Altitude Share Discussion Threads

[stephen1946] 27/1/2017 10:51

Got to start going up soon, blue skies.

[webster32] 27/1/2017 10:50

Very good! :-)

[jakleeds] 27/1/2017 10:42

The stock market is a device for transferring money from the impatient to the patient. – Warren Buffett

[stephen1946] 27/1/2017 10:32

Thats the trouble with today's society, nobody takes responsibility for their own actions. Counselling, what a growth industry that is.

[the patient investor] 27/1/2017 10:22

Im setting up an anonymous alcoholic type group called "ruined at 144" to counsel each other from this tragedy

[jakleeds] 27/1/2017 10:13

Bouncing off 100p ...

[stephen1946] 27/1/2017 10:00

100p wont be there for long.

[stephen1946] 27/1/2017 09:44

P.I. you got an rns fully explaining the company position on 3rd oct 2016. End of.

[melf] 27/1/2017 09:43

Just thinking back to MVs share disposal back in November to satisfy the "demands" of a new investor.



I wonder if the new investor was one of the directors coming on board? Just a thought.

[stephen1946] 27/1/2017 09:39

My focus in any company i invest in is, "is the company going to make widgets forever and earn me a nice little divi every year or have i seen a company that makes or sells a product that other companies may one day purchase for a considerable sum?"

[the patient investor] 27/1/2017 09:30

Im bereaved

[robbnw] 27/1/2017 08:26

Stephen 1946Couldn't agree with you more

[stephen1946] 27/1/2017 07:03

No wonder the company withdrew its contact, this is all becoming rather silly.

Altitude take the view, first in, best dressed. Patents in this field are notoriously difficult to apply. A top class team are miles ahead of any who may eventually see the huge potential.
The aim is, SIMPLY to secure a large footprint in the USA, the rest will follow. To say patent protection is a must in this field is ridiculous, China and Korea copy everything with impunity, best to be so far ahead they can not hurt the bottom line.

Martin knows the USA market, it is so fragmented, the first company to get the dots joined up will be altitude. The answers are simple the authors here try to cloud the issues with geek like language. ALT is cheap, get in. Simple.

Finally, nobody has mentioned the exhibition, this was fantastic, the numbers attending were amazing, football crowd proportions, a real eye opener, again, a very slick, very American presentation and the staff of PPE were both knowledgeable and helpful, will be attending again next year, cant praise PPE highly enough, others could learn from this.

[robbnw] 27/1/2017 06:39

BestaceInteresting and thoughtful but can't the same he said re revenue for what's appTwitterSnapchatEtc And look at their valuations ! Have faith And a little patience I say and you will be rewarded

[bestace] 27/1/2017 01:20

buzztrader,

I'll make no comment about historic share price movements; I consider that to be irrelevant and the gnashing of teeth over the last couple of days as pointless. However your comments about it being reasonable to expect some real numbers from the company and about making spreadsheets has prompted me to bash out the following, which has turned into a bit of a disquisition.

Over the years so many companies have been brought to the AIM market which had a good story and a seemingly credible management. With hindsight many of those companies turn out to be flops led by salesmen in shiny suits selling snake oil in the form of a story of jam tomorrow that never arrives, and whose talents lie in being able to string along investors while they extract as much personal benefit from mug punters as possible.

But sometimes the story is real and the directors are genuine and credible and the jam promised for tomorrow really does arrive, and I see it as my job as a private investor to try and sort the wheat from the chaff (excuse the mixing of food-based metaphors). For me, ALT is currently a stock with a good story with potential but not much more. When a story stock comes along I see it as imperative to take a dispassionate, critical view of the story and of management claims, to see whether it stacks up on a financial basis, having regard to the risks that may waylay a perfectly valid story before it has had a chance to deliver the jam.

A necessary part of that process in my book is to build a spreadsheet and put some pro forma numbers together to calculate revenue and profit projections into the future. Such spreadsheet models are never spot on accurate, but that’s not really the point. The aim is to get a feel for what is possible, and by setting out all the key inputs behind the business model it quickly becomes obvious where and how profits are sensitive to the key drivers and assumptions, and what is not so important.

For ALT, several different bases of calculation have been bandied around, i.e.:
- 0.25% of market = $60m profit to ALT (from yesterday's presentation – SH post 1650)
- 1% of market = $156m revenue to ALT (ALT presentation to SCSW on 28 December – see SH post 1063)
- $1bn sales = $100m contribution to ALT (email from MV to SH earlier this month – see SH post 1087)

All of these calculations are sourced ultimately to the ALT board (and MV specifically?) so you would think they should all be consistent with each other, but I’m finding it difficult to reconcile between them; it doesn’t help they are referring separately to revenue, profit and contribution! As it is, these calculations appear to be inconsistent with each other based on the information we have available to us.

What I find frustrating is the lack of clarity about what the various numbers represent. I’m sure it would help having access to a comprehensive broker’s note which has crunched the numbers with guidance from the company, but that’s obviously off the table to us plebs. Questions I have about the above include: do references to percentages of ‘sales’ or ‘the market’ refer to the $22bn market or to the smaller chunk that represents the printers’ income? How does the 2.4m figure for ‘web stores’ in the SCSW slide relate to customer and distributor numbers? Do the various numbers quoted for customers and distributors refer to the Aprinta deal, the AIM deal, both or the whole market? What is the profit share that ALT earn on these deals? Is this based on the distributor’s gross margin or the printer’s? How is gross margin defined, e.g. how are sales taxes and other direct costs accounted for? What is the anticipated rate of roll out?

To an extent, I fully appreciate this is not seeing the wood for the trees. Take any of the above methods, do the maths and it ends up as a Very Big Number compared to where ALT is now, and if you’re happy with the execution and competition risks, perhaps that should be enough to invest. But to me this all raises some questions, if not about the management themselves then certainly about their ability to communicate and clearly articulate their business case. Often the snake oil salesmen I referred to earlier use deliberate obfuscation as a key part of their toolkit, I would like to think that is not the case here but I still need some convincing this is more than just a good story.

Given all this, I’ll remain sceptical unless and until ALT can demonstrate that the business and financial numbers stack up and that they are getting some traction in the form of website roll outs and free cash flow. Given where we are in the story, I expect this to follow fairly quickly.

For any lawyers reading, I am emphatically NOT saying that ALT fall into the snake oil category.

[robbnw] 27/1/2017 00:11

Investors should take stock of what an amazing share this has been and have faith in the management Martin varley has invested a huge amount of his money and most importantly his time in this business and is so enthusiastic an advocate of altitude Peter Hallett is such a quality Executive Chairman with Sanjay and Gellen, we have a world class teamSo far you don't see MV. Or Keith Willis selling And Simon Taylor has 6 percent . He's no foolThe potential for future growth is immense Have patience and buy on any dips

[bestace] 26/1/2017 23:55

Point taken SH, but $125k - $300k up front and similar annually is chicken feed if one of the big boys wants to get involved, and that's still a fraction of the $250m figure.

Just going by the published accounts ALT appear to have spent relatively little on software development. As I said above they've spent less than £5m over the last 5 years. I've just gone through all the accounts on their website going back to 2007 (which is as far back as they go), specifically to tot up software development costs and it comes to £3.9m expensed and £1.6m capitalised for a total of £5.4m over a 10-year period. In the last interims they suggested £0.6m annually going forwards would be sufficient.

It's a barrier of sorts, and of course we shouldn't underestimate the know-how and experience that ALT have built up, but if a competitor was looking to replicate what ALT have, those figures don't strike me as being an insurmountable financial barrier, particularly if there are profits at stake running into the hundreds of millions annually.

If ALT start earning fantastic profits and margins you can bet that others will have a try; super-normal profits will always be competed away unless you have watertight barriers locked in place.

Good find on the patent. I find the patent legalese nearly impenetrable, but from the filing dates and the references to art and artwork, I think it relates specifically to the artworktool patent not the other stuff.

It would be interesting to know what the other 2 patents are that MV mentioned. I tried a quick search on that google site but nothing came up.