AFFINION GROUP
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BroadSoft (BSFT)
$248mm market cap at price range mid-point of $10 |
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BUSINESS |
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Provider of software that enables fixed-line, mobile and cable service providers to deliver voice and multimedia services over their Internet protocol-based, or IP-based, networks |
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SUMMARY |
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. The license business is essentially flat, which means no growth
. The maintenance fees & services are now equal to the licensing fees
. Gross margins are declining
. Loss continue, lots of competition
. Not very exciting |
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COMPETITION |
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. Primary direct competitors consist of established network equipment companies, including Alcatel-Lucent, Avaya Inc., Comverse Technology, Inc. (through its acquisition of Netcentrex S.A.), Cisco, Ericsson, Huawei, Metaswitch Networks, Nokia-Siemens Networks, Nortel Networks Corporation and Sonus Networks, Inc. |
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. Some of the network equipment companies with which BSFT has non-exclusive distributor partnerships may also provide, as a package, their own network equipment in combination with IP application software that they have developed. |
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INTELLECUAL PROPERTY |
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Six U.S. patents. One European patent, two Canadian patents and two Australian patents, all of which are counterparts to certain of the U.S. patents. |
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USE OF IPO PROCEEDS |
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2.5mm shares from shareholders, 5mm shares from BSFT for $45mm |
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. $4.3 million to redeem preferred stock
. $14.3 million to repay debt
. Balance for working capital. |
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BroadSoft (BSFT) |
BSFT, C, 6 |
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Post-IPO shares: 24.6mm |
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IP software |
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Gaithersburg, Maryland |
2007 |
2008 |
2009 |
March '10qtr |
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IPO Mkt |
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Revenue ($mm\) |
$62 |
$62 |
$69 |
$18 |
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Cap (mm) |
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. Licenses |
$46 |
$40 |
$38 |
$9 |
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$246 |
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. Maintenance & fees |
$15 |
$22 |
$31 |
$9 |
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@$10 |
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Gross margin % |
80% |
78% |
75% |
72% |
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Profit (loss) |
-$1.7 |
-$11.2 |
-$7.8 |
-$2.6 |
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Profit (loss) % of revenue |
-2.8% |
-18.1% |
-11.3% |
-14.6% |
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VALUATION RATIOS |
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IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
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trailing 12 months thru March |
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
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BroadSoft (BSFT) |
$246 |
1.1 |
-35 |
7.2 |
9.3 |
30% |
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SCORECARD |
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Mgt |
Market |
Market Do- |
Proprie- |
Total |
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1-5, 5 is high |
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Growth |
mination |
tary |
rating |
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20 is perfect |
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1 |
2 |
2 |
1 |
6 |
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