Promethean Share Discussion Threads

[masurenguy] 03/4/2011 09:40

SMT up by 12% in the US over the past 4 weeks. Some recent positive views on Tech spending by US schools which of course constitutes PRW's main market !

In City Schools, Tech Spending to Rise Despite Cuts

Despite sharp drops in state aid, New York City's Department of Education plans to increase its technology spending, including $542 million next year alone that will primarily pay for wiring and other behind-the-wall upgrades to city schools. The surge is part of an effort to move toward more online learning and computer-based standardized tests. But it comes just two years after the city declared a victory on the technology front, saying that every classroom in every school had had plug-in Internet connections and wireless access set up, an undertaking that cost roughly half a billion dollars over several years.

Some local officials are questioning the timing, since the city is also planning to cut $1.3 billion from its budget for new school construction over the next three years, and to eliminate 6,100 teaching positions, including 4,600 by layoffs. While state law prevents capital funding, the source of much of the technology spending, from being used for salaries, both moves are likely to make class sizes rise. "It is particularly large in the context of a fiscal crisis which the mayor reports is so dire that he may eliminate some 6,000 teaching positions," Scott M. Stringer, the Manhattan borough president, wrote in a letter to the schools chancellor, Cathleen P. Black, last week.

City education officials are not shy about their goal to more fully integrate computers into everyday instruction. Instead of a lonely desktop or two at the back of a room, officials picture entire classrooms of students going online simultaneously, taking Internet-based classes or assessments to measure both their and their teachers' performance. This school year alone, the city has issued $50 million in contracts to build an online course-management system, called iLearn NYC, as well as to provide training and to pay companies like Rosetta Stone and Pearson Education to provide content.

The front line is called the Innovation Zone, or iZone, a group of 80 schools (out of the roughly 1,700 in the city) that are testing more intensive ways to use computers, like by having them design individualized lessons based on each student's progress and weaknesses. Teachers would still be needed as guides, but the goal would be to try to solve the age-old problem of how to teach a group of students with a wide range of abilities. The plan is to expand the zone to 125 schools next year, and 400 schools by the end of Mayor Michael R. Bloomberg's third term. "If we want our kids to be prepared for life after high school in the 21st century, we need to consider technology a basic element of public education," said John White, a deputy chancellor at the Department of Education. Despite the hundreds of millions of dollars already spent on wiring, city officials now say those connections are insufficient, given the need to stream high-definition video and interactive programs that they were not designed to handle. It is proposing to spend $465 million to upgrade those connections at 363 schools next year, and $315 million for additional schools by 2014, with schools chosen based on the state of their current technology infrastructure and the poverty level of their students.

Keeping pace is a problem around the country, as the need for bandwidth has increased exponentially, often amid a lack of planning and investment by governments because the field is so new, said Doug Levin, executive director of the State Educational Technology Directors Association. "We have seen circumstances where schools have overbought for bandwidth they didn't touch," he said, "but increasingly we are seeing cases where districts thought that this was a problem that was solved, and they are now running into significant issues, and significant costs."

The city says that even if it wanted to, it could not shift the money to help retain teachers, because it is part of the capital budget, which cannot be used for operating costs like salaries. The money can, however, be used for new school construction, which is being trimmed to $642 million from $2 billion over the next three years. The capital budget will also include some money for classroom computers for the first time, though officials could not say how much. The cost of computers has traditionally come out of each school's own budget or from outside grants, leading to wide discrepancies in the number of computers in different schools.

At P.S. 97, a popular 800-student elementary school in Bensonhurst, Brooklyn, the Internet has been running slowly because the school went from just three interactive white boards - popularly known as Smart boards - to 16 this year. It also has a computer lab and one computer per classroom. The slowness is despite the $247,000 connectivity upgrade that the city said the school received last year, which consisted mostly of improved wireless access points to broadcast signals through the building. The principal, Kristine Mustillo, said she has applied for another upgrade, concerned that her connections will crawl next year when she adds 15 more Smart boards and 150 laptops, paid for by local grants. The city's capital plan initially proposed $481,000 be spent in the school in 2010, then the city revised that number to $419,000 in pending work, and then it said the work had already been done at $247,000. "I've been told we are pretty much at capacity," Ms. Mustillo said. "How is it going to go when all our teachers are accessing the Internet along with 150 students at the same time?"

City officials said the most crucial reason for the new spending was to prepare for computerized standardized English and math tests being developed by a national consortium that may replace the existing state assessments in the 2014-15 school year. But the state Department of Education said last week that those exams, at least at first, would also be available in pencil-and-paper format to give districts time to make the transition. In response, the city said it wanted to be ahead of the curve, because the scoring of online tests would be faster and more accurate. Already, some of the city's larger ambitions for online instruction are taking longer than expected. Last week, officials said they would delay the expansion of a much-promoted experiment in educational technology, School of One, which uses iPod-like computer playlists to manage math lessons for each student at three middle schools. There were unanswered questions about the program's effectiveness, the city said. In another setback, School of One's founder, Joel Rose, quit the Department of Education last week to start a nonprofit organization that would seek to bring the program to other cities.

[2trying] 28/3/2011 21:27

From local newspaper .

[she-ra] 27/3/2011 21:10

Masurenguy - Because I think profits will halve at least and for the forseeable future PRW is an ex-growth story.

I agree that it commands a good market share position however the market is fickle.It will bounce back but I just cant see when for the moment.

[masurenguy] 27/3/2011 21:00

Businesses have to face challenges all of the time. You still haven't explained how you arrive at a valuation of 30p or £60m !

[she-ra] 27/3/2011 20:07

Masurenguy - If you looked at the trend in PRW's revenues in their last set of results you would understand.The £15 million is historic.

They said they are going to restructure.

Basically they ignored the business market and have found that putting all their eggs in the educational basket at a time of austerity is going to be a problem.

The American Congress is going to force Obama into cutbacks. Big ticket items such as interactive whiteboards are going to suffer.If they are cutting back on teachers theyre going to be cutting back on these expensive teaching aid products.

[masurenguy] 27/3/2011 19:40

So you think that a company that made post tax profits of £15m last year, had zero debt, £14m in the bank and sales of £235m should have a market cap of just £60m.

Perhaps you would like to explain how you arrived at your 30p projection !

[she-ra] 27/3/2011 19:01

I see this going to 30p and then maybe bouncing.

Reminds of Psion except I could see a way out for Psion even though it is a more competitive market they operate in.

[sunseeking] 25/3/2011 17:05

And at a fraction of the IPO price such a short time ago!
ss

[sunseeking] 25/3/2011 17:03

I was tempted to sell on this latest news but I can,t help thinking why would
any company issue such a negative rns without trying to put at least a little gloss on it.? Are they thinking of taking it private again!!!
ss

[gopher] 02/3/2011 10:02

This has similarties to a company called Sepura (SEP) where I knew something about the end markets. The IPO was overpriced and I bought around the low on a cheap PE but never made any money as it became obvious they weren't really a growth stock and people lost interest. The share has stagnated for last 2 years although turnover has increased.

[she-ra] 01/3/2011 19:19

I think the promise has gone.

[masurenguy] 01/3/2011 10:33

gopher - 271: the 200p that GS placed these at looks more and more like Gods work.

LOL gopher - I think that IPO & post IPO investors might see it more as the work of the "great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money" to quote Matt Taibbi, rather than Blankfeins claim of "doing Gods work" !

[gopher] 01/3/2011 10:23

The trend that cause concern here is margin erosion as markets mature. The UK is now mature and the US cant be far away. This was a much better statement and should easily support the share price at these levels (60p) equally the 200p that GS placed these at looks more and more like Gods work. There is upside if they can string a few non negative trading statements togther imo.

[masurenguy] 01/3/2011 10:10

Interesting webcast. Some of the main points.

* Recent market research undertaken in 250 educational districts in the US (nearly two-thirds of their total sales) between Dec and Feb indicate a very strong commitment to IWB. Current US research indicates that the likely adoption rate for IWB will be in the range of 75% - 80%. At the end of 2010 only about a third of US schools had already adopted IWB so there is plenty of future market potential to be exploited here. As a result the CEO will be relocating to the US to spearhead their growth there.

* New 500 series is ahead of the competition in terms of functionality & versatility. In addition to gaining new customers this should also trigger upgrades from existing customers, particularly in the UK.

* Roll out of the Oct contract for 8000 systems to Italian schools has now commenced.

* Swift action was taken to reduce operating costs as soon as the downturn in sales became apparent in H2. Headcount has already been reduced by 13% - mainly in administration and middle management - and they expect total opex costs to be between 5% and 10% lower in 2011.

* Gross margins have held up and are expected to be sustained at current levels.

* Inventory remains under control and there are no potential write-downs in the pipeline.

* Market surveys have clearly indicated there is strong brand loyalty to PRW. Lower cost alternatives are not really credible and the market should continue to be dominated by SMT and PRW.

* Plan to accelerate penetration in horizontal markets such as corporate & government training.

Clearly educational budgets could remain under pressure during 2011 but this was a fairly upbeat presentation and the growth potential in overseas markets remains high as does the potential to exploit horizontal training markets too. There were quite a few analysts in attendence so it will be interesting to see what coverage this might produce over the next couple of days !

Webcast replay:

[masurenguy] 01/3/2011 07:39

Historic PER is just under 7 with a yield of 4.2%, no debt and £14.5m in net cash. Sales during the past 12 months are up by 14.7% but this has been declining quarter by quarter. H1 sales were up by 35% (Q1 +48.9% & Q2 +25.7%) but H2 sales were down by 1.7%. The latter was entirely due to an 18% decline during Q4 following an 11.8% increase in Q3.

Question is whether the sales slide is now close to being arrested via growth in overseas markets during this year. Perhaps the analysts presentation this morning will provide some meaningful guidance on this.

[masurenguy] 26/2/2011 12:25

Results due on Tuesday. A reminder of the January trading statement.

2010 Trading Update

On 3 December, 2010, Promethean, a world leader in the global market for interactive learning technology, reported that while customer interest and the long-term drivers of demand for its technologies remained strong current market conditions were difficult due to budgetary uncertainties and constraints, particularly in the United States, and also in Europe. Promethean stated it would give a further update early in the New Year. As expected, market conditions during the fourth quarter were challenging, and consequently fourth quarter revenues were lower than in the same period in 2009. However, the Group expects revenues for the full financial year to 31 December 2010, to be towards the top end of current market expectations.

Promethean intends operating on the basis that market conditions will continue to be challenging for the foreseeable future, particularly in the United States. Promethean is therefore aligning its cost base to these market conditions, and the Board now expects to increase the exceptional charge related to restructuring to be taken in the fourth quarter of 2010. At the same time, Promethean continues to invest in the business and is launching important new products at this week's major BETT international educational trade fair in London, which it believes will further strengthen its technology leadership and positioning in the educational marketplace. In particular, Promethean is launching its next generation 500 series interactive whiteboard, which provides true multi-touch and multi-pen functionality, as well as a range of new software and accessories.

[masurenguy] 24/2/2011 15:43

SMART Technologies (SMT) downgraded at Credit Suisse to Neutral from Outperform on unpredictable revenue, and high expectations, Credit Suisse said. Price target slashed to $9 from $13.50.

SMT already down 5% to $8.90 over the past two weeks so the CS downgrade is out-of-date before its release ! Smart has net debt of £166m wheras PRW has net cash of circa £14m.

[masurenguy] 21/2/2011 12:30

Results due a week tomorrow !

[masurenguy] 11/2/2011 16:25

Cheers gopher. The shareprice has gradually moved up by 10% over the past 8 sessions. Both the global and US markets still grew at circa 20% in 2010 according to Futuresource and this was largely corroborated by the Smart Tech Q3 results earlier this week.



The most recent PRW trading update last month also stated that "However, the Group expects revenues for the full financial year to 31 December 2010, to be towards the top end of current market expectations." and consensus forecasts gave an average projection of pretax profits coming in at around £23m for 2010. If this reflects the actuals then the historic PER will be around 7.5, based upon eps of circa 8p, with a prospective yield of 4.8%. Hopefully this will be confirmed in the actual results in just over 2 weeks time which should also include an update on how well the new 500 series is selling.

[gopher] 10/2/2011 00:05

Good luck on this Masurenguy. I agree with your conclusions but imo growth must return to this market to make you money

The Smart statement indicated flat US markets rather than any collapse but I was frankly unnerved by the Smart share price fall last week and do use stop losses in situations where I seem to be losing from day one.

[masurenguy] 09/2/2011 12:02

Made an initial purchase @62.5p within an equity ISA today. Circa 67% of Prometheans sales are in the US market and their main competitor Smart Tech reported yesterday that their Q3 US sales were up by 27% over the comparative quarter in the prior year.

Promethean seem to have a competitive edge on SMT and anecdotal evidence suggests that their products are more popular with end users in the US. There are also indications that their new ActivBoard 500 Pro (launched at BETT last month) is already selling well and is considered to be superior to the equivalent SMT 800 model.

Promethean are due to report their 2010 results on March 1st and I will be looking to add in due course. With a current market cap of £127m at 63p, including cash of circa £14m and no debt plus a projected yield of 4.9%, they have now been oversold and are undervalued in my opinion.

[masurenguy] 08/2/2011 23:00

Smart Technologies continued to increase sales during Q3 which were 16% up over last year at $180.9m. Adjusted earnings nearly doubled at 13c per share compared with 7c a year ago. Earnings fell by 37% due to a reduction of $5.5m in forex gains compared to Q3 last year. These results came in ahead of average analysts projections of earnings of 10c on sales of $173.2m

SMART Reports Third Quarter 2011 Financial Results

Total revenue for the third quarter of fiscal 2011 was $180.9m, an increase of 16% compared to $156.1m in the prior-year period. Revenue growth for the quarter was particularly strong in North America, up 27% compared to the same quarter last year. In terms of unit sales, 89,705 SMART Board(TM) interactive whiteboards were sold in the quarter, compared to 93,958 units sold in the prior-year period. Total revenue for the first nine months of fiscal 2011 was $622.8m, an increase of 26% over the prior-year period. Revenue growth in the first nine months of the year was strong in both North America and EMEA, up 27% and 23%, respectively.

Gross profit for the third quarter of fiscal 2011 was $86.4m, an increase of 13% compared to $76.6m in the prior-year. Gross margins for the third quarter were 48%, compared to 49% for the same period last year. Adjusted EBITDA for the third quarter of fiscal 2011 was $34.0m, representing an Adjusted EBITDA margin of 19% compared to $35.5m in the prior-year. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenue after adding back the net impact of deferred revenue.

GAAP net income was $12.5m for the third quarter of fiscal 2011, compared to $19.9m in the prior-year period. GAAP EPS was $0.10 based on 123.8m weighted average shares outstanding, compared to $0.11 based on 180.5 million weighted average shares outstanding during the same period last year. GAAP net income during the quarter ended December 31, 2010, includes a $3.2m foreign exchange gain, partly due to the conversion of our U.S. dollar-denominated long-term debt into the company's functional currency of Canadian dollars, compared to an $8.7m foreign exchange gain during the same period last year. Adjusted Net Income for the third quarter of fiscal 2011 was $15.9m, an increase of 26% compared to $12.6m in the same period last year. Adjusted EPS was $0.13 based on 123.8m weighted average shares outstanding, compared to $0.07 based on 180.5m weighted average shares outstanding for the third quarter of fiscal 2010.

At December 31, SMART had cash and cash equivalents of $130.1m and $365.1m of debt outstanding.

Financial Outlook for Fiscal 2011

Total revenue is expected to be in the range of $775m to $790m for the fiscal year ended March 31, 2011. Adjusted Net Income per share is expected to be in the range of $0.69 to $0.73.

[masurenguy] 08/2/2011 08:52

Creeping up ahead of the year end results with the shareprice having moved up by 10% over the past 3 sessions, on comparatively modest volumes.

[masurenguy] 05/2/2011 16:06

Some further institutional support with Deutsche Bank increasing their shareholding from below 3% to 3.4% this week. This follows Aberforth, Norges Bank and Wolf who all marginally increased their positions during November and December.