General Body Meeting 10.27.10. Mutual Investment Club of Cornell Agenda Announcements Headline by Energy Junior Analyst Long pitch by the Tech Analyst.

General Body Meeting 10.27.10

Mutual Investment Club of Cornell

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Agenda

Announcements Headline by Energy Junior Analyst Long pitch by the Tech Analyst Team Long pitch by the Healthcare Analyst

Team


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Events coming up

Doug Braunstein, CFO of JP Morgan Thursday (tomorrow) at 8:00pm in Statler

Ballroom Rolla Huff, CEO of Earthlink

Thursday (tomorrow) at 10:00am, location TBD

Social event for MICC The weekend before elections, Jai’s house

Elections for MICC Executive Board Tentatively November 10th


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Energy Headline


Maxwell Technologies: Stop-Start Design

Maxwell announced it has commenced deliveries of Boostcap ultracapacitors to Continental AG for use in a new stop-start idle elimination system for diesel passenger cars - will extend battery life

Stop-start will become a major new energy storage market over the next 3-5 years. It has potential to be a multi-billion dollar market because it meets many of the new US and EU fuel economy and emissions standards

This concept used in hybrid electric vehicles saves fuel and reduces emissions by about 5%


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TeleCommunication Systems, Inc. (TSYS)

John Yoshida, Nicole Kim, David Kim,

Joshua Lyons, Zachary Peskin


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Industry Overview


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General Industry Overview

Communication Equipment Industry Heavy Hitters:

Motorola Harris Corporation Alcatel-Lucent


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Industry at a Glance


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Summary within US

Technological Innovation Demand for Mobility Expected revenue for 2010: $38.7

billion Domestic demand is forecasted to grow

at a real average rate of 3.5% for the next 5 years


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Key External Drivers

Demand from wireless telecommunication carriers

GDP Exchange rates Demand from TV broadcasters Demand from radio broadcasting


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Products and Services


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Industry Costs


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Where Does TSYS Fit?


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Company Overview

Global leader of high-availability and secure mobile communication technology

Provides end-to-end solutions for E9-1-1, text messaging, location-based services (LBS), and deployable wireless communication

Forefront of mobile cloud computing services providing wireless applications


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Government Segment Offerings Technology

SwiftLink Deployable Communications Services

Secure Satellite Teleport Data Landing and Transmission

Integrated Logistics Support (ILS) Services Information Technology Services Cyber Security Services


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Commercial Segment Offerings Technology

Xypoint Location Platform (XLP) and Applications for Mobile LBS

Short Message Service Center and Wireless Intelligent Gateway

Services Subscriptions to wireless application-

based services (navigation, people-finder, points-of-interest)

Hosted LBS infrastructure, including E9-1-1

Software and system maintenance


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Past Acquisitions

Second Quarter, 2009: AutodeskLocationLogic

Fourth Quarter, 2009: Sidereal Solutions Solvern Innovations Networks in Motion (NIM)


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Advantages

Provides integrated and end-to-end solutions Speeds time to market and eliminates

integration problems Partnership with Qualcomm and

marketing alliance in China Serve 60+ wireless carrier networks

and VoIP providers in 16 countries Solid foundation and scale for support

and maintenance Many patents on applications


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Thesis

Commercial LBS business growth Reducing reliance on business

Continues to be undervalued Rosy acquisition target Inclusion to Indices/Funds


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Past Share Performance


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Recent News

10/25/10: TCS receives $4.1 million in spending from U.S. Army for deployable satellite equipment and support

10/20/10: TCS wins $9.6 million equipment order from U.S. Army for 3D terrain mapping

10/14/10: TCS demonstrates LBS service technology at Huawei Innovation Summit

10/06/10: TCS named sole awardee on $269 million contract to deliver U.S. Marine Corps integrated communications systems


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Location Based Services (LBS) Added layer of convenience for QOL LBS finally gaining a foothold

2009: Only 21.5 million subscribers in N.A. used

Immediate avenues for growth


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LBS Trends


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TSYS LBS Products


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Risks


Government Segmento Spending cutback

o 44% revenue from government agencieso Control of contract

o Government controls contracts; can terminate for convenience or default by TSYS

o Can audit and review cost, performance, accounting and adjust based on results

o Competitorso Government utilizes other big competitors;

General Dynamics Corp

Risks


Commercial Segmento Lack of marketing from wireless providers

o Providers neglect marking of Location-Based Systems

o Discontinuation of text messaging applicationso Competitors

o Wireless providers look to other big competitors for communication technology; Nokia, Motorola

o Rapidly changing industry; need to offer services to heavy influx of Smartphones

Risks


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Financials


Financials - Basics

Share price: 5.32 (10/26/2010) 52wk range: 2.96-10.55 Market cap: $286.6m

YTD: -44.21% Month: +41.36%


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Financials – Industry Comparison

TSYS Industry

P/E 12.24 35.9

P/B 1.421 3.43

P/S 0.9616 1.13

Operating Margin

9.5% 5.08%


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Financials – Balance Sheet


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Financials – Cash Flows


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Financials – Valuation

Computed DCF with NPV Average 12-month EPS - $0.50 8% projected earnings growth for 3

years 3% projected growth thereafter

Current Price: $5.31 Target Price: $7.07


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Catalysts and Proposal


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Potential Short-term Catalysts 11/04 Q3 Earnings New government contracts Analyst upgrades (Oppenheimer)


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Proposal

BUY 300 shares @ $5.31 Total value: $1593


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Technical Analysis


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Quaneam Analytics


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Quaneam Analytics

Using 300 days of past data the Z-scores follow:

BollingerBands= -1.45

MACD= 1.12

RSI= 1.60 Aggregating these we get an average Z-score

of: 0.42

This means that conditional to the past 300 days of data, TSYSis at the upper 66% of its evaluation range.


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Insights

Technicals indicate price momentum has decreased TSYS well in the range of Bollinger Bands

May continue to experience correction in price RSI and MACD both has only come down

slightly below overbought signal


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Prediction

Short term price change is estimated to be flat May continue to experience correction in price


Emdeon

Coverage: Healthcare

Senior Analysts: Amitha Kurmala, Tracey Zhou

Junior Analysts:Eric Hoffman, Yang Zhao


Thesis and Key Debates

Buy NOW! Earnings Report: November 8th

Healthcare Reform is good for HIT Acquisitions are predicted positive

synergies Valuation supports undervaluation

thesis


State of Healthcare Industry

HC expenditures are a significant component of the US economy 16.2% of GDP in 2008; expected to grow

to $4.4 trillion, or 20% of GDP, in 2018 HC administrative costs totaled $360

billion in 2008 Healthcare is provided through a

fragmented industry that has historically underinvested in HIT


Condition of US Hospitals

Many hospitals lack resources to bill, collect, and receive full reimbursement for their services

Nearly one-third of hospitals had negative total margins in 2003

In 2009, 50 percent of U.S. hospitals lost money, and total total margins for U.S. hospitals had declined further


Recent Legislation

American Recovery and Reinvestment Act Stimulus intends to create job, promote

investment, and increase consumer spending

Cost of $787 billion Obamacare

Aims to insure 33 million Americans by 2018

Series of HC changes


Health Insurance Portability and Accountability Act

Major components Regulates group health plans and certain

individual health insurance policies Defines HC offenses and sets penalties for

them Creates rules to increase the efficiency of

the HC system Effect of HIPAA on research and clinical

care


HC Current Events

Determining the constitutionality of Obama’s healthcare plan Is requiring Americans to have health

insurance constitutional? Fraud in HC system Patient Protection and Affordable Care

Act New federal law mandating that at least 80

percent of premium revenue must be spent on medical, not retained as profits or used to pay overhead


What is Emdeon?

Leading provider of medical revenue and payment cycle solutions (Revenue cycle management)

Connects payers and providers Improves efficiency of the US

healthcare system Take advantage of governments

movement towards a digital, computer run system


Emdeon Provider Solutions

Simplifies the business of healthcare for hospitals and other medical offices

Effectively and securely shares patient information between payers, hospitals and pharmacies

Successful Internal Programs: Emdeon Assistant Emdeon Claim Master®

Emdeon Patient Connect Emdeon Office Suite


Emdeon Payer Solutions

Improves patient payment processing; lowers costs

Transforms data into greater business intelligence

Successful Unique Programs: Member eligibility Management Solutions Interactive Care Management Services Payment Integrity Services


Emdeon Consulting Services Recently acquired Healthcare

Technology Management Services (HTMS)

Offer consulting services to help payers: Innovate Solve problems Optimize performance Keep up with changing times


Emdeon Pharmacy Services

Quickly and accurately connects doctors with local and national pharmacies

July 1, 2009, Emdeon acquired eRx Network, LLC

Successful Internal Programs: Emdeon CardFinder™ Emdeon Flu™


Emdeon History

More current connections to payers, providers, and vendors in the industry

Roots traced back to Healtheon in 1996 Merged with Microsoft’s WebMD in 1999 Changed name in 2005 to Emdeon General Atlantic bought 52% stake in 2006 Following buyout, acquired several

companies IPO on August 11th, 2009 as a profitable

company (rare)


Recent Events

Acquisitions HTMS, FV, Chapmin RCM, Chamberlin

Edmonds• Strategic Alliances

• Noridian Insurance


Fundamental Analysis

Undervalued

Comparable Valuation Metrics*All figures in thousands except per share numbers

Company Shares Market YoY

Ticker Name Price Out Cap Growth Revenue 2009A 2010E 2009A 2010E P/Book EV/Sales

MDAS MedAssets 22.10 58 1,276 33.3% 95 52.6x 52.6x 20.5x 15.4x 2.7x 15.7xATHN AthenaHealth 37.42 91 3,407 19.3% 152 467.8x 133.6x 185.5x 155.5x 30.9x 22.5x

Em Emdeon 13.32 91 1,210 6.2% 243 111.0x 57.9x 10.5x 9.9x 1.6x 9.0x

Min 19.3% 95 52.6x 52.6x 20.5x 15.4x 2.7x 15.7xMean 26.3% 124 260.2x 93.1x 103.0x 85.4x 16.8x 19.1xMedian 26.3% 124 260.2x 93.1x 103.0x 85.4x 16.8x 19.1xMax 33.3% 152 467.8x 133.6x 185.5x 155.5x 30.9x 22.5x

P/E EV/EBITDA


Fundamental Analysis (cont’d)

Comparable Profitability and Liquidity Metrics*All figures in thousands except per share numbers

Company EBITDA EBIT Net Current Quick Debt/ InterestTicker Name RONA ROE Margin% Margin% Margin% Ratio Ratio Equity Coverage

MDAS MedAssets 34.5% 4.6% 28.5% 14.9% 5.8% 1.0x 0.1x 0.5x 5.4xATHN AthenaHealth 7.6% 7.3% 14.6% 10.1% 4.9% 3.4x 0.8x 0.1x 28.5x

EM Emdeon 0.5% 1.3% 24.1% 11.1% 1.0% 3.7x 2.0x 1.3x 3.2x

Min 0.1x 0.0x 0.1x 0.1x 0.0x 1.0x 0.1x 0.1x 5.4xMean 0.2x 0.1x 0.2x 0.1x 0.1x 2.2x 0.4x 0.3x 16.9xMedian 21.0% 5.9% 21.5% 12.5% 5.4% 216.9% 43.5% 26.5% 1690.8%Max 0.3x 0.1x 0.3x 0.1x 0.1x 3.4x 0.8x 0.5x 28.5x


Financial Data: Balance Sheet


Financial Data: Income Statement


Good Entry Point


Risks

Software commoditization and lack of SM arm

Some of their customers compete with them and some, instead of using a third party provider, perform internally some of the same services that they offer.


Conclusion

Buy NOW!

Hold for 1 to 2 years Expected Amount: 1000-2000 shares


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Thanks for coming by!

Reminder for tomorrow’s JP Morgan event

General Body Meeting 10.27.10. Mutual Investment Club of Cornell Agenda Announcements Headline by Energy Junior Analyst Long pitch by the Tech Analyst.

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