John Chen’s Challenge

Blackberry LogoAs BlackBerry (NASDAQ: BBRY) refines its mission of “pushing the boundaries of mobile experiences,” all eyes will be upon 58 year-old John Chen, who has been named interim CEO.

Mr. Chen, who hails from a modest upbringing in Hong Kong, and lived in New England for several years, where he attended the Northfield Mount Herman school on the banks of the Connecticut River, and graduated with a EE from Brown University in 1978. He then headed West to receive his masters in electrical engineering from the California Institute of Technology the following year.

John Chen began his career at Unisys, (the merger of mainframe computer companies Burroughs and Sperry) as a hardware engineer, and later became president and COO at age 38 of Pyramid Technology Corporation, a fast-growing computer company, based in San Jose, California, started by former HP engineers, and a pioneer in Reduced Instruction Set Computing.  After Siemens acquired Pyramid and merged it into Siemens Nixdorf, Chen became president and CEO of Siemens Nixdorf’s Open Enterprise Computing Division in 1996.

A year later he joined Sybase, as president and CEO. Sybase, at one time, was the youngest and fastest growing database software company in the world, and a perceived challenger to Oracle for technology leadership. A series of management missteps pertaining to its products and technology, misleading financial statements, and ultimately lost investor credibility, led to a multi-year phase of purgatory—not unlike that experienced by BlackBerry.

This set the stage for a turnaround, which was led by John Chen, after he assumed leadership of the company in 1997. Under his leadership Sybase reemerged as a provider of data warehouse and other analytics software, mobile data management, messaging and virtualization technology. And the company recorded 55 consecutive quarters of profitability. In May of 2010 SAP AG the German enterprise applications software giant acquired Sybase for $5.8 billion, thus filling a gaping hole in its own product line, and better positioning itself as an Oracle competitor.

Among the myriad challenges facing John Chen and the management of Blackberry is what to do with the company’s smart phone and tablet business, which has steadily lost market share to long-standing competitors and up-starts. The company’s software challenges are no less daunting, although the company possesses solid mobile and security assets. Blackberry also benefits from several thousand patents relating to mobile devices, software, and security, and these are sure to be powerful assets in the future.

All in all, John Chen’s challenges exceed those that he faced upon joining Sybase some thirteen years ago. It will be interesting to see whether his interim position is followed by a more permanent one in which he can reestablish the leadership once held by the venerable Canadian company.

Constant Contact Still Flying Below the Radar Screen

RadarConstant Contact (NASDAQ: CTCT) of Waltham, Massachusetts is the category leader in email marketing software, with a cloud-based subscription software service that helps over 550,000 companies mount effective marketing campaigns, and maintain a continuous line of communication with customers and prospects. Though the company lost focus last year with an over-exuberant thrust into the social media market, Constant Contact, has, in the last several quarters returned to a more disciplined sales approach, and has added over 10,000 gross new customers in each of the last two quarters. We think it highly probable that CTCT will end 2013 with close to 600,000 active customers.

Constant Contact targets more than 20 million small and mid sized businesses in the U.S., as well as non-profits, including trade associations, schools, churches, hospitals and libraries. Constant Contact’s core email marketing product improves the quality and frequency of interaction with customers, constituents, and prospects, while reducing the costs associated with expensive, and often wasteful direct mail.

Three years ago Constant Contact offered only one product, email marketing, but now has six: online surveys, event marketing, social media marketing, local deals, and digital storefronts for small businesses. Each of these products target large addressable markets inside the company’s existing customer base, as well as new segments, which are receptive to the company’s affordable pricing. The new products have thus far been modest revenue contributors, yet signs are pointing in the right direction, as the company has demonstrated that its customer retention rate is 20 percent higher among customers that opt for two or more products, and 40 percent higher among customers who subscribe to three or more products.

CTCT has been slow to address overseas markets, but its products are used in the English language in over 100 countries. We believe the company will have a large addressable market overseas once it begins to roll out foreign language versions of its products.

Constant Contact, despite having made a dilutive acquisition, which cost the company over $65 million in cash, maintains a stellar balance sheet with nearly $100 million in cash, no debt, and negligible receivables. The company anticipates generating over $20 million in free cash flow this year, and not long ago initiated its first-ever share repurchase program, with an authorization for $20 million.

Constant Contact’s improving prospects coincide with a recent acceleration of M&A activity in the marketing automation sector led by’s purchase of ExactTarget, and Oracle’s recent acquisition of Eloqua. Constant Contact’s large installed base, improving business model, growing portfolio of products, and untapped potential at the mid-range of the email marketing market are among its most alluring attributes, which may yet lift it above, rather than below many investors’ radar screens. Streaming for Success

Amazon logoAs part of its mission to provide planet earth with the largest selection of consumer products and services, launched Prime Instant Video in February 2011. The $79 per year annual service, an extension of its Amazon Prime two- day shipping program for all Amazon purchased goods, now features over 36,000 movies and television shows that can be streamed to its customers’ video devices, at no additional cost.  In its most recent quarterly letter to shareholders, Netflix,’s most significant streaming competitor, indicated that of its top 200 most popular television shows and movies in the fourth quarter, offered 37 percent of these to its viewers. This overlap has risen from zero two years ago, and is the highest level of overlap among Netflix’s key competitors. like Netflix, has recently become more interested in proprietary content that can be displayed only to Prime Instant Video customers. Toward that end recently added FX crime drama Justified to its expanding line-up of exclusive content. Amazon has also announced exclusive agreements with PBS for Downton Abbey, and the CBS series Under the Dome, based on the Stephen King novel, and produced by Stephen Spielberg.  Through Amazon Studios, an original movie and series production arm of, Amazon currently has 11 min-series in either trial or production mode, including five children’s series, and six comedy pilots. Amazon intends to air the productions on Amazon Instant Video, Prime Instant Video, Lovefilm UK and Germany (an subsidiary), where customers will pay no additional cost to view them. Amazon intends to gather feed-back during the pilot mode to determine further funding. briefly experimented with a monthly subscription service in November of 2012 in advance of the holiday shopping season, but mysteriously pulled it after two weeks, preferring to keep Amazon Prime an annual, rather than monthly subscription service. A major motivating factor for may have been its desire to avoid getting stuck with a massive shipping bill during its seasonally strong fourth quarter, which ultimately revealed a declining rate of sales growth, which, in turn, has upped the ante on succeeding with its streaming strategy.

Illumina – Driving Next Generation Sequencing

Illumina LogoPersonalized medicine is the massive market opportunity next generation sequencing (NGS) offers. The market was about $28 billion in 2011 and dominated by tissue tests to determine drug therapy decisions. The opportunity lies with the ability to generate targeted medicines based on virus/disease composition or individual human genomes. Unfortunately, cost and lack of analytical abilities have acted as impediments to the expansion of this technology into the clinical diagnostics, pharmaceutical and other applied markets, but progress is being made. From a cost perspective, NGS equipment designers have successfully reduced the cost of sequencing a complete human genome to sub-$5,000, from $1 million in 2007. The consensus is that once the price hits or goes below $1,000, the technology will be fiscally viable for more commercial and industrial applications.

One step in this direction has been the desktop analyzers offered most notably by Illunina (NASDAQ: ILMN) and Life Technologies (NASDAQ: LIFE). These instruments are about a sixth of the cost of the higher-end models and are of increasing interest to clinical customers. Both companies have plans to seek FDA approval, with Illumina expecting to submit its request with a specific assay method by the end of 2012. Consumables pull-through appears to be a healthy $55,000, although the sample size is small at this point.

In an effort to reduce the data-interpretation-headwind, Illumina has announced plans to launch five targeted content sets. These consumables were designed by experts to offer streamlined, targeted sequencing for specific genetic diseases or conditions. The targeted conditions include autism, cancer, cardiomyopathy, inherited disease and exome (genetic diseases). The products are only for laboratory use. Shipments begin in Q4 2012. These standardized sets should help advance the analytical abilities of researchers delving into each condition.

Illumina has also teamed up with Partners HealthCare to speed up clinical interpretation. Together they will offer medical geneticists and pathologists infrastructure and networking tools to support the analytics and reporting processes for genetic sequencing data. The companies are combining Illumina’s MiSeq analyzer with Partners’ GeneInsight suite of IT solutions for streamlining analyses and reporting of genetic test results. GeneInsight is FDA approved. The new tools will link to Illumina’s BaseSpace cloud-storage product enabling analysis of the stored data.

Another initiative Illumina has launched is its BaseSpace cloud-storage offering. The service will take genomics data and store it in a cloud-based system for easy sharing and analyzing. This bioinformatics product gives Illumina a key differentiator, as well as a new revenue stream and a way to help move past the data interpretation issue. Illumina will offer one terabyte free, then charge $250 a month for each additional terabyte, or $2,000 for the year. It also offers a 10 terabyte package that runs $1,500 a month, or $12,000 a year. The service will enable clinical customers and smaller research laboratories to avoid having to invest in their own expensive data warehouses. Illumina is also launching an app store for the BaseSpace that will enable researchers to develop analytical tools and sell them through the store, with Illumina taking a 30 percent cut.

Finally, Illumina has announced an addition to its whole genome sequencing service. The company will now offer a “RapidTrack” service that will expedite the sequencing of whole genomes that customers send to the company. Using the new HiSeq 2500, which is capable of sequencing a complete genome in one day, Illumina will now be able to return data sets to customers in less than two weeks. This high-end offering is much improved from main competitor, Complete Genomics, which can take three months or longer to return the completely sequenced genome. We believe this service offers another means to spur the adoption of sequencing techniques in new markets.

Two startups working to speed the process to achieve personalized medicine are DNAnexus and Bina Technologies. DNAnexus also offers a cloud-based service much like Illumina’s, positioning itself between researchers and the sequencing facilities. Bina Technologies is working on software to reduce the 300 gigabytes of information from each complete genome sequence, to a more manageable level. The company reduces the information into profiles, which are more easily uploaded to cloud-systems and are simple to share and manage.

While headwinds still remain, the push towards developing the ultimate market for NGS appears to be more at the forefront of sequence equipment manufacturers than ever before. We believe this bodes well for the long-term outlook for the industry.

Battle Road Research Announces the Battle Road IPO Review

Wednesday, September 19, 2012 

Battle Road Research Announces

the Battle Road IPO Review

A Monthly Survey of Growth-Oriented IPOs

(WALTHAM, MA) Battle Road Research (, an independent stock research firm, has launched The Battle Road IPO Review, a monthly survey focused on the prospects of more than 150 growth-oriented companies that have come public in the last five years. The first issue features stocks across seven sectors: internet, software, hardware, consumer, business services, and manufacturing.

“Our clients tell us they are interested in seeking out new investment opportunities, particularly from among companies that are relatively new to the public markets. As a research-only firm, without an investment banking axe to grind, we are in a unique position to assess the prospects of many of these growth-oriented companies,” according to Ben Z. Rose, President of Battle Road Research.

From its proprietary database of growth-oriented IPOs of the last five years, Battle Roadanalysts utilize qualitative and quantitative measures to help its clients screen for investment opportunities across a range of technology, consumer, business services and manufacturing stocks. The initial focus of the Battle Road IPO Review is on long-oriented ideas. 90 percent of the companies are below $5 billion in market cap, as of mid September, 2012. The Battle Road IPO Review is available in hard copy or directly from Battle Road Research’s website at

Established in 2001,Battle Roadis a research-only firm, not an investment bank, not a broker dealer, and not an asset manager. Unlike Wall Street and regional investment banks, who are paid by the companies they research,Battle Roadhas never accepted compensation from any company that it researches.

“As we set out in search of investment ideas for our clients, we trust that the Battle Road IPO Review will be a helpful addition to our clients’ stock-selection process, and will help further our reputation as a credible stock research company, free from the influence of investment banking,” Rose concluded.

About Battle Road Research

Battle Road Research provides fund managers and analysts with an independent voice on technology, and consumer stocks. Our research process combines rigorous financial analysis with insights gleaned from industry sources. We present our findings in straight-forward Buy, Hold, or Sell research reports. The Battle Road IPO Review is a monthly survey focused on the prospects of over 150 growth-oriented IPOs of the last few years.  Since our founding in 2001 we have refrained from investment banking, company-paid reports, and personal investment in the stocks we research.

Media Contact:

Ben Z. Rose, President,Battle RoadResearch

781-894-0705, ext. 204
[email protected]


The Battle Road IPO Review

A Monthly Screen for New Ideas

October 13, 2014

Research on companies which have come public in the last several years is available mostly from the investment banks who were paid by the companies during the IPO process. This leads to a conflict of interest as the investment bank seeks to please the owners of the company, as well as provide an objective assessment of the company’s growth prospects to investors, the other group of clients whom the bank serves through its brokerage arm.

This conflict continues long after the IPO is complete, for once a company becomes public, investment bankers and analysts who played a role in the IPO may advise the company on future stock offerings, mergers and acquisitions, and customized plans for insiders to sell their stock.

As a research-only firm, Battle Road is focused on helping asset managers seek out stocks to buy and stocks to avoid, without the conflict presented by conducting business with the subject of its research. Since our founding in 2001, we have remained true to this principle.

The idea for the Battle Road IPO Review originated with one of our clients, a portfolio manager, who sought our help in seeking out solid companies with sustainable competitive advantages –and reasonable valuations—from among the many companies which have come public in recent years. Using quantitative and qualitative measures we developed a methodology for screening for new buy ideas.

The Battle Road IPO Review has become a monthly service that screens for new ideas from a uniquely designed universe of over 180 growth-oriented IPOs of the last seven years. The universe includes software, internet, computer hardware, cyber security, consumer, and business services companies. The median market cap. in the Battle Road IPO universe is $1.1 billion. The universe is rapidly growing with the addition of newly-minted IPOs on a regular basis.

We rank order the stocks by group each month and call out names for further exploration, based on our assessment of the company’s strengths and weaknesses, as well as other measures which include our interpretation of the company’s current valuation, balance sheet, quality of earnings, and other metrics. We draw upon these metrics, as well as qualitative factors to determine our monthly Exploration List, which is a sub-set of all stocks that we believe should out-perform the overall coverage universe. The Exploration List is therefore a screening tool for new ideas. We strive to develop a list that features both growth and value-oriented stocks. Our goal is for the median stock performance of the Exploration List to exceed the median stock performance of the coverage universe.

Our clients use the Battle Road IPO Review to:

  • Screen for new stock ideas;
  • Consult an independent source on growth-oriented IPOs, free from the influence of company management and investment bankers;
  • Keep apprised of the Exploration List of long-oriented ideas selected by Battle Road;
  • Stay abreast of the best and worst performing sectors, and best and worst performing stocks in each sector;
  • Keep current on recently-minted IPOs;
  • Identify broken IPOs which have fallen off Wall Street’s radar;
  • Discover and track over-heated IPOs prior to their pull-backs;
  • Screen for meetings with company management at investor conferences;
  • Listen in on a monthly dial-in call to keep current on Battle Road’s research findings.

<<Request a Copy of the Battle Road IPO Review>>

About Battle Road Research

Battle Road Research provides fund managers and analysts with an independent voice on technology and consumer stocks. Our research process combines rigorous financial analysis with insights gleaned from industry sources. We present our findings in straight-forward Buy, Hold, or Sell research reports. In addition, we publish The Battle Road IPO Review, a monthly screen for new ideas that examines the prospects of more than 180 growth-oriented IPOs of the last seven years. Since our founding in 2001 we have refrained from investment banking, company consulting, company-paid reports, and personal investment in the stocks we research.

Battle Road Research was one of the first eleven members of the Investorside Research Association,, the only trade group that certifies its members are free of investment banking, consulting, and research for hire conflicts.

Battle Road’s Ben Z. Rose Discusses the Outlook for Netflix on CNBC’s Closing Bell

Battle Road Research Launches Small Cap Snapshots

For Immediate Distribution
Monday, April 16, 2012

 Battle Road Research LogoBattle Road Research Launches Small Cap Snapshots

 A New Service Focused on Below the Radar Stocks


(WALTHAM, MA) Battle Road Research (, an independent stock research firm focused on the technology, consumer, and renewable energy sectors, has officially launched Small Cap Snapshots, a new service designed to help fund managers, analysts, and wealth advisors seek out small cap stock ideas. The initial focus is on companies located in New England, with stock market valuations under $1 billion.

“A growing number of intriguing small cap companies in our backyard and beyond have been overlooked by Wall Street and regional investment banks,” according to Ben Z. Rose, President of Battle Road Research. “Many IPOs of the last two years have fallen below the radar, or may have little coverage beyond the research reports written by their underwriters. These companies represent fertile ground for a fresh, independent perspective. We believe that Small Cap SnapShots will be a timely addition to our clients’ research process,” said Rose.

Combining fundamental research with key financial metrics, Battle Road’s Small Cap Snapshots are designed to help fund managers, analysts, and wealth advisors screen for investment ideas in the technology, consumer, and renewable energy sectors.  Small Cap Snapshots are now available to Battle Road Research clients through its website at

Established in 2001, Battle Road is a research-only firm, not an investment bank, not a broker dealer, and not an asset manager. Unlike Wall Street and regional investment banks who are paid by the companies they research, Battle Road does not accept –nor has it ever accepted— a dime from any company that it researches.

“Our research has been adopted by some of the world’s leading portfolio managers and analysts. We are confident that Battle Road Small Cap Snapshots will help our clients seek out new investment ideas, and will further our reputation as a research firm free from the influence of investment banking,” Rose concluded.

About Battle Road Research

Battle Road Research, an equity research firm, provides an independent voice on technology, consumer, and renewable energy stocks. Our research process combines rigorous financial analysis with insights gleaned from industry sources. Since our inception in 2001 we have refrained from investment banking, company-paid reports, and personal investment in the stocks we research. Battle Road has been a member of the Investorside Research Association since its inception in 2002. Investorside monitors and certifies that its members do not perform investment banking or research for hire, thus avoiding the conflicts of interest elsewhere rampant within the equity and fixed income research business.  For each of the last three years, Battle Road has received an award for its research coverage from Investorside, including the Thought Leadership in Technology award.

We welcome investors to visit our website at

Media Contact:

Ben Z. Rose, President

Battle Road Research

781-894-0705, ext. 204
[email protected]

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