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Hello Readers,
And, once again, we must relay to you that the markets are still dicey and that our Current Portfolio remains in some sort of purgatory. In sum, except for the last eight trading days, August was a terrible month for the markets. Of course droughts in the West along with earthquakes and hurricanes in the East put some damper on investor enthusiasm. If there was a bright spot, it was the outcome of the Fed’s Jackson Hole conference when, after it was over, Chairman Ben said nothing about a possible QE3. Many market watchers are taking his silence as a good thing. They feel that at the Fed’s meeting later this month it will announce some sort of liquidity boost, and that thinking is what juiced the markets at the end of August. Time will tell. Remember, there are many mine fields out there, right now; let’s not forget about Europe!
Here are the headlines since the last Newsletter about companies in the Current Portfolio; dates in parentheses are when we first recommended them. We are not giving updates about companies that are on the “Endangered List” unless we feel the news to be significant.
Synthesis Energy (SYMX)(8/20/11). Company and Ambre Energy enter into technical study agreement for coal to liquids project. To present at the Rodman & Renshaw conference on September 12. Announces successful test of high ash Chinese coal for use in China’s ammonia industry. Company and China Energy announce extension of agreement for $83.8 million equity investment.
On Track Innovations (OTIV)(6/20/11). Merriman initiates coverage on company.
Gleacher & Company (GLCH)(6/5/11). Implements new strategic plan.
Neostem (NBS)(5/20/11). Upgraded by WBB Securities. Brokerage Morgan Joseph says valuation attractive (there’s an astute observation).
MediciNova (MNOV)(5/20/11). Balance sheet still looks good.
Jamba, Inc. (JMBA)(3/20/11). Opens franchise in Chicago. 2ndQT report pretty upbeat; balance sheet still looks okay.
Sprint Nextel (S)(1/5/11). Company receives great news when the DOJ blocked the AT&T and T-Mobil merger. Then, of course, there are the usual several dozen stories and releases. Of note is that the company will be selling the Apple iPhone.
Trident Microsystems (TRID)(12/20/10). Unveils world’s first integrated 240 Hz digital TV SoC for android- based smart televisions. Yes, we know the stock has tanked, but the balance sheet still looks good.
Pixelworks (PXLW)(11/20/10). To present at the 2011 Citi Technology Conference on September 8.
RELM Wireless (RWC)(11/5/10). Gets FCC approval for its P25 800 MHz KNG portable radio. Receives $1 million international military order for KNG UHF products. Completes Project 25 compliance assessment for KNG P800 portable radio.
Inovio Pharmaceuticals (INO)(10/20/10). Posts schedule for September presentations.
NovaBay Pharmaceuticals (NBY)(4/20/10). Highlighted in Cataract & Refractive Surgery Today.
Cerus Corp. (CERS)(3/20/10). To present at the Baird’s Health Care Conference on September 7. Awarded $2.1 million to advance development of pathogen inactivation for red blood cells.
Cytokinetics (CYTK)(2/5/10). Announces Phase I and Phase IIa clinical trial results for omecamtiv mecarbil.
Qualstar (QBAK)(10/20/09). Quarterly seems pretty upbeat; balance sheet still looks good.
USA Technologies (USAT)(6/5/09). Expands JumpStart offering to include stand-alone wireless telemetry option. ePort Connect Service reaches 123,000 connections and 2079 customers; says growth driving record number of transactions and dollar amount processed for July.
U.S. Geothermal (HTM)(8/5/08). Receives funding from $96.8 million loan for Neal Hot Springs project.
Bridgeline Digital (BLIN)(6/5/08). KMWorld Magazine names iAPPS product suite a 2011 trend setting product. Dover Solutions India signs a strategic multi-license iAPPS product suite agreement.
Move, Inc. (MOVE)(1/5/08). AOL Real Estate launches new search experience powered by MOVE.
LRAD Corporation (LRAD)(10/5/07). Receives LRAD-RX Systems order to remotely secure oil platforms. Announces $1.5 million in LRAD systems and support equipment orders from the U.S. Navy.
YM Biosciences (YMI)(11/5/06). Collins Stewart rates the stock a “buy”.
Our picks for this Newsletter are a game maker for mobile devices and a developer of logic-based memory, both trading on the NASDAQ.
GLU MOBILE, INC. (NASDAQ: GLUU) – $3.05. Twelve-month hi-low has been $6.10 – $1.05. Based in San Mateo, CA, with about 380 employees, this game maker has 63.16 million shares outstanding, $41.94 million in total current assets, $57.55 million in total assets, little debt, and $27.66 million in total liabilities. Institutional ownership is around 35%. Four analysts rate the stock a “strong buy”. www.glu.com
Besides filling our basic criteria, i.e. good balance sheet, Glu Mobile, Inc. has been showing a renewed revenue growth pattern, which had fallen in the last few years. The other thing that caught our eye is that the stock is trading at around its “crash” low; we, of course, are referring to last month’s market selloff.
Founded in 2001, and public for over four years, Glu Mobile designs and sells casual and traditional mobile games based on its own original brands and intellectual property, as well as third-party licensed brands. It bills itself as a leading global publisher of 3D social mobile games for smartphone and tablet devices. The company’s technology platform enables its titles to be accessible to a broad audience of consumers – supporting iOS, Android, Palm, Windows Phone 7 devices and others. Glu also partners with other brands including Activision, Atari, Caesar’s, and Fox.
Glu’s original games based on its own intellectual property include Beat It!, Bonsai Blast, Brain Genius, Glyder, Gun Bros, Hero Project, Jump O Clock, Magic Life, Stranded, Super K.O. Boxing, Toyshop Adventures, and Zombie Isle. The company’s games based on licensed intellectual property include Build-a-lot, Call of Duty, Deer Hunter, Diner Dash, DJ Hero, Guitar Hero, Family Feud, Lord of the Rings, Paperboy, The Price Is Right, Transformers, Wedding Dash, Who Wants to be a Millionaire?, and World Series of Poker.
In mid-August, Glu launched Bug Village for Windows Phone 7. Earlier that month, the company announced the availability of its games on Google’s Chrome Web Store.
For FY2010, ending 12/31/10, revenue was $64.34 million with $13.42 million in losses. During the first six months of the current FY, ending 6/30/11, revenue was $34.10 million with a net loss of $4.92 million, which is on pace to top last year’s numbers.
Before the “crash”, the stock was trading at between $5 and $6, and, given the company’s product line, balance sheet, and improved P&L, we can see it trading there, again.
Our 24-month target for the stock is $5.50 to $6.00.
For more information, contact GLUU’s Seth Potter at 646-277-1230; ir@glu.com
NET LIST, INC. (NASDAQ: NLST) – $1.80. Twelve-month hi-low has been $3.90 – $1.09. Based in Irvine, CA, with about 130 employees, this hi-tech has 25.34 million shares outstanding, $32.91 million in total current assets, $36.75 million in total assets, and $18.43 million in total liabilities, of which $2.11 million is long-term debt. Institutional ownership is around 13%. One analyst rates the stock a “strong buy” and another has it as a “hold”. www.netlist.com
At first glance, there is not much sexy about Net List, Inc., but, besides its decent-looking balance sheet, the company is seeing a huge surge in revenue growth, while other companies are bellyaching about lousy business conditions.
Founded in 2000, and public for nearly five years, Net List designs and makes a wide variety of high-performance logic-based memory subsystems for cloud computing, virtualization, and high-performance computing (HPC) markets primarily in the United States and China. The company’s flagship products include HyperCloud, a memory module that it claims breaks traditional memory barriers; the Vault family of cache data protection products including NVvault, a flash memory based subsystem that enables data retention for weeks following a disaster, and EXPRESSvault, a PCI Express backup and recovery solution for cache data protection; and a portfolio of high performance and specialty DIMMs. NetList is expanding its flash product portfolio and these products include standard PCIe mini, mSATA Slim, and mSata mini interfaces, along with Compact Flash, miniSD, and others.
In early August, Net List says it extended Cache-to-Flash market leadership with the launch of the next generation NVvault DDR3 NVDIMM module. Also, at around that time, it introduced its HyperStream low latency memory.
Now, for the fun part. For FY ending 1/1/11, revenue was $37.85 million with $15.12 million in losses. During the first six months of the current FY, ending 7/2/11, revenue was $28 million with net losses of $4.33 million.
The company is on pace to increase revenues by 50% to 60% this year, and, at the same time, paring losses by nearly like amounts.
Our 24-month target for the stock is $3.25 to $3.75.
For more information, contact NLST at 949-435-0025; info@netlist.com
Look for the September 20, 2011 Newsletter to be posted on 9/16 or 9/19.
Thank you,
George