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player, seasonality,
I have no idea what is the busy Q for companies in general, last year Q4 disappointed me, I said so, argued that the baseline non-BigDeal was critical, and got lectured about forests, trees, and GM doubling down. I was part of a small cadre that was saying if you back out GM numbers, sales were declining (tkx, xxxcslewis as I recall). But then it reversed in Q2 and Q3, along with my mood.
Q4 and Q1 were down last year, and I had been plotting/guessing Q4 was going to follow Q3 instead of following year ago Q4. It followed year ago Q, not most recent Q. There are no useful numbers prior to last year. With such a small sample I didn't adjust Q4 for Q4'10 weakness.
So, should I adjust Q1 as well, for what was Q1 weakness? That will certainly be one of my mocks.
As far as gov (as opposed to business), I believe Q4 is by far the worst Q for orders. Its the beginning of the fed FY, they never have a budget, all agencies are operating under assumptions in continuing resolutions ... gov spends its money in Q2 and Q3.
Well, that happens to also be when dotism has for some time guesses DoD might at some level engage. Indeed, many a large DoD order maps to that time period.
Having long placed more value in non-DoD non-LargeEnterprise business with the firm belief that it represents not only keeping the lights on and limiting dilution, but actually represent a significant growth opportunity, I am obviously disappointed in them falling a million+ short of what I was hoping.
To me, that million+ can only mean dilution. The loss, per se, doesn't phase me. I thought most guesses were short, and was far from believing the Safend dust was settled on the Safend deal and that much of that cost was going to manifest itself in Q4.
Going forward the company now has considerable overhead on flat sales.
The current situation has largely returned Wave to a binary, not something I like.
A Bean Laced Abacus;
Ok so, 2010 was $26.05m revs, $30.16 exp, loss $4.11m
2011 non-Safend revs were up $8.3m from 2011 so 2011 non-Safend revs were $34.35m.
Revs for 9 mo ending Q3 were $25.10m, so Q4 non-Safend revs were $9.25m.
That is down from $9.53m for Q3. That goes in the bad column.
The exps statements in the interim filing are absolute gibberish to me, and seem couched in EBITAS talk, which I don’t do. I could see EBITA, but tacking on the S is just plain sick.
But, as the loss is given ($10.5m) and the loss thru 9 months was $6.16m, Q4 net loss was $4.35m
So, somehow one has to pile in Safend numbers to get to the loss a loss of $4.35
I was using $1.6m for Safend revguess and $2.3m for safend expguess, but that doesn’t give a big enough loss. If you toss in the $1.8m in non-recurring acquisition cost you get a loss of 10.8 (too big) but close enough with either Safend bringing in more than 1.6 (doubt it) or my handling of the added costs a bit much (my guess) … so shaving off the diff to gets to
…… drum roll
Q4 revs: $10.8m
Q4 exps: $15.2m
The total loss matches up,
FY2011: revs $35.9m, exp $46.4m, loss $10.5m
yoy revgrowth +38%
QtoQ revgrowth +14%
QyoQ revgrowth +54%
Revs for Q4 were disappointing by the tune of around a million dollars (for me).
Dell, FWIW Dell has been massively over-halling its website.
Products:
Wave: zero
Credant: zero
DigitalPersona: zero
Winmagic: zero
Securedoc: zero
Safenet: zero
unix, for some yes,
some need to see profits now or die, others consider a revenue and market share maximizing strategy as infinitely more prudent at this juncture.
It is why so many analysts and SEC documents make space for things like "revenue growth" and "cash-flow" and "R&D".
They may seem irrelevant to you, but there is a whole planet out there that looks at these things very closely and very seriously.
Why you ask? Its all about the bottom line you say?
For some yes. MCD, XON, and PM are good investments as well.
The magnifying glass is in a different area for speculative growth companies.
(cue: now is when one responds with Xpress.)
Here, now, you are looking at rapidly growing revenues and market share dominance. Some believe in emerging markets that translates into something.
what is "Embassy II"? /e
jaschrod, could you clarify? /e
did you get SEDs?
DD, I have been watching this as well,
and perhaps you are why those pages take forever to load ...
I ponder a few explanations, but no nothing.
1. Dell has been carrying the Wave products on their site owing to the absence of an established Wave sales/reseller network. Perhaps Dell didn't enjoy getting Embassy questions, perhaps Wave didn't like their cut, and in either of those cases, Wave products are movingto its various other resellers (which we've seen PRed a fair bit lately).
2. Dell is done with Wave. That needs an 8-k, and there isn't one. Furthermore, the Dell revs show only signs of growing, although again what makes a dollar a Dell dollar is rather obscure.
3. Its all still there but Wave branding has been subordinated. The only way to know this is to order a bloody machine and see. It may include the concept that Wave products have been somehow merges into other things, but I really have no idea how that would work.
I guess one could call to order a machine and ask what's included. Not my cup of tea, yours? (I don't speak Czech very well, and here in the republic, I'm not sure what the word for "Dell" or "Embassy" is, and worry that talking about Embassies may get me a visit).
Dell
I have always expected the bundling of ETS with Dell to end (I don't get much traction around here with the notion).
I do not, however, expect it with current Win7 devices.
Should the agreement end, it would seems that would be an amendment to a material contract that would require an 8-k in 4 days.
Q3 Dell revs for Wave were at a record level ($5.7m).
Dell represented 60% of Wave revs in Q3 (although what component of that was bundling is unknown).
My abacus projects Dell numbers for Q4 at 45-50% of Wave revs (again, what portion of that is bundling is unknown).
An abrupt loss of that revs would be rather trying. Obviously, some of it would be filled by other means (other resellers), and one retail ETS is worth a couple dozen bundled ETSes.
in the end, I do not believe that unbundling has occurred, I believe an 8-k would be in order.
I belive it is something that warrants close monitoring, and I have, and I have observed what DD has observed.
I have not, however, seen any cogent explanation for it.
Seeing that the SWAG spigot is wide open,
and seeing that Wave said they would issue an 8-k, that indicates something material has come to light, I believe the likely have 4 days to comment in an 8k (SWAG mode remember?) and the 8k will likely point out the issue, something like,
during xyz period (sometime in the last few years) Safend recorded something as a ABC (cap investment e.g.) that needed to be recorded as XYZ (a general expense e.g.) and so we need correct and carry it all the way to present, or that they have always booked something one way that we must book a different way and this will/will not affect things like cap loss carry over or whatever. If it affects something that was part of the consideration for sale, adjustments will be made using either SP at acquisition or current SP.
When the 10k does come out all attention will be on SAfend particulars, and I will carry on looking at revs, Dell-component, cash, cash-flow, and some indication of the direction/magnitude of the expenses vector.
Love the SWAG spigot.
yes, rolling with rubbish and then amending is worse then saying, 'wait a minute .. its not right.'
1260, that's my guess /e
workingcapital, holey barf bags,
you're not not seeking to nudge me into the direction of any sort of conclusion as to what that means are you? ;)
I'm just pointing out that there is a share escrow, and the way I read it its to cover any Safend screw-ups in representation, at least it kinda read that way to me. The escrow is shares, not dollars as I read it. (its worth less than $1.33mm today, could be worth more or less some other day)
2/3rds frees up in 12 months, the rest in 18 months.
It would simply lower the total share outlay for the acquisition as I read it (Safend sellers surrendering some of their Wave shares back to Wave).
My totally uninformed guess is that somewhere in the international thingy aspect, representation of revenue, representation of liabilites, or some sort of indecipherable hocus pocus like goodwill and friends hit a snag, and it will iron out.
Pure guess.
Agreed its sales that matter, but the numbers report the sales, and with only a few exceptions (very large sales) nothing else does. I fail to understand the reasoning in wanting sales, but being uninterested in them being reported.
Pursuant to the terms of the Purchase Agreement, certain of the Selling Shareholders have agreed to indemnify Wave and its affiliates for liabilities arising out of the matters identified in the Purchase Agreement, subject to the limitations described in the Purchase Agreement. The Purchase Agreement also contains customary representations and warranties with respect to Safend, the Selling Shareholders and Wave. 600,723 shares of Class A Common Stock, representing $1,330,000 of the Total Consideration payable to the Selling Shareholders, will be held in escrow pursuant to the terms of an escrow agreement (the “Escrow Agreement”) by and among Wave, the Selling Shareholders and ESOP Management & Trust Company Ltd., as escrow agent. The shares of Class A Common Stock held in escrow will serve as a reserve for any payments by the Selling Shareholders in connection with (i) any post closing adjustment to the Total Consideration in respect of the actual amount of cash, debt, working capital and transaction expenses as of the Closing Date and (ii) to satisfy claims for indemnification by Wave pursuant to the Purchase Agreement. In accordance with the terms of the Escrow Agreement, two-thirds of the escrowed shares will be released to the Selling Shareholders 12 months after the Closing Date and the remainder will be released 18 months after the Closing Date (in each case, subject to reduction for any then pending claims).
As an annual gets an independent audit, my first guess is that it maybe stumbled there. Wave has to rework and resubmit to auditors, just my uninformed guess.
ATM = Wave selling shares from shelf directly into secondary market without negotiating a PIPE. (ATM= at the market)
http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=8363599-808-8933&type=sect&dcn=0001104659-12-005098
And while nobody knows definitely if they are selling shares through this facility, I think they are selling some, and in any event the mood of the facility may well be bearish.
alritethen, Samsung 2012.
I don't have Samsung generating revs in 2012 becuase given the timing of the announcement I don't expect meaningful shipment of Samsung devices and chips with royalties to Wave for any sort of TC enablement in 2012.
I do think that is is reasonable that Samsung may well become a 10% customer, and given their volume, overtake Dell as Wave's leading OEM customer.
Should Samsung start royalty based bundling Wave IP in with devices and chips, the ramp would likely be much quicker than the Dell ramp ... mobile devices simply turnover faster than PCs. But not 2012. Samsung can cover a lot of ground in a real hurry, they have shown that, but it still seems meaningful Samsung revs would likely have to wait until at least mid/late-2013. I would expect, however,for Samsung based revs to gain visibility prior to them actually occurring (as was the case with Dell).
For historical perspective the Dell ramp is as follows:
2005: nil (Feb-05 reseller agreement, Nov-05 bundling agreement)
2006: $1.1m
2007: $4.5m
2008: $7.0m (Jan-08 deal extended and higher rate, Dec-08 another rate increase)
2009: $15.3m
2010: $20.7m
2011: $22.4m (est)
If one considers the Samsung agreement a development agreement, one would presumably wait for a bundling agreement with modest sales to follow and then a pretty steep ramp.
trustcousa, I am not an elder,
but on supply and demand for shares
there is potential supply in
1. Safend
2. a number of Warrants set to expire (Dec, Mar, Apr)
3. the ATM
and demand is essential driven by dollar sign news, of which there is none since BP, and BP was the smallest of Wave's 'large orders'.
That the BP event was apparently a first installment of 18k seats against a target deployment of 80k seats is not factored in as that is 'down the line'.
Finally, the trading has been odd. Large bid and ask will lock a penny apart at e.g. 1.74 for an hour, and rather than sellers taking the ask at 1.73, it appears they wait until the ask goes away, and then step in to sell their shares at say 1.70. Most downward activity has been short pulses when the ask is not there, which is what one would do if they were tying to get as little money as possible for their shares. Again, rather odd. That's just what it looks like (and if it was true it would be SP manipulation)
That said, I generally discourage couching thing in terms of manipulation and rely more on the supply and demand mentioned above.
I know, that was too much detail.
player/mig, rev growth
bridge, scramlbls,
Fair enough, I misinterpreted your post. It seems you are saying you expect that they have learned from Xpress, and would not be silly now with that knowledge in hand, and I read it as you saying they had previously demonstrated wisdom in when to pull a plug or otherwise not get distracted. My bad.
24601, the restatement of the Jan 8k in Dec of 08 that stipulated the increase in royalties states that the increase can be vacated after 30 days notice. Seeing that the money flow continues and the bundling is continuously referred to, it would seem any cessation or amendment (particularly given it is a 10% customer) would require an 8-k w/in 4 days of the event. Chatter to the contrary is simply not supportable. The agreement has always been a permit to bundle, not a requirement to bundle, and no minimum shipment etc., all to be considered in the context of the fact the Q3-11 revs from Dell were the highest on record.
glo, not a surprise, but a number (and my final numbers).
The revenues, if they come in at the not-surprising level, will boast of strong revenue growth.
For those looking for revenue growth, they will see what they want to see: growth.
For those looking for bottom line loss, they will see what they want to see: loss.
Whether the revenue growth interests or the earnings loss interests win the headlines will likely govern the SPIN.
Final numbers:
revs: $12.0m
exp: $15.0m
loss: $3.0m
cash: $1.3m
AR-AP: $0
That would be revs +26% QtoQ and +71% QyoQ for those looking for top-line growth.
That would be a loss of 3 cents a share, up fro a loss of 2 cents a share QtoQ and QyoQ (or something like that) for those looking for loss.
Hence it is a rapidly growing prelude to success, or a struggling gasping prelude to failure, depending on what one is looking for or what one thinks is most important today.
bridge scrambls,
I totally don't get what you are saying.
With Xpress they dumped heroic amounts of money into something on the side when their core business was not generating revs, and did so to the extent that they had to burn serveral PIPEs to keep the doors open ... this is an example that they are prudent?, because after they spent there last dime they stopped?
scrambls may or may not turn out to be brilliant, but seeing it through the Xpress filter can only make one cringe. And, SAME STAFF!
bridge - yup,
Sonic Wall is a different layer, their site doesn't even mention TPMs, SEDs, FDE, TCG ... sure, I guess one could say Dell has changed their mind, is dumping TPM/SEDs and their managment and so on, but it is a reach. There are pieces of the Safend suite the seem to bump into pieces of the Sonic Wall stuff, but in the end, Trend buying Mobile Armor was more significant than Dell buying Sonic Wall.
Dell, I've looked pretty hard, and have not found anywhere where there is more defining language than that.
Should one hazard to infer, Q3 was the highest Q on record for Dell revenue, $5.7m, seeing that the language allows them to not bundle, they don't seem to be ramping down.
When asked at the CC about hitting $45-50m in 2012 I thought Feeney said ..' well you got 20m from Dell ...' and blah blah blah (strictly from my feeble memory).
While I don't expect the Dell relationship to stay as it is indefinitely,I can't see it changing with e.g. current Win7 machines.
I have always expected and continue to expect the Dell relationship to end more or less when TC takes hold, and for the product to sell independently and not bundled as part of more comprehensive solutions.
That is 100% completely uninformed unaligned Ouija board gut feeling stuff. As Win8 TPM wrapper and features for the client improve, I expect client bundling to be less distinguishing for Dell, but that there will be customers that use ERAS and for those, ETS will be on that particular companies/agencies standard order package ... so in the end at a higher price, on fewer machines i.e. unbundled, and very possibly for greater revenue to Wave.
Or not.
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kaleid, as a scramlbs naysayer,
I would think that a load test would require load. I suspect my netbook could handle the scramlbs traffic. I would think if one wants a load test they hire an outfit to bludgeon your servers, likely for a lot less money than scrambls.
I think scrambls is what it is, a cool thing by the wrong folks at the wrong time.
awk (and weets) thanks for those points(edit)
it gets back to Tom Clancy to me. In Clancy's world everything works. Yes, HP and Dell have upgrade tools. Cool. Hopefully they work very well on all of the things they have shipped.
I would be happy to have the OEM-bios refresh tools work flawlessly, legacy TPM activation to work flawlessly, and I am not ruling out that happening. But I'm going to hedge my expectations for rate.
Remarkably sophisticated and extremely well supported guided missiles often... miss. I love Clancy's books, but they are filed under fiction.
Considering that much has happened slower than expected, I am going to figure I am correct on this until history shows me incorrect.
weets, bios refresh
from your post:
wavedreamer, I agree with all of that.
The BIOS issue isn't a deal killer per se, I expect it to negatively impact the rate of deployment.
SKS indicated that the BIOS issue is a matter for machines more than a couple years old, the actual slice of the pie that the more difficult machine represents is unknown, but presumably less than half.
If somebody is going to solve this, it would be Wave. They have worked with and worked out compatibility with all sort of bioses, TPMs etc for some time. Nobody is more fluent (IMO). In a sense, this legacy cluster-stuff is an advantage for Wave ... its one thing to enter a shiny new market with a shiny new product, its another to enter a market with legacy problems and try to compete with a firm so fluent and entrenched in the nuances (indeed has made dealing with the nuances a part of its business plan).
Again, its an adoption rate issue to me, but a rather important issue in my estimation.
rick5, not much help here,
Acer's market share is falling, and they are less of an enterprise platform seller, we wouldn't see them until they got to around $1.2m+ per Q (making them a 10% customer). I certainyl make a reasonably hasty path to the 10% line in Q reports to get the Dell number and look for any new entrants. BYOD seems like the only place were one might expect Acer to plow into being a significant top-line contributor (that is if one measure significant as 15% plus, and 10% is a moving target).
On the flip side post-Gateway and post-Packard-Bell acquisitions Acer has endevoured to carve out some enterprise space, I just don't know how well that is going. The Acer Travelmate Timeline series of notebooks now have TPMs, and while it is supposedly in enterprise desktops, the Acer site doesn't help on this matter.
bridge, my effort was to focus on both TC components. For TPMs there is a known incumbent on HP machines. For a bios-pre-boot sniffer, I am aware of no incumbent, and am aware of only one product (WEM). So, to me, the HP product in coolers post represents two distinct opportunities for Wave although there are very intertwined as Wave's NIST solution uses the TPM as the RoT.
These are the machines Wave needs to see to roll for WEM (IMO).
SKS' comments that older legacy platforms have unsigned or missigned BIOS making them intractable for WEM short of going threough and upgrading to properly signed BIOS platform-by-legacy-platform. I worry the the $500k WEM deployment slammed square into this truth, and hence the delay in commercial WEM roll-out. That's me, I'm a paranoid sort. I worry that the stated possibility for a second $500k WEM deployment may have put on ice as this whole screwed-up legacy bios issue is worked through. BUT!!, , >> new machines like this HP machine are fertile and ready to go.
So, while DoD e.g. demonstrated forsight in requiring TPMs for some time, much of this may have been made moot as they shipped with mangled bios. The whole notion of 'and 5 million machines go WEM live Q3 PR' blew up when SKS indicated its an engineering nightmare for much of this 'installed base'.
This, IMO, will hasten some machine refresh cycles, but slow WEM development and deployment. So, again, Wave needs these UEFI NIST capable platforms, or they spend a lot of time with AMI etc debugging legacy BIOS.
I would welcome a counterpoint from those more fluent in this or those with their various moles and listening devices regarding the $500k WEM effort.
Yes, point 2 is the exciting component. Presumably for example, one could devise a non-TPM Nist capable/compliant solution (the door is left open on this by NIST), but I see the TPM as the only broadly available extant host for RoT.
alrite, special sauce,
WEM is definitely a pre-production COTS solution tagertting the emergence of these machines (and to some extent legacy platforms with some difficulty as illuminated by SKS at AGC CC), and nobody else has that. Wave software runs on hardware, this particular HP hardware is begging for WEM.
alritethen, basically yes, as we have seen, what actually gets sold (e.g. HP-Wave-ERAS-TDM), varies from what is in the store-front. Wave clearly seeks to leverage its dominance of SEDs and its superior expertise in TPMs and its innovation with WEM to own these machines. So it is an opportunity for Wave or for anybody else targeting TC implementation. It goes in the ecosystem column.
bridge, just citing what it appears HP uses as its default means to implement TPMs, nothing about NIST/bios. Obviously even though this is the default means for TPMs, customers have flexibility as demonstrated by Wave ERAS-TDM deployments on HP machines. I consider the situation rather fluid, but they do have an incumbent TPM management suite. They could throw Credant under the bus, Credant could develop cWEM, or the could SIs e.g. could sell hybrids. It will ultimately be an SI/buyer action if one is looking at NIST-compliant gov machines. The HP-Credant relationship represents incumbency, just as the Dell-Wave relationship represents incumbency (although Credant's relationship will Dell is by no means flimsy, while Wave's relationship with HP would have to be considered flimsy). We'll see when these things actually roll. I believe what is going to become important is what customers have on the ground, that will be the defining component of incumbency (in this niche). Wave dominate SED management, I don't know if anybody dominates TPM management, as Wave has supposedly rolled $500k of WEM, and I am aware of no other such product there, Wave is clearly first out the gate with NIST-compliant bios-pre-boot integrity software.
I think Wave's strength in forever focusing on interoperability and diverse platforms and the considerable engineering weight I believe they are willing to bring to bear to iron out deployment difficulties makes them a strong competitor.
alritethen, HP has a reselller agreement with Wave but not a bundling agreement as per Dell and Acer. HP use ProtectTools to configure and manage TPMs. By all indications this is a Credant product. They have had this relationship since 2004.
unixguy, you are correct,
if the SP goes down and folks don't want it to go down then that would be bad. Excellent analysis.
Allow me to add:
If it goes up and folks want it to go down, that would also be bad.
If it goes down and folks want it to go down, that would be good.
If it goes up and folks want it to go up, that would be good.
player, thanks, haven't had the time to sift that site, not that I has any doubt about j's numbers or anything.
rwk, are you saying that
all taxes are equal, just that some taxes are more equal than others ... ?