IT Sector Presentation
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Transcript of IT Sector Presentation
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IT Sector PresentationIT Sector PresentationKyle Schneider Patrick SymmondsKyle Schneider Patrick Symmonds
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Information Technology in the S&P 500
Information Technology in the S&P 500
Financials - 20.77%
Info. Technology 15.45%
Health Care - 11.67%
Industrials - 11.43%
Energy - 10.79%
Consumer Disc. - 10.20%
Consumer Stap. - 9.29%
Telecom - 3.75%
Utilities - 3.51%
Materials - 3.12%
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Current HoldingsCurrent Holdings
Akamai Technologies, Inc (AKAM)1.03%
Hewlett-Packard Company (HPQ)3.68%
Intel Corporation (INTC) 4.04%
Microsoft Corporation (MSFT)5.02%
Akamai Technologies, Inc (AKAM)1.03%
Hewlett-Packard Company (HPQ)3.68%
Intel Corporation (INTC) 4.04%
Microsoft Corporation (MSFT)5.02%
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Class RecommendationClass Recommendation
Current: Information Technology1.38% Underweight
Class Vote: Increase holdings up to1% Overweight
Current: Information Technology1.38% Underweight
Class Vote: Increase holdings up to1% Overweight
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General StrategyGeneral Strategy
Intra-sector diversificationWe like most current holdingsBut see new opportunitiesIndustries:
Intra-sector diversificationWe like most current holdingsBut see new opportunitiesIndustries:
Communications EquipmentComputer HardwareComputer Networks
Computer PeripheralsComputer Services
Computer Storage Devices
Electronic Instr. & ControlsOffice EquipmentScientific & Technical Instr.SemiconductorsSoftware & Programming
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Proposed HoldingsProposed Holdings
Akamai Technologies, Inc (AKAM)0.00%
Hewlett-Packard Company (HPQ)3.00%
Intel Corporation (INTC) 3.00%
Microsoft Corporation (MSFT)4.15%
Research In Motion Limited USA (RIMM)3.00%
Google Inc. (GOOG)3.00%
Akamai Technologies, Inc (AKAM)0.00%
Hewlett-Packard Company (HPQ)3.00%
Intel Corporation (INTC) 3.00%
Microsoft Corporation (MSFT)4.15%
Research In Motion Limited USA (RIMM)3.00%
Google Inc. (GOOG)3.00%
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AkamaiAkamai
RecommendationSell our 103 basis points in AkamaiAll CDN companies are facing
uncertainty Increased competition and
alternatives taking away market share
Online video is currently increasing at a decreasing rate
RecommendationSell our 103 basis points in AkamaiAll CDN companies are facing
uncertainty Increased competition and
alternatives taking away market share
Online video is currently increasing at a decreasing rate
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AkamaiAkamai
Why the recent drop?Lost three million in market capitalization
in three weeks timeSecond Quarter earnings, the company
announced increased spending and lower margins
Market leader whose patents and early technological leads are wearing off
Increased CDN competition, price wars, video content growing online, but at slower rate
Priced very aggressively, such that any bad news would have caused the stock to slip
Why the recent drop?Lost three million in market capitalization
in three weeks timeSecond Quarter earnings, the company
announced increased spending and lower margins
Market leader whose patents and early technological leads are wearing off
Increased CDN competition, price wars, video content growing online, but at slower rate
Priced very aggressively, such that any bad news would have caused the stock to slip
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AkamaiAkamai
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
AKAMAI TECHNOLOGIES INC (AKAM)PRICE 34.18 DATE 08-10-2007PRICE 34.18 DATE 08-10-2007StockVal®
0.50.5
1.01.0
2.02.03.03.0
5.05.0
8.08.0
14.014.0
23.023.0
41.041.0
70.070.0
120.0120.0
210.0210.0
370.0
630.0
1100.0
The Ohio State UniversityFisher College of Business
Price Change % Diff SP5
1-Day -0.87 -0.91
1-Week 3.89 2.45
4-Weeks -32.05 -25.68
QTD -29.73 -26.42
YTD -35.66 -38.15
2006 166.53 152.91
2005 52.95 49.95
2004 21.10 12.10 FYE Dec 2006 EPS 0.40
First Call Data 2007 2008 2009
Mean Estimate 1.27 1.67 2.06Change +217% +32% +23%
High 1.30 1.79 2.10
Low 1.25 1.56 2.04
Total 21 20 3
# Up 0 0 0
# Down 12 12 2
House Estimate
PE Ratio 26.9 20.4 16.6
Revenues ($Mil) 529
Market Value ($Mil) 5,637
Shares Out (Mil) 164.9
Volume 60-Day Avg (Th) 6,158
Volume 60-Day Avg ($M) 210.5
Dividend Estimate None
Payout Ratio
Retention Rate
Dividend Yield
Data Page # 1
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AkamaiAkamai
StockVal®AKAMAI TECHNOLOGIES INC (AKAM) Price 34.182003 2004 2005 2006 20072003 2004 2005 2006 2007 2008
PRICE RELATIVE TO S&P INFO TECH. SECTOR COMPOSITE ADJ (SP-45) M-Wtd1
2
4
10
20
HI 10.54 LO 1.00 ME 3.45 CU 6.31
08-08-200308-10-2007
PRICE / YEAR-FORWARD EARNINGS RELATIVE TO S&P INFO TECH. SECTOR COMPOSITE ADJ (SP-45) M-Wtd0
1
2
3
4
HI 3.78 LO 0.87 ME 1.83 CU 1.30
08-08-200308-10-2007
PRICE / SALES RELATIVE TO S&P INFO TECH. SECTOR COMPOSITE ADJ (SP-45) M-Wtd0
3
6
9
HI 8.60 LO 1.00 ME 3.36 CU 4.29
08-08-200308-10-2007
PRICE / CASH FLOW ADJUSTED RELATIVE TO S&P INFO TECH. SECTOR COMPOSITE ADJ (SP-45) M-Wtd0
2
4
6
HI 99.99 +LO 0.82 ME 2.17 CU 2.76
08-08-200308-10-2007
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AkamaiAkamai
StockVal®AKAMAI TECHNOLOGIES INC (AKAM) Price 34.182003 2004 2005 2006 20072003 2004 2005 2006 2007 2008
PRICE RELATIVE TO INTERNET SERVICES (166A) E-Wtd0.5
1.0
1.5
2.5
4.0
HI 3.62 LO 0.97 ME 2.16 CU 1.82
08-08-200308-10-2007
PRICE / YEAR-FORWARD EARNINGS RELATIVE TO INTERNET SERVICES (166A) E-Wtd0.0
0.1
0.2
0.3
HI 1.58 LO 0.00 ME 0.11 CU 0.75
08-08-200308-10-2007
PRICE / SALES RELATIVE TO INTERNET SERVICES (166A) E-Wtd0
3
6
9
HI 8.46 LO 1.96 ME 3.91 CU 2.06
08-08-200308-10-2007
PRICE / CASH FLOW ADJUSTED RELATIVE TO INTERNET SERVICES (166A) E-Wtd0.0
0.5
1.0
1.5
2.0
HI 2.21 LO 0.00 ME 0.64 CU 1.10
08-08-200308-10-2007
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AkamaiAkamai
StockVal®AKAMAI TECHNOLOGIES INC (AKAM) Price 34.182003 2004 2005 2006 2007
PRICE RELATIVE TO S&P 500 COMPOSITE ADJUSTED (SP5A) M-Wtd1
2
4
10
20
HI 10.40 LO 1.00 ME 3.58 CU 6.32
08-08-200308-10-2007
PRICE / YEAR-FORWARD EARNINGS RELATIVE TO S&P 500 COMPOSITE ADJUSTED (SP5A) M-Wtd0
2
4
6
HI 5.42 LO 1.40 ME 2.65 CU 1.66
08-08-200308-10-2007
PRICE / SALES RELATIVE TO S&P 500 COMPOSITE ADJUSTED (SP5A) M-Wtd0
3
6
9
12
HI 16.65 LO 1.99 ME 6.77 CU 8.14
08-08-200308-10-2007
PRICE / CASH FLOW ADJUSTED RELATIVE TO S&P 500 COMPOSITE ADJUSTED (SP5A) M-Wtd0
3
6
9
12
HI 99.99 +LO 1.58 ME 3.69 CU 4.26
08-08-200308-10-2007
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AkamaiAkamai
1/07 2/07 3/07 4/07 5/07 6/07 7/07 8/07
AKAMAI TECHNOLOGIES INC (AKAM)PRICE 34.18 DATE 08-10-2007PRICE 34.18 DATE 08-10-2007StockVal®
3131
3333
3535
3737
3939
4141
4343
4646
49495151
5454
5757
61
64
68
200
50SP5
0.63
Volume in Thousands of Shares10001000
20002000
30003000
50005000
90009000
1500015000
25000 60 Day Avg. Volume 6,158
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GoogleGoogle
Recommendation Purchase 300 basis points of SIM
portfolio
Recommendation Purchase 300 basis points of SIM
portfolio
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GoogleGoogle
Story Had very good second quarter, but missed
and was beaten up by market (over reaction)
Google phone in the works, expected release in 2008 or 2009
Entering into battle for old analog distribution systems
Currently all earnings come from ads Believes in investing in people, may harm
short term, but good long term for long term growth
Story Had very good second quarter, but missed
and was beaten up by market (over reaction)
Google phone in the works, expected release in 2008 or 2009
Entering into battle for old analog distribution systems
Currently all earnings come from ads Believes in investing in people, may harm
short term, but good long term for long term growth
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GoogleGoogle
2003 2004 2005 2006 2007 2008
GOOGLE INCORPORATED (GOOG)PRICE 515.75 DATE 08-10-2007PRICE 515.75 DATE 08-10-2007StockVal®
70708080
100100
120120
140140
170170
200200
240240
280280
340340
400400
480480
570
680
810
The Ohio State UniversityFisher College of Business
Price Change % Diff SP5
1-Day 0.20 0.16
1-Week 2.53 1.10
4-Weeks -6.59 -0.23
13-Weeks 9.91 13.81
26-Weeks 11.66 10.58
QTD -1.33 1.98
YTD 12.00 9.51
2006 11.00 -2.62 FYE Dec 2006 EPS 9.98
First Call Data 2007 2008 2009
Mean Estimate 15.26 19.48 23.30Change +53% +28% +20%
High 15.92 20.73 25.79
Low 14.93 18.13 19.89
Total 34 32 10
# Up 19 19 1
# Down 15 12 4
House Estimate
PE Ratio 33.8 26.5 22.1
Revenues ($Mil) 13,431
Market Value ($Mil) 160,539
Shares Out (Mil) 311.3
Volume 60-Day Avg (Th) 5,564
Volume 60-Day Avg ($M) 2869.6
Dividend Estimate None
Payout Ratio
Retention Rate
Dividend Yield
Data Page # 1
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Google Google
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StockVal®GOOGLE INCORPORATED (GOOG) Price 515.752004 2005 2006 20072004 2005 2006 2007 2008
PRICE RELATIVE TO S&P INFO TECH. SECTOR COMPOSITE ADJ (SP-45) M-Wtd0.5
1.0
1.5
2.5
4.0
HI 3.59 LO 0.93 ME 2.96 CU 3.59
08-20-200408-10-2007
PRICE / YEAR-FORWARD EARNINGS RELATIVE TO S&P INFO TECH. SECTOR COMPOSITE ADJ (SP-45) M-Wtd1.2
1.5
1.8
2.1
2.4
HI 2.23 LO 1.25 ME 1.59 CU 1.62
08-20-200408-10-2007
PRICE / SALES RELATIVE TO S&P INFO TECH. SECTOR COMPOSITE ADJ (SP-45) M-Wtd2
4
6
8
HI 7.55 LO 3.99 ME 5.48 CU 4.41
08-20-200408-10-2007
PRICE / CASH FLOW ADJUSTED RELATIVE TO S&P INFO TECH. SECTOR COMPOSITE ADJ (SP-45) M-Wtd2
4
6
8
HI 7.72 LO 2.20 ME 3.49 CU 2.46
08-20-200408-10-2007
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StockVal®GOOGLE INCORPORATED (GOOG) Price 515.752004 2005 2006 20072004 2005 2006 2007 2008
PRICE RELATIVE TO S&P 500 COMPOSITE ADJUSTED (SP5A) M-Wtd0.5
1.0
1.5
2.5
4.0
HI 3.65 LO 0.91 ME 2.97 CU 3.65
08-20-200408-10-2007
PRICE / YEAR-FORWARD EARNINGS RELATIVE TO S&P 500 COMPOSITE ADJUSTED (SP5A) M-Wtd1
2
3
4
HI 3.48 LO 1.75 ME 2.30 CU 2.08
08-20-200408-10-2007
PRICE / SALES RELATIVE TO S&P 500 COMPOSITE ADJUSTED (SP5A) M-Wtd7
8
9
10
HI 15.40 LO 7.63 ME 10.72 CU 8.36
08-20-200408-10-2007
PRICE / CASH FLOW ADJUSTED RELATIVE TO S&P 500 COMPOSITE ADJUSTED (SP5A) M-Wtd2
4
6
8
10
HI 12.54 LO 3.38 ME 5.27 CU 3.80
08-20-200408-10-2007
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Research in MotionResearch in Motion
Manufacturer of BlackBerry communication device
Founded 1984, taken public 40 Billion Dollar Market Cap Canadian based company Currently trading around $210-$215 Price Target $265-$280 Upside Potential 23%-33%
Manufacturer of BlackBerry communication device
Founded 1984, taken public 40 Billion Dollar Market Cap Canadian based company Currently trading around $210-$215 Price Target $265-$280 Upside Potential 23%-33%
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Cons of Research in Motion
Cons of Research in Motion
Trading close to all time high is price and many ratios
Competition from iPhone and other alternatives.
Trading close to all time high is price and many ratios
Competition from iPhone and other alternatives.
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2002 2003 2004 2005 2006 2007 2008
RESEARCH IN MOTION LIMITED (RIMM)PRICE 207.00 DATE 08-10-2007PRICE 207.00 DATE 08-10-2007StockVal®
3344
66
99
1313
1919
2727
3939
5656
8181
118118
170170
245
353
510
The Ohio State UniversityFisher College of Business
Price Change % Diff SP5
1-Day -4.17 -4.20
1-Week -5.26 -6.70
4-Weeks -9.02 -2.65
QTD 3.51 6.81
YTD 62.00 59.51
2006 93.58 79.96
2005 -19.91 -22.91
2004 146.66 137.66 FYE Feb 2007 EPS 3.34
First Call Data 2008 2009 2010
Mean Estimate 5.89 7.92 9.95Change +76% +34% +26%
High 6.51 9.84 11.37
Low 5.48 6.35 8.92
Total 31 30 5
# Up 1 2 3
# Down 0 0 0
House Estimate
PE Ratio 35.2 26.1 20.8
Revenues ($Mil) 3,506
Market Value ($Mil) 38,507
Shares Out (Mil) 186.0
Volume 60-Day Avg (Th) 7,568
Volume 60-Day Avg ($M) 1566.5
Dividend Estimate None
Payout Ratio
Retention Rate
Dividend Yield
Data Page # 1
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StockVal®RESEARCH IN MOTION LIMITED (RIMM) Price 207.002002 2003 2004 2005 2006 20072002 2003 2004 2005 2006 2007 2008
PRICE4
10
30
90
240HI 231LO 4ME 67CU 207GR 108.7%
08-09-200208-10-2007
PRICE / YEAR-FORWARD EARNINGS10
20
30
40
50
HI 99.9 +LO 11.2 ME 24.2 CU 30.3
08-09-200208-10-2007
PRICE / SALES0
5
10
15
20
HI 17.52 LO 2.44 ME 8.76 CU 11.22
08-09-200208-10-2007
PRICE / CASH FLOW ADJUSTED20
40
60
80
100
HI 100.0 +LO 20.1 ME 36.6 CU 46.1
08-09-200208-10-2007
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StockVal®RESEARCH IN MOTION LIMITED (RIMM) Price 207.002002 2003 2004 2005 2006 20072002 2003 2004 2005 2006 2007 2008
PRICE RELATIVE TO S&P INFO TECH. SECTOR COMPOSITE ADJ (SP-45) M-Wtd1
2
5
10
23
HI 22.69 LO 0.94 ME 8.49 CU 22.59
08-09-200208-10-2007
PRICE / YEAR-FORWARD EARNINGS RELATIVE TO S&P INFO TECH. SECTOR COMPOSITE ADJ (SP-45) M-Wtd0.0
0.5
1.0
1.5
2.0
HI 99.90 +LO 0.37 ME 1.08 CU 1.71
08-09-200208-10-2007
PRICE / SALES RELATIVE TO S&P INFO TECH. SECTOR COMPOSITE ADJ (SP-45) M-Wtd0
2
4
6
HI 5.69 LO 1.01 ME 2.99 CU 4.10
08-09-200208-10-2007
PRICE / CASH FLOW ADJUSTED RELATIVE TO S&P INFO TECH. SECTOR COMPOSITE ADJ (SP-45) M-Wtd0
2
4
6
HI 99.99 +LO 1.13 ME 2.04 CU 2.67
08-09-200208-10-2007
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Pros of Research in MotionPros of Research in Motion
International Exposure large part of business and growingIncludes Europe and China
Recent decline presents good buying opportunity
Company is growing and has great upside potential
International Exposure large part of business and growingIncludes Europe and China
Recent decline presents good buying opportunity
Company is growing and has great upside potential
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Proposed HoldingsProposed Holdings
Akamai Technologies, Inc (AKAM)0.00%
Hewlett-Packard Company (HPQ)3.00%
Intel Corporation (INTC) 3.00%
Microsoft Corporation (MSFT)4.15%
Research In Motion Limited USA (RIMM)3.00%
Google Inc. (GOOG)3.00%
Akamai Technologies, Inc (AKAM)0.00%
Hewlett-Packard Company (HPQ)3.00%
Intel Corporation (INTC) 3.00%
Microsoft Corporation (MSFT)4.15%
Research In Motion Limited USA (RIMM)3.00%
Google Inc. (GOOG)3.00%
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Questions?Questions?
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