Posts Tagged ‘GAAP’

Article from GigaOm.

In contrast to the findings of a research note on Tuesday that says Silver Spring Networks could soon shelve its IPO, I’ve been hearing that Silver Spring is actually getting ready to finally go public within the next four weeks, a year and a half after filing its S-1. A delay that long between filing and finally trading is not ideal, but it’s not unheard of for companies to wait through difficult market conditions, particularly as they negotiate pricing.

Beyond discussions I’ve had with sources, in Silver Spring’s latest S-1 Amendment the company notes that longtime investor Foundation Capital now says it plans to purchase $12 million worth of stock at the IPO price, following the IPO, in a private placement. If Silver Spring was planning to shelve its IPO it probably wouldn’t be negotiating this detail with its investor, and also wouldn’t continue to update its S-1 every quarter (it would just withdraw it).

Solar installer SolarCity’s investors used a similar tactic when the company went public last year to try to create interest from Wall Street. SolarCity investors Elon Musk, Draper Fisher Jurvetson and DBL Investors, agreed to buy up about a third of the Solar City float the day before trading, and that helped it get out and pop on its first day. Bankers could take it as a good sign that Foundation Capital is looking to buy up even more shares of Silver Spring.

Silver Spring has continued to grow over the years, despite the fact that selling smart grid networks to utilities is a pretty difficult low margin business. If you only look at Silver Spring’s GAAP revenue and net income it doesn’t look all that amazing, which is what this analyst did. The company hasn’t ever had a positive net income, and it recorded revenue of $147 million for the nine months ended Sept 30, 2012, which was down from $176 million from the same period in 2011.

But if you look at the deals that Silver Spring closed in 2012, and the amount it billed its utility customers for, it actually had a decent year last year. The company recorded billings of $219 million for the nine months ended Sept 30, 2012, up from $183 million for the same period of 2011. Billings are how much Silver Spring invoiced its customers, and they are considered deferred revenue until they can be officially counted as revenue. It had its highest gross margin yet on those billings of 34 percent. The company has a total of $473 million in deferred revenue as of the nine months ended September 30, 2012, and about $60 million in cash for the same period.

That’s the problem with selling gear to utilities. The deals and the sales cycles take a really long time to negotiate from a trial to a commercial deal, and then a long time to see through to the end. We’ll see how comfortable Wall Street is with looking at both its GAAP and non-GAAP financials when it comes to interest in the IPO.

Silver Spring Networks has networked 13 million smart grid devices, and has contracts to network more than 22 million total. The company has a total backlog of $745 million in product and service billings.

Now, we’ll see if over the next four weeks, Silver Spring is able to negotiate and get enough interest to price its shares at the valuation it wants. But from what I’m hearing it’s starting to aggressively try to do just that.

Read more here.


Read Full Post »

Here is an article from Seeking Alpha.

As I promised in November, below is my updated Q1 2010 earnings estimate for Apple. My previous estimate can be viewed here. Due to numerous analysts’ calls for strong iPhone sales, this update increases iPhone unit sales from 8.8 million to 10 million. With subscription accounting, this increase in iPhone sales does not have much of an effect on GAAP EPS, but it does give non-GAAP EPS a nice bump. Also, after a review of recent trends, I reduced non-iPhone margins from 33% to 32%. Overall, my GAAP EPS estimate for Q1 decreased modestly from $2.44 to $2.41 on $12.7B in sales while non-GAAP EPS increased from $3.67 to $3.97 on $16B in sales. The Street GAAP EPS estimate has remained at $2.04 on revenues of $11.9B.

It continues…

Based on current accounting practices, for the year ending September 2010, Apple could post EPS of $9.70. If they transition from subscription accounting starting this quarter, Apple should earn $17.70. About $3.60 of this is from prior deferred iPhone revenues, so I am looking at FY10 non-GAAP EPS of around $14 on revenues of $55.6B. Additionally, I expect their year end cash position to be somewhere north of $45B. Depending on how you want to calculate EPS (e.g. with cash, without cash, GAAP, non-GAAP EPS etc), forward P/E will be somewhere between 10 and 15. Forward EV/FCF will be about 12.”

Read the full article here.

Read Full Post »