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Thursday, Jul 31st

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Igor Stenmark Blog

Commentary on issues affecting technology buyers, vendors and investors

Cloud Stocks Again Lagged Equity Benchmarks in 1H2014

Posted by Igor Stenmark
Igor Stenmark
Igor Stenmark is a Managing Director of MGI Research.
User is currently offline
on Wednesday, 09 July 2014
in MGI Quant

As was the case in 2013, during the 1H2014 equities of cloud companies have lagged broad market benchmarks. In 2013, the 2nd half of the year reversed the trend - cloud equities not only caught up but also outperformed the market finishing the year up over 32.22% vs. S&P 500 up 29.69%.

As of July 7th 2014, MGI Cloud 30(tm) Index - a portfolio of 30 leading cloud related equities, was at $273.97 - down 4% on a YTD basis.

While the broad market benchmarks have also had a stormy 1H2014, on YTD basis S&P 500 squeezed out a 2.27% gain by July 7 2014.

 

 

 

 

 

 

 

 

On a cumulative basis since we have begun tracking MGI Cloud 30 Index, the cloud stocks have vastly outperformed general markets. Since late 2009 when we first created and began tracking MGI Cloud 30, the index has gained almost 174% on a cumulative basis. During the same period, S&P 500 advanced by 69.66%.

During the period from late February to early-mid May of 2014 we have seen MGI Cloud 30 correct by about 28% (peak to trough), followed by a recovery back to the long-term trendline.

A similar and more dramatic sell off took place in 2011 with a 33% correction which was then followed by a reversal to the mean and an outperformance with an over 2% gain in 2011 and a 33% gain in 2012.

Cloud adoption continues to grow - it is a steady process with an increasing number of buyers. The growth in cloud far outpaces GDP growth, inflation and growth in IT budgets.

Marketo (NASDAQ:MKTO) replaced Vocus (NASDAQ:VOCS) as an index component as Vocus was taken private by GTCR for $18 per share.

For additional information, index composition, data or index licensing, please contact MGI Research at 888-801-3644.

© 2014 MGI Research, LLC
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How Can Blackberry Come Back from the Dead?

Posted by Igor Stenmark
Igor Stenmark
Igor Stenmark is a Managing Director of MGI Research.
User is currently offline
on Monday, 04 November 2013
in Mobile Computing

Blackberry today announced a termination of its planned buyout and a replacement of its CEO Thorsten Heins with former Sybase CEO John Chen as an interim Chief Executive. A smaller ($1 Billion) round of funding will take place instead.

Going private and restructuring the company is in our view the most viable long-term path forward for Blackberry. Company needs a real strategy that is different from everything management has tried during the last 24 months. As a mobile phone maker Blackberry is "dead". It still has many users worldwide, it still has great technology, but the game is over and all the rest of it matters little. The question is: What's next?

We believe that Blackberry could be re-born as a mobile device company. Five years from now, mobile smartphones and tablets will be only one of many Internet-enabled smart devices. A broad spectrum of connected gadgets and sensors ranging from smart alarm clocks and thermostats (a la NEST) to cars, cargo containers and heavy industrial equipment, is likely to hit the market. The opportunity in this space is wide open and Blackberry at least has the technology and some remaining talent to deploy in this area. The company has hinted at the automotive market apps a while ago, but we do not believe it really focused and funded this effort in earnest.

One thing is clear, - if the new management team tries to once again revive Blackberry as only a smartphone maker, its chances for success are limited. Our expectation is that Blackberry will be bogged down for a while in survival mode and not be able to refocus on new opportunities till at least mid-2014, if at all.

Related Past Blog Posts:

CIOs talk about not renewing RIM Contracts - Next Six Months Critical

Is Leon Cooperman Right? Can QNX Save RIM?

© 2013 MGI Research, LLC
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Twitter Ups IPO Valuation Closer to Our Estimate of $17Bil

Posted by Igor Stenmark
Igor Stenmark
Igor Stenmark is a Managing Director of MGI Research.
User is currently offline
on Monday, 04 November 2013
in MGI Quant

This morning Twitter raised the price of its proposed IPO from $11.1 Billion to $17.4 Billion. The Internet Valuation Model we published last week predicted $17Bil market cap for Twitter. The revised Twitter valuation is also inline with average EV/Revenue multiple for LargeCap Internet stocks. The price increase must be reflective of demand for Twitter IPO shares. There is a high probability that at the open of trading, Twitter shares will trade above the trend line for its peer group. As a reminder, - there are numerous LargeCap social media stocks (Facebook, Linkedin, et al) that trade above the valuation trend line.

© 2013 MGI Research, LLC
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Cloud Stocks Pull Higher Away from Market Benchmarks

Posted by Igor Stenmark
Igor Stenmark
Igor Stenmark is a Managing Director of MGI Research.
User is currently offline
on Thursday, 19 September 2013
in Cloud Computing

After a long period of under performance in 2013, cloud equities caught up and surpassed major market performance benchmarks. The MGI Cloud 30 Index has been making and breaking new highs and the pull higher has now accelerated vis-a-vis the market overall.

© 2013 MGI Research, LLC
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The Cloud Trend is Intact - MGI Cloud 30 Index Reaches an All Time High

Posted by Igor Stenmark
Igor Stenmark
Igor Stenmark is a Managing Director of MGI Research.
User is currently offline
on Monday, 29 July 2013
in MGI Quant

The upward trend in cloud equities is intact. On Friday, July 26 2013, The MGI Cloud30(tm) Index reached an all-time-high of 247.02. But even with the latest surge in performance, the cloud stocks have markedly under performed the broad equity index benchmarks like S&P 500. The gap between MGI Cloud30 and S&P 500 has narrowed considerably from over 17% earlier this year to just over 3.5% as of Friday. While it is difficult to assess how many investors have followed this arbitrage situation, it is clear to us that the interest level is clearly rising.

© 2013 MGI Research, LLC
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