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General Body Meeting 10.27.10. Agenda. Announcements Headline by Energy Junior Analyst Long pitch by the Tech Analyst Team Long pitch by the Healthcare Analyst Team. Events coming up. Doug Braunstein , CFO of JP Morgan Thursday (tomorrow) at 8:00pm in Statler Ballroom

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agenda
Agenda
  • Announcements
  • Headline by Energy Junior Analyst
  • Long pitch by the Tech Analyst Team
  • Long pitch by the Healthcare Analyst Team
events coming up
Events coming up
  • Doug Braunstein, CFO of JP Morgan
    • Thursday (tomorrow) at 8:00pm in Statler Ballroom
  • Rolla Huff, CEO of Earthlink
    • Thursday (tomorrow) at 10:00am, location TBD
  • Social event for MICC
    • The weekend before elections, Jai’s house
  • Elections for MICC Executive Board
    • Tentatively November 10th
maxwell technologies stop start design
Maxwell Technologies: Stop-Start Design
  • Maxwell announced it has commenced deliveries of Boostcap ultracapacitors to Continental AG for use in a new stop-start idle elimination system for diesel passenger cars - will extend battery life
  • Stop-start will become a major new energy storage market over the next 3-5 years. It has potential to be a multi-billion dollar market because it meets many of the new US and EU fuel economy and emissions standards
  • This concept used in hybrid electric vehicles saves fuel and reduces emissions by about 5%
telecommunication systems inc tsys

TeleCommunication Systems, Inc. (TSYS)

John Yoshida, Nicole Kim, David Kim,

Joshua Lyons, Zachary Peskin

general industry overview
General Industry Overview
  • Communication Equipment Industry
  • Heavy Hitters:
    • Motorola
    • Harris Corporation
    • Alcatel-Lucent
summary within us
Summary within US
  • Technological Innovation
  • Demand for Mobility
  • Expected revenue for 2010: $38.7 billion
  • Domestic demand is forecasted to grow at a real average rate of 3.5% for the next 5 years
key external drivers
Key External Drivers
  • Demand from wireless telecommunication carriers
  • GDP
  • Exchange rates
  • Demand from TV broadcasters
  • Demand from radio broadcasting
company overview
Company Overview
  • Global leader of high-availability and secure mobile communication technology
  • Provides end-to-end solutions for E9-1-1, text messaging, location-based services (LBS), and deployable wireless communication
  • Forefront of mobile cloud computing services providing wireless applications
government segment offerings
Government Segment Offerings
  • Technology
    • SwiftLink Deployable Communications
  • Services
    • Secure Satellite Teleport Data Landing and Transmission
    • Integrated Logistics Support (ILS) Services
    • Information Technology Services
    • Cyber Security Services
commercial segment offerings
Commercial Segment Offerings
  • Technology
    • Xypoint Location Platform (XLP) and Applications for Mobile LBS
    • Short Message Service Center and Wireless Intelligent Gateway
  • Services
    • Subscriptions to wireless application-based services (navigation, people-finder, points-of-interest)
    • Hosted LBS infrastructure, including E9-1-1
    • Software and system maintenance
past acquisitions
Past Acquisitions
  • Second Quarter, 2009:
    • AutodeskLocationLogic
  • Fourth Quarter, 2009:
    • Sidereal Solutions
    • Solvern Innovations
    • Networks in Motion (NIM)
advantages
Advantages
  • Provides integrated and end-to-end solutions
    • Speeds time to market and eliminates integration problems
  • Partnership with Qualcomm and marketing alliance in China
  • Serve 60+ wireless carrier networks and VoIP providers in 16 countries
  • Solid foundation and scale for support and maintenance
  • Many patents on applications
thesis
Thesis
  • Commercial LBS business growth
    • Reducing reliance on business
  • Continues to be undervalued
  • Rosy acquisition target
  • Inclusion to Indices/Funds
recent news
Recent News
  • 10/25/10: TCS receives $4.1 million in spending from U.S. Army for deployable satellite equipment and support
  • 10/20/10: TCS wins $9.6 million equipment order from U.S. Army for 3D terrain mapping
  • 10/14/10: TCS demonstrates LBS service technology at Huawei Innovation Summit
  • 10/06/10: TCS named sole awardee on $269 million contract to deliver U.S. Marine Corps integrated communications systems
location based services lbs
Location Based Services (LBS)
  • Added layer of convenience for QOL
  • LBS finally gaining a foothold
    • 2009: Only 21.5 million subscribers in N.A. used

 Immediate avenues for growth

risks1
Risks
  • Government Segment
    • Spending cutback
      • 44% revenue from government agencies
    • Control of contract
      • Government controls contracts; can terminate for convenience or default by TSYS
      • Can audit and review cost, performance, accounting and adjust based on results
    • Competitors
      • Government utilizes other big competitors; General Dynamics Corp
risks2
Risks
  • Commercial Segment
    • Lack of marketing from wireless providers
      • Providers neglect marking of Location-Based Systems
      • Discontinuation of text messaging applications
    • Competitors
      • Wireless providers look to other big competitors for communication technology; Nokia, Motorola
      • Rapidly changing industry; need to offer services to heavy influx of Smartphones
financials basics
Financials - Basics
  • Share price: 5.32 (10/26/2010)
  • 52wk range: 2.96-10.55
  • Market cap: $286.6m
  • YTD: -44.21%
  • Month: +41.36%
financials valuation
Financials – Valuation
  • Computed DCF with NPV
  • Average 12-month EPS - $0.50
  • 8% projected earnings growth for 3 years
  • 3% projected growth thereafter
  • Current Price: $5.31
  • Target Price: $7.07
potential short term catalysts
Potential Short-term Catalysts
  • 11/04 Q3 Earnings
  • New government contracts
  • Analyst upgrades (Oppenheimer)
proposal
Proposal

BUY 300 shares @ $5.31

  • Total value: $1593
quan eam analytics1
Quaneam Analytics

Using 300 days of past data the Z-scores follow:

    • BollingerBands= -1.45
    • MACD= 1.12
    • RSI= 1.60
  • Aggregating these we get an average Z-score of: 0.42
  • This means that conditional to the past 300 days of data, TSYSisat the upper 66% of its evaluation range.
insights
Insights
  • Technicals indicate price momentum has decreased
    • TSYS well in the range of Bollinger Bands
  • May continue to experience correction in price
    • RSI and MACD both has only come down slightly below overbought signal
prediction
Prediction
  • Short term price change is estimated to be flat
  • May continue to experience correction in price
emdeon
Emdeon

Coverage: Healthcare

Senior Analysts:

AmithaKurmala, Tracey Zhou

Junior Analysts:

Eric Hoffman, Yang Zhao

thesis and key debates
Thesis and Key Debates
  • Buy NOW!
  • Earnings Report: November 8th
  • Healthcare Reform is good for HIT
  • Acquisitions are predicted positive synergies
  • Valuation supports undervaluation thesis
state of healthcare industry
State of Healthcare Industry
  • HC expenditures are a significant component of the US economy
    • 16.2% of GDP in 2008; expected to grow to $4.4 trillion, or 20% of GDP, in 2018
    • HC administrative costs totaled $360 billion in 2008
  • Healthcare is provided through a fragmented industry that has historically underinvested in HIT
condition of us hospitals
Condition of US Hospitals
  • Many hospitals lack resources to bill, collect, and receive full reimbursement for their services
  • Nearly one-third of hospitals had negative total margins in 2003
  • In 2009, 50 percent of U.S. hospitals lost money, and total total margins for U.S. hospitals had declined further
recent legislation
Recent Legislation
  • American Recovery and Reinvestment Act
    • Stimulus intends to create job, promote investment, and increase consumer spending
    • Cost of $787 billion
  • Obamacare
    • Aims to insure 33 million Americans by 2018
    • Series of HC changes
health insurance portability and accountability act
Health Insurance Portability and Accountability Act
  • Major components
    • Regulates group health plans and certain individual health insurance policies
    • Defines HC offenses and sets penalties for them
    • Creates rules to increase the efficiency of the HC system
  • Effect of HIPAA on research and clinical care
hc current events
HC Current Events
  • Determining the constitutionality of Obama’s healthcare plan
    • Is requiring Americans to have health insurance constitutional?
  • Fraud in HC system
  • Patient Protection and Affordable Care Act
    • New federal law mandating that at least 80 percent of premium revenue must be spent on medical, not retained as profits or used to pay overhead
what is emdeon
What is Emdeon?
  • Leading provider of medical revenue and payment cycle solutions (Revenue cycle management)
  • Connects payers and providers
  • Improves efficiency of the US healthcare system
  • Take advantage of governments movement towards a digital, computer run system
emdeon provider solutions
Emdeon Provider Solutions
  • Simplifies the business of healthcare for hospitals and other medical offices
  • Effectively and securely shares patient information between payers, hospitals and pharmacies
  • Successful Internal Programs:
    • Emdeon Assistant
    • Emdeon Claim Master®
    • Emdeon Patient Connect
    • Emdeon Office Suite
emdeon payer solutions
Emdeon Payer Solutions
  • Improves patient payment processing; lowers costs
  • Transforms data into greater business intelligence
  • Successful Unique Programs:
    • Member eligibility Management Solutions
    • Interactive Care Management Services
    • Payment Integrity Services
emdeon consulting services
Emdeon Consulting Services
  • Recently acquired Healthcare Technology Management Services (HTMS)
  • Offer consulting services to help payers:
    • Innovate
    • Solve problems
    • Optimize performance
    • Keep up with changing times
emdeon pharmacy services
Emdeon Pharmacy Services
  • Quickly and accurately connects doctors with local and national pharmacies
  • July 1, 2009, Emdeon acquired eRx Network, LLC
  • Successful Internal Programs:
    • EmdeonCardFinder™
    • EmdeonFlu™
emdeon history
Emdeon History
  • More current connections to payers, providers, and vendors in the industry
  • Roots traced back to Healtheon in 1996
  • Merged with Microsoft’s WebMD in 1999
  • Changed name in 2005 to Emdeon
  • General Atlantic bought 52% stake in 2006
  • Following buyout, acquired several companies
  • IPO on August 11th, 2009 as a profitable company (rare)
recent events
Recent Events
  • Acquisitions
    • HTMS, FV, Chapmin RCM, Chamberlin Edmonds
  • Strategic Alliances
    • Noridian Insurance
risks3
Risks
  • Software commoditization and lack of SM arm
  • Some of their customers compete with them and some, instead of using a third party provider, perform internally some of the same services that they offer.
conclusion
Conclusion
  • Buy NOW!
  • Hold for 1 to 2 years
  • Expected Amount: 1000-2000 shares
thanks for coming by
Thanks for coming by!
  • Reminder for tomorrow’s JP Morgan event