AVG Technologies has now been public for a year. Their IPO (Initial Public Offering) took place
in early February, 2012, The stock closed
around $13.08 on its opening day last February on Nasdaq after targeting an opening day price at $16
plus. The stock closed on February 2, 2013 at $13.14. These two figures represent a one-year return
of 0.38% excluding transaction costs and any dividends paid. For the first 9 months of their fiscal year, AVG Technologies
revenue was up, but net income was down (not good as a trend). Over the course of the year, AVG had a low of $9.42 and in December, had a high of $16.38. They have toolbar deals with both Google and Yahoo.
A Motley Fool Perspective - February
One worries about the thoroughness of AVG's protection, however, when one sees they've not been very thorough in safeguarding their finances. Current ratio is a quick-and-easy indicator of a stock's health, especially for a smaller company such as AVG which may lack the resources to bail itself out in the long term. With a current ratio of 0.7, AVG is struggling.
But T.M., you might say, AVG could be using its profits to expand, research, etc. etc. Their declining margins, however, tell another tale: one of a company whose long-term solvency and profitability is in doubt.
http://beta.fool.com/tmloyd/2013/02/11/world-wide-web-investment-here-today-gone-tomorrow/23612/?ticker=AVG
A Motley Fool Perspective - February
One worries about the thoroughness of AVG's protection, however, when one sees they've not been very thorough in safeguarding their finances. Current ratio is a quick-and-easy indicator of a stock's health, especially for a smaller company such as AVG which may lack the resources to bail itself out in the long term. With a current ratio of 0.7, AVG is struggling.
But T.M., you might say, AVG could be using its profits to expand, research, etc. etc. Their declining margins, however, tell another tale: one of a company whose long-term solvency and profitability is in doubt.
http://beta.fool.com/tmloyd/2013/02/11/world-wide-web-investment-here-today-gone-tomorrow/23612/?ticker=AVG
So what do Forbes contributor Jim Oberweis
and Seeking Alpha contributor Eiad Asbahi see for the company?
3 Slow Growth
Small-Caps with Big Potential – Forbes
Forbes’ numbers are inaccurate in the article. AVG Technologies has more than 110 million
computer users. While they have been losing
share, according to Opswat, they claim an active user base of 143 million
users. Some of this is attributable to
25 million copies of their Internet Security Suite (the paid) product given to
purchasers of Huawei (Yes, that Huawei) mobile devices, in India.
Forbes contributor Jim Oberweis likes AVG for
the company’s PEG ratio, growth prospects, and the fact that the free product
received a PC Magazine Editor’s choice award.
He likes the Google relationship. See links at the bottom of this blog for relative rankings of the paid
AVG Antivirus and AVG Internet Security solutions. The print article will be in the February 11 issue.
AVG: Feb 1st Google
Policy Updates Threaten AVG's Growth Engine, Signals Steep Downside
In a January 31 Seeking Alpha article, Seeking Alpha contributor
Eiad Asbahi is forecasting a share price of $8.50 to $10 per share (elsewhere
in the analysis, the figures are $7.30 to $10.28). This is based on an extensive quantitative analysis
based on a supposed change that will be occurring in Google’s toolbar policy.
According to the article, “Google (GOOG), AVG's primary
search partner and currently the source of substantially all of AVG's
Platform-derived revenue, is on the verge of announcing an update to its
toolbar policy, something that has not been widely followed or discussed by
market participants.” This would require
companies to make use of “opt-out” instead of having “opt-in” checked
automatically on the customer’s behalf. Opt-in has been a point of consternation among many users of many software packages.
In the article, he mentions Yahoo CEO Marissa Mayer was
asked about this policy change. Her
response, "On the Toolbar change from Google, we'd
be remiss to offer comment on another company's product, so I'm not going to
comment further there.” AVG Technologies
has a toolbar agreement with Yahoo as well as Google. Previously, they had been exclusively one company or the other.
Asbahi did some number crunching based on different churn rates
for users prior to and after February 1, 2012, an opt-in rate of 65% and per
user revenue from Yahoo search bar users at 50% of Google tool bar users. After all of his number crunching, his estimates for AVG Technologies 2013
revenue to be between $248M and $287M,
an “ implied market capitalization and target price would between $399M
and $569M, or $7.34/share and $10.28/share respectively.” On CNETs download site, AVG averages around a million downloads a week, suggesting major churn.
From a November 1 Financial Times blog, “J R Smith, chief
executive of AVG, admits that being the first in the industry to offer free
products has “kind of put us a little bit in a box”, but slowly the company is
succeeding in convincing investors that AVG has evolved from offering just
hardcore security into other services and platforms” http://blogs.ft.com/beyond-brics/2012/11/01/corporate-watch-avg-breaks-out
AVG made a buy versus make decision regarding mobile security in November 2010 with a $4.1 million acquisition of Droidsecurity to gain entry into mobile security market.
AVG Technologies should be reporting their earnings on
February 21.
For some comparative reviews of paid antivirus and internet
security products by PC Magazine, go to:
About OPSWAT www.opswat.com
Founded in 2002, OPSWAT is the industry leader in software
management SDKs, interoperability certification, and multiple-engine scanning
solutions.
OPSWAT market share reports are available at http://www.opswat.com/media/reports
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