NIA's latest brand new stock suggestion BroadVision Inc. (BVSN) gained 13% on Wednesday to finish at $17.35 on strong volume of 471,188. BVSN has so far made a gain of 109% since NIA first suggested it on December 12th at $8.31! NIA considers BVSN's gains so far to be nothing compared to what is to come over the next few months leading up to the Facebook IPO and likely consolidation in the enterprise social space.
NIA has not sold a single share and will be releasing no new stock suggestions until BVSN is trading where it belongs. In our opinion, BVSN's 2012 rally is only at its very early stages. With only 4.515 million shares outstanding, BVSN's latest market cap is still only $78.34 million. BVSN has $56.79 million in cash and no debt, giving the company an enterprise value of only $21.55 million. If we assume that BVSN's old products that a private equity firm tried to acquire a few years ago for $29 million are now only worth $15 million, it means Clearvale is only receiving a valuation at $17.35 per share of $6.55 million.
It is insane that Clearvale is receiving a value of only $6.55 million when BVSN's competitor JIVE is receiving a valuation for their platform of $668.46 million, which is 102 times higher! The only reason BVSN is so ridiculously undervalued where Clearvale is being valued at next to nothing is BVSN's management has done nothing to promote its stock because they are focused on rapidly improving Clearvale by constantly adding new features so that BVSN stays a step ahead of the competition.
As we approach the Facebook IPO, every smart investor in the world will start searching the market for other social networking stocks. They will most likely discover JIVE and BVSN as the only two pure plays in the enterprise social networking space. After realizing that a whole $12.58 of BVSN's $17.35 share price is cash and BVSN's Clearvale platform is being valued at less than 1% of JIVE's platform, investors could pile into BVSN in droves. Considering BVSN's small float of only 2.54 million shares and the fact that we believe institutions could be starting to accumulate BVSN as we speak, BVSN could absolutely explode leading up to the Facebook IPO!
Clearvale has just about all of the features JIVE has plus some additional unique features that make us like Clearvale better. With BVSN's other competitor Lithium now being valued on the private market for about $500 million, we will be surprised if Clearvale doesn't very quickly receive a valuation of at least $100 million, which would still only be a small fraction of JIVE and Lithium. A Clearvale valuation of $100 million along with $56.79 million in cash and a $15 million valuation for BVSN's old products, means BVSN would trade with a market cap of $171.79 million or $38.05 per share.
Take a look at the enormous amount of money that BVSN has spent on research and development in recent years, when the company has been focused almost entirely on building Clearvale. 2008 R&D spending: $9.18 million, 2009 R&D spending: $8.57 million, 2010 R&D spending: $7.3 million, first 9 months 2011 R&D spending: $5.05 million. If we estimate that BVSN's full year 2011 R&D spending was $6.73 million and we combine it with R&D spending for years 2008 through 2010, BVSN has spent approximately $32 million developing Clearvale.
Considering that BVSN has the best possible management team and is in the hottest possible space, we believe for every $1 that BVSN spends on Clearvale R&D they are likely creating a platform that has at least $3 to $10 in value. Meaning, BVSN's $32 million investment into developing Clearvale could realistically be worth somewhere in between $96 million and $320 million today. BVSN was one of the first companies to begin developing a platform from scratch in this space. If a company started today and spent $32 million over the next four years building a social enterprise platform, it will likely be worthless when they're done because they will have missed out on the four most rapidly growing years for this industry. Plus, while another company is spending $32 million over four years to get to where BVSN is today, BVSN will be building on top of their platform and leaving most of their competitors in the dust.
For a software company to enter this space in time to take advantage of the growth coming over the next four years, they need to acquire a platform that has already been developed. BVSN is one of the only companies to have developed a fully featured enterprise social suite that allows businesses to provide just about every type of function that can possibly be used on a social network. If a large software company acquired BVSN for $60 per share, which means they would end up spending about $200 million on Clearvale, and they began marketing Clearvale in a new subsidiary in which they spend $100 million on advertising to rapidly sign major clients, they could possibly turn a total investment of $300 million into a subsidiary that is worth well over $1 billion by 2016.
If you look at all of the consolidation that has been taking place in this industry in recent months, the very minimum price that companies have been selling for is around $25-$30 million. If you look at the companies that have sold for $25-$30 million, these are companies that have only spent around $5-$10 million developing their product. Most of these companies don't have any cash or revenues, and their product usually doesn't stand a chance of making it on its own. Then why are these companies being acquired? 9 out of 10 of them have a product that has a unique feature that a company like JIVE wants to include in their enterprise social platform to separate themselves from the competition.
That's right, companies like JIVE are acquiring companies for around $25-$30 million with no intentions on running those companies or continuing to offer their products/services. They are acquiring them, laying off all of their employees, and striping their products of one function that they particularly like and want to add to their own enterprise social platform. For example, JIVE recently acquired OffiSync for $25-$30 million because they liked the way that OffiSync's technology could be used to integrate JIVE's software with Microsoft (MSFT)'s Office and Outlook. OffiSync had a very successful business that offered a service allowing Google Docs users to edit their files in MSFT Office before saving them back to Google Docs. OffiSync only spent $1 million developing their software, which unbelievably means for every $1 they spent they created a product worth $25 to $30.
BVSN is starting to get discovered by investors all around the world. Considering that 1.3 million shares traded this week in just 3 trading days, which represents more than 1/2 of its public float, it is very possible that major institutions are beginning to accumulate. NIA believes that no company in the world will benefit more from Facebook's IPO than BVSN. Wealthy American and international investors who are interested in investing into Facebook will likely soon find out about BVSN and how it has positioned itself as a leader of the enterprise social space, which is going to grow many times faster this decade than the consumer social space.
The time to invest into Facebook was in 2007 when MSFT purchased 1.6% of the company for $240 million, which valued Facebook at $15 billion. At the time, everybody was insulting MSFT's investment including Private Equity Hub’s Dan Primack who suggested it might be “one of the worst venture capital deals of all time.” After four consecutive years of triple digit revenue growth, Facebook's value has increased 567% to an estimated $100 billion. Those who doubted the geniuses at MSFT are really kicking themselves right now as they are being forced to eat their words!
NIA believes that BVSN is positioned similarly to where Facebook was four years ago. Young tech savvy individuals from around the world who have spent the past four years using Facebook to communicate with their friends and family, are now demanding that their employers implement enterprise social networks. When eBay employees asked for an enterprise social network and their demands were ignored by eBay management, the workers decided to launch their own secret unofficial enterprise social network that eBay management had no access to or control over.
This scared eBay management big time. They obviously don't want all of their employees to be communicating behind their backs on an enterprise social network that might not even be secure. This forced eBay to immediately get the ball rolling on deploying their own official eBay enterprise social network using the platform of NewsGator.
NewsGator is a private company that is a competitor of BVSN. NewsGator is one of the companies discussed in NIA's Social Network Stocks 2012 Report. NIA will be updating its social network report recipients throughout the year on the progress of NewsGator including any new venture capital funding, acquisition announcements, or other developments we notice that we consider to be preparations for a future potential IPO.
In NIA's opinion, based on the extensive research we did in recent weeks about NewsGator, we believe that the company currently deserves a valuation of $300-$400 million in the event of an IPO or buyout. However, we believe they have a product that is inferior to BVSN's Clearvale and we are very confident that BVSN will gain a much larger market share of the enterprise social industry this decade.
The reason BVSN is a much better company is simple. BVSN has spent an enormous amount of money on research and development related to Clearvale over the last few years. BVSN has shifted its attention entirely to Clearvale and completely away from its old software products that are still being used and generating revenues. BVSN built Clearvale completely from scratch from the ground up. It is a full suite that allows businesses to offer just about every type of feature they can possibly imagine themselves having on their enterprise social network.
NewsGator, on the other hand, is truthfully not a full suite built from the ground up, despite what the company claims. NewsGator brags about their partnership with MSFT, but NIA looks at this like the woman who raised a baby tiger and continued living with it in her house until the day it finally decided to act wild by lunging at her and mauling her to death.
MSFT has a web application platform called SharePoint that it originally launched in 2001. SharePoint helps simplify business intelligence, content management, search, and sharing for intranet and internet sites. Because MSFT knows that enterprise social networking will be the hottest technology space of 2012 and fastest growing between now and 2016, they decided to figure out a way to get its foot into this space as quickly as possible. MSFT accomplished this by adding some social networking tools to SharePoint.
MSFT began developing SharePoint from scratch over a decade ago when social networks didn't even exist. By adding enterprise social networking features to a product that wasn't meant for social networking let alone cloud computing, SharePoint simply isn't a suitable solution for companies looking to launch their own enterprise social networks over the cloud.
NewsGator's platform is built on top of MSFT's SharePoint in order to improve SharePoint and make it more suitable for enterprise social networking. MSFT's SharePoint lacks many features that a platform like BVSN's Clearvale has, but NewsGator tries to fill these gaps by adding new social functionality. If you are wondering if there are any advantages that NewsGator has over its competitors, there is one. NewsGator uses MSFT's underlying documentary library services that are already a part of SharePoint without having to build out documentary library services on their own.
NewsGator's major problem will be in the future as MSFT improves SharePoint to a level in which NewsGator can no longer easily improve it. At that point, the loving partnership they have today will turn into MSFT mauling NewsGator and possibly putting them out of business. That is why we love companies like BVSN that are built from the ground up and not on top of a MSFT product.
You won't believe this major Zdnet article just out about this space: http://www.zdnet.com/blog/btl/ibm-aims-to-formalize-the-social-enterprise-movement/66704
It discusses how IBM aims to formalize the social enterprise movement to help companies adopt new tools and processes. IBM is planning to offer services to help customers develop skills and technical support for social networking. After reading the article, if you weren't already absolutely sure that this will be the single hottest technology space of the decade, you will now be convinced guaranteed.
The management of just about every major corporation worldwide is now realizing that social is the new norm and enterprise social networking will allow their employees to prosper and thrive as a team. By mid-decade, just about every corporation will be using enterprise social networking, similar to how just about every American with a computer is using Facebook today.
BVSN is positioned to not just lead this space in the U.S., but to lead all around the world. BVSN has a stunning international presence unlike any other pure play in this space. BVSN has offices in Redwood City CA, Waltham MA, Paris France, Milano Italy, Unterföhring Germany, Madrid Spain, Reading United Kingdom, Tokyo Japan, Bangalore India, Beijing China, and Taiwan! See for yourself here: http://www.broadvision.com/en/about.php
BVSN is positioned to not just lead this space in the U.S., but to lead all around the world. BVSN has a stunning international presence unlike any other pure play in this space. BVSN has offices in Redwood City CA, Waltham MA, Paris France, Milano Italy, Unterföhring Germany, Madrid Spain, Reading United Kingdom, Tokyo Japan, Bangalore India, Beijing China, and Taiwan! See for yourself here: http://www.broadvision.com/en/about.php
BVSN once again broke a key resistance level on Wednesday and is still a 100% perfect technical buy in all 13 short, medium, and long term indicators: http://barchart.com/opinions/stocks/BVSN
If you would like to receive NIA's exclusive Social Network Stocks 2012 Report, please go to: http://inflation.us/social2012.html
Disclaimer: NIA owns 150,000 shares of BVSN that it purchased at an average price of $9.1628 per share. NIA agreed to a 60 day holding period on its initial position of 122,000 shares starting from the date that NIA first suggested the company, but NIA intends to sell these 122,000 shares at some point in the future after the date of February 12th, 2012. NIA intends to sell its additional 28,000 shares of BVSN in the future and can sell them at any time. NIA's co-founders have also been referred business in the past from somebody who has filed as a large BVSN shareholder. NIA also reserves the right to accumulate additional shares of BVSN at any time. Past performance is not an indicator of future returns.
NIA is not an investment advisor. This email is not a solicitation or recommendation to buy, sell, or hold securities. Never make investment decisions based on anything NIA says. This email is meant for informational and educational purposes only and does not provide investment advice. NIA's co-founders have previously disseminated information about BVSN in other media outlets.
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