carrots, I simply did not hear this:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=98783803
and those "credible deals" would have to weigh in at $10m recognized over 4 Qs.
More realistically, one might imagine some significant deals during 2014 that achieve cfbe, but nothing resembling GAAP g/l b.e., in which case a much more modest SP recovery would be more likely.
Cash-flow,
at a crude level they burn $2.5-3m/q. They walked in to Q1 w ~2m, sold equity for ~5m ... that's 7, burn 3, 4 left end of Q plus any additional ATM over the next two weeks.
I can't see losing the going concern clause this 10k.
It would seem that would require ~$10m.
Given that, current treasury efforts would be more to satisfy customers than it would be to satisfy KMPG (to the extent they are separable).
So, how much is enough (i.e. when could one speculate backing off the ATM?
On EMV,
Solms said it was a new idea or opportunity for Wave, am I the only one that thinks this is a very old thing ala CyberCOMM etc. perhaps the market has matured, or its a new focus thingy ... but there is mountains of Zaptronix, cards, card readers, Europe ownership etc ... barge even found a shipping manifest with some boatload of readers rounding Cape Hope on their way to Brussels (the peak of "DD").
exciting ... sure, why not? But new????
blue, the metaphor is a good one,
with medical bills being THE leading cause of US bankruptcies and all.
So don't think, just grab the bloody knife.
Got it.
I'm missing the part where shareholder value is protected in all of this cut first count the beans later approach. But alea makes a good point, and one you have touched on before, perhaps some of these folks are walking without severance, perhaps even with cause.
There is no disagreement on surgery, just perhaps in whether one does things like prep for surgery or if they just barge in.
Fortunately (it appears, presumably find out this evening)the BitCoin fiasco was a very shiny object to the always distracted science club hanging out at the water cooler at Wave.
I argued some time ago to just make them want to leave. Cancel scrambls (the cool fun thing) and assign them to improving the ERAS experience (very boring) and get updates on progress .... weekly. That would make Rivetz seem pretty attractive to folks who have largely played with cool toys forever.
Looking forward to the numbers and hopefully Q1 guidance.
RoT, the SFND dlp and SED stuff has legs and with "new focus" and it would seem that is what to look to for growth near term. On the other thingy, the accelerated maintenance renewal, it would seem that for it to be worth mentioning it would have to be a large enterprise and there only so many fish to fry in that category (GM, BP, BASF), me thinking BP. I thought GM bought a multiyear that was still good for a bit, so I count them out. BASF ... can't remember the maint portion of the deal. I always thought BP had more platforms to deploy, the first PR didn't add up, and the linkdin sleuthing supported the notion they would be back to the table for another major buy or two. Blah blah blah, so for me one needs to back out the maint renewal from last Q as more of a one time (rare) thing and try to build from there, so billings coming in as flat would still be increased breadth to me but likely disappointing for many.
Now guidance, well that would be fun.