Filed under: eBay (EBAY), Next big thing

Lending Club is a spring chicken, having launched its online lending service in late May. To get momentum, the company has leveraged the Facebook platform (which has become increasingly popular). Last week, Lending Club snagged $10.26 million in a first round of venture capital. The investors include Canaan Partners and Norwest Venture Partners.

Think of Lending Club as an eBay (NASDAQ: EBAY) for borrowers and lenders. That is, if you need some money, you can post a proposal on the site — and then a variety of lenders will offer money (loans range from $500 to $25,000). Cool, huh? Although, borrowers need a credit score above 640.

Interesting enough, on the Lending Club’s blog, there are interviews with the firm’s VCs. For example, Canaan Partners’ Dan Ciporin says: “The consumer credit market is an absolutely gigantic market and yet paradoxically one of the few sectors that has not yet been completely upended by the internet. I think the Lending Club approach to consumer lending is not only a great disintermediation approach in a large, established market sector, but also through the focus on affinity relationships takes what has been proven to work on the web and applies it uniquely to the lending marketplace.”

Then there is Jeff Crowe, who is a general partner at Norwest Venture Partners. In fact, he is a lender on Lending Club. And, so far, his portfolio is yielding about 13%. But, I’m sure he wants to make a lot more from his venture investment in Lending Club.

If you want to check out more venture capital investments, click here.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.

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Filed under: Analyst reports, Deals, Industry, Apple Inc (AAPL), AT and T (T), iPhone

Wall Street has wondered for some time how profitable the Apple (NASDAQ: AAPL) iPhone is. First, numbers of analysts pulled the device apart and found out what each component cost. That probably gave a good sense of how much the margin was on the hardware.

But, there has always been a sense the Apple was making a great deal from AT&T (NYSE: T). This was based on the idea the the phone company gave Apple a bit of its service plan revenue in exchange for have an exclusive right to sell the phone in the U.S.

Now that Apple is coming close to closing deals to sell the phone in Europe, information is leaking out about what the consumer electronics company will make for calls placed on the device. According to The New York Post, T-Mobile will have exclusive rights to sell the phone in Germany but will pay “10 percent of the revenue from voice calls and data usage.” If the German company is anything like Verizon Wireless (NYSE: VZ), it operations have an operating margin of 15%. So, they are giving up a very great deal indeed.

The paper also writes that Gene Munster, an analyst with Piper Jaffray, in July estimated that Apple collects $3 per month per iPhone subscriber from AT&T for voice calls and data usage, as well as $8 per month for every new subscriber who signs up for AT&T with the device. But, if the T-Mobile deal is as good as its looks for Apple, the estimate of what AT&T gives up may be too low.

The bottom line: If the iPhone is not a huge hit at bringing in net new customers to these cell carriers, then they have made very bad deals.

Douglas A. McIntyre is a partner at 24/7 Wall St.

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Filed under: Earnings reports, Good news, Press releases, Products and services, Competitive strategy, Cypress Semiconductor (CY)

In July, Cypress Semiconductor Corp. (NYSE: CY) posted record 2Q 2007 revenue. At $372.8 million for the quarter, up 8.7% from 1Q 2007, 2Q revenue surpassed the previous record revenue set in 4Q 2000 at the height of the dot-com boom. (Ah, those were the days.) Diluted EPS were $2.29 as compared with 1Q 2007 diluted EPS of a loss of $0.01. But let’s examine that EPS figure. During 2Q, Cypress sold 7.5 million shares of its wholly owned subsidiary Sun Power. Cypress still has a $3 billion stake in Sun Power. Excluding the proceeds from this stock sale, diluted EPS is $0.16, much less but still much better than a loss. CEO T. J. Rodgers bragged on these results, noting that Cypress Semiconductor has survived when 47 of its competitors since 1982 have not.

Rodgers stated that demand for semiconductor products increased for the seventh quarter in a row, and he sees no slow down. Cypress is expanding its line of proprietary products, including PSoC (programmable solution on chip) models that offer touch-screen capabilities for cell phones, video gaming, and point-of-sale registers. Touch-screen capability is the wave of the future, as is HB-LED (high brightness light emitting diode) for all types of HD TVs, cell phones, and lighting products. Cypress forecasts HB-LED to be a $10 billion market annually within the next three years, much of which will rely on Cypress products. Cypress is also in the forefront of mobile communication devices, offering a peripheral handset controller that downloads music to cell phones ten times faster than previously. Cypress is also developing next generation high-speed holographic (3D) data storage systems.

Continue reading Cypress Semiconductor Corp (CY) shines

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Filed under: Morgan Stanley (MS), Lehman Br Holdings (LEH), Initial public offerings

In the U.S., there are about 5,700 acute care health systems. No doubt, they face lots of pressure from things like reimbursement, rising costs, government regulation, and so on. In fact, according to a study from the American Hospital Association, about 25% of community hospitals had negative margins.

Well, for MedAssets this is a big opportunity. And, to help propel the growth, the company has filed for an IPO.

Basically, the company has technology that helps improve operating margins and cash flows for hospitals. The improvements typically range from 1.5% to 5.0% of revenues. A critical piece of the technology is MedAssets’ proprietary database, which includes 4 million products and information on 160,000 different charges.

It’s turned out to be a great business. Over the past four years, MedAssets revenues have shown a compound annual revenue growth rate of 41.4%. As of last year, revenues were $146.2 million and adjusted EBITDA was $50.8 million. Keep in mind that MedAssets estimates that the size of its market is roughly $6.5 billion.

The lead underwriters on the IPO include Morgan Stanley (NYSE: MS) and Lehman Brothers (NYSE: LEH). The proposed ticker is MDAS. You can find the prospectus at the SEC website.

Also, if you want to check out more IPO filings, click here.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.

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Filed under: Forecasts, Industry, Ford Motor (F), General Motors (GM), Employees

Ford (NYSE: F) and General Motors (NYSE: GM) have started telling the UAW that they are willing to move much of their production outside the U.S. if they cannot get very large concessions on employee costs.

According to The Observer in the UK, if negotiations do not go well, “Ford and GM negotiators have said the companies will have no choice but to move their North American operations to countries in Latin America and Asia.”

Both car companies have been trying to set up a fund, run by the UAW, to handle most of the pension and health benefits for the UAW. This would have to be funded with as much as $60 billion from the two companies, but would take the liabilities for these costs off of their balance sheets.

But, the UAW may want a level of funding for this pool that is greater than the car companies are willing to give. Or, the UAW may want to fight for a higher number of jobs in the U.S. than GM and Ford feel they can handle. With falling vehicles sales and high costs, getting their North American operations profitable may be impossible no matter what the union gives.

All the UAW has to push back with is a strike. And, strike it may. If the UAW gives up what the car companies want in this round of negotiations, the union will cease to exist as the bargaining force that it has been for decades. The union may decide that it is better to risk dying while defending its workers that to be overrun without a struggle.

Douglas A. McIntyre is a partner at 24/7 Wall St.

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Filed under: Earnings reports, Good news, China, Trina Solar ADS (TSL)

Chinese solar power manufacturer Trina Solar Limited (NYSE: TSL) is ablaze with double digit increases in net revenues, net income, operating income and the solar megawatt volume of units shipped. The company added 12 new customers in 2Q 2007 alone, and its manufacturing capacity is booked solid through the remainder of 2007. Good thing the company is in the midst of a tremendous manufacturing capacity expansion program. Currently, Trina Solar has a manufacturing capacity of 100 solar megawatts, set to increase by 50% to 150 solar megawatts by the end of 2007, and rise again to 350 solar megawatts worth of manufacturing capacity by the end of 2008. The sky really is the limit for Trina Solar.

Despite big increases in the cost of raw materials, Trina Solar’s total net revenues in 2Q 2007 jumped 77% to $75.3 million, even though the average sales price dipped. Gross profit increased 49.5% to $14.2 million, and net income increased 51.4% to $7.2 million. Because Trina Solar is still in its start-up phase, operating expenses increased as did interest expense. Based on figures thus far reported in 2007, CEO Jifan Gao states FY net revenues will total $270-$200 million, and FY net income will be in the $34.5-$36.5 million range. Trina Solar has guaranteed contracts with suppliers for 90% of the necessary supply of polysilicon for 2007 orders, and 60% for 2008 orders. Trina Solar recently began dealings with various silicon reclamation companies to ensure a stable and moderately priced supply of necessary polysilicon to meet its present demand forecast.

In an odd state of affairs, most of Trina Solar’s customers are in Germany, Italy, and Spain. The company does very little business in China. CEO Gao’s remarks make no reference to this fact, only that climatic conditions and government policies make it easier to do business in southern European countries. Given China’s unprecedented growth in demand for energy resources, one has to wonder why the Chinese government is so late coming to the solar-powered party.

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Filed under: Analyst reports, Forecasts, Internet, Rants and raves, Google (GOOG), Sunday Funnies

On Friday my colleague Jonathan Berr posted Henry Blodget blasts Mary Meeker’s Google (GOOG) math. In this story he outlined a slight difference of opinion. Actually a 1000%, regarding the potential revenue and earnings of YouTube. Since my own attempts at guessing what Google Inc. (NASDAQ: GOOG) is worth (Serious Money: What IS Google worth? One year later…) proved more accurate than either of them, and since total stock value is of more importance, I had to comment.

Here are some real important numbers: If Google earns $18 per share over the next twelve months, its forward P/E is around 28. If they continue to make any progress with YouTube revenue at somewhere in between our battling pundits and hold market share, Google might be worth $600 in 12 months. Not the stuff investors are dreaming of but pretty darn good.

If Google gains market share, adds any new revenue streams or improves its margins, it could reach 5% to10% above these figures. I do not believe this will happen because Google will not be able to achieve a return on investment for new business equal to that of its original idea. In addition, any new acquisitions, and there will be some, will not improve margins either.

To verify my track record, including bad calls, read Chasing Value and Serious Money.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

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Filed under: Microsoft (MSFT), Interviews, International Business Machines (IBM), salesforce.com inc (CRM)

Founded in 1999, Intacct is now a key player in the on-demand software space. The focus is on enterprise resource planning (ERP) solutions for small and mid-size companies (of which there are about 2,000 customers).

To ramp up growth, the company raised $14 million in venture capital. The investors include Sigma Partners, Sutter Hill Ventures, and Emergence Capital Partners.

I had a chance to interview the company’s CEO, Mike Braun. He is a veteran of the tech world, having worked at high level positions for IBM (NYSE: IBM) as well as a variety of upstart companies.

Q: Salesforce.com (NYSE: CRM) just reported a record quarter. What’s your perspective on the company’s future growth prospects?

A: It was a fantastic quarter — further demonstrating the momentum of the new “on-demand” computing model. Salesforce continues to focus on new customer acquisition, which drives high expenses in the near term, but you can get a preview on the future by looking at the cash flow growth of 197% YTY. Once companies move to this delivery model, whether with salesforce.com or Intacct, they love it and will stay for life.

Continue reading CEO Interview: What’s the big deal about on-demand?

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Filed under: Analyst reports, Forecasts, Internet, Rants and raves, Google (GOOG), Sunday Funnies

On Friday my colleague Jonathan Berr posted Henry Blodget blasts Mary Meeker’s Google (GOOG) math. In this story he outlined a slight difference of opinion. Actually a 1000%, regarding the potential revenue and earnings of YouTube. Since my own attempts at guessing what Google Inc. (NASDAQ: GOOG) is worth (Serious Money: What IS Google worth? One year later…) proved more accurate than either of them, and since total stock value is of more importance, I had to comment.

Here are some real important numbers: If Google earns $18 per share over the next twelve months, its forward P/E is around 28. If they continue to make any progress with YouTube revenue at somewhere in between our battling pundits and hold market share, Google might be worth $600 in 12 months. Not the stuff investors are dreaming of but pretty darn good.

If Google gains market share, adds any new revenue streams or improves its margins, it could reach 5% to10% above these figures. I do not believe this will happen because Google will not be able to achieve a return on investment for new business equal to that of its original idea. In addition, any new acquisitions, and there will be some, will not improve margins either.

To verify my track record, including bad calls, read Chasing Value and Serious Money.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

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Those bullish on housing have continually called blogs such as Housing Panic, Housing Doom, Patrick.net and others chicken littles.  Their shallow reasoning went something along these lines:  “The median housing price is up, meaning that home values continue to increase.  Ergo, the blogs calling the market a declining one are insane.”

If you fell for that poorly reasoned argument in the first place I feel sorry for you; but at last, that remaining mirage of hope for the poor folks at the NAR and other disillusioned cheerleaders has evaporated.  The New York Times reports that the median home price is expected to drop for the first time since 1950.  Try to spin that one Lawrence Yun.

From the Times:

The median price of American homes is expected to fall this year for the first time since federal housing agencies began keeping statistics in 1950.

…

The reversal is particularly striking because many government officials and housing-industry executives had said that a nationwide decline would never happen, even though prices had fallen in some coastal areas as recently as the early 1990s.

…

On an inflation-adjusted basis, the national median price — the level at which half of all homes are more expensive and half are less — is not likely to return to its 2007 peak for more than a decade, according to Moody’s Economy.com, a research firm.

The entire article is worth the read.  It particularly highlights how all of the supposed “experts” (a loosely defined word in the article, as it lumped the NAR in to the group of experts)  predicted that price declines could never occur.

Maybe this will finally, once and for all, kill the argument over whether there is truly a housing market downturn or not.  While the NAR has been busy dreaming up new ways to show the housing market in a positive light, when even your best friend of a statistic turns against you - there is little left available to prop your lie version of the story up.  In other words, Lawrence Yun needs a new alibi.

Some interesting graphs are below, and be sure to check out the interactive home price comparison tool over at the NY Times.

From the Times:

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