Mediaboss Marketing

One of the things Buffett consistently refers to when evaluating the quality of a business is the amount of cash it produces relative to the amount of cash it needs to maintain the business. Buffett calls this cash flow that is produced "owner earnings", which is basically free cash flow. Buffett defines owner earnings as the cash flow a business produces less the capital expenditures a business has for maintaining the business (he excludes growth capex).

Free cash flow is the easiest way to approximate Buffett's "owner earnings" definition, and in some ways it's more conservative because it typically includes both maintenance and growth capex.

For weeks, I've noticed that Check Point Software (CHKP) has been at the top of the list in Value Line's weekly "Biggest Free Flow Cash Generators" screen. CHKP has generated an astounding 71 times more cash than it has needed to invest back into the business (more than two times the ratio of the next highest stock). That is an incredible cash flow machine.

Check Point is a leading provider of software that protects computer networks from malicious attacks. I haven't done any detailed research on the business itself, and it's not extremely cheap, but from an EV/FCF basis, it looks somewhat attractive, especially given the incredible growth the company has experienced. In the last 10 years, here are the average annual growth rates:

Here are some of the key metrics:

Free Cash Flow

Look at the incredible amount of operating cash flow relative to the capital spending, which of course leads to significant free cash flow. The company is currently priced at around 9 times free cash flow (using EV/FCF), which is excellent in and of itself. But it has grown its free cash flow at an average rate of 16.7% per year over the last 10 years.

This FCF has allowed the company to buy back about 20% of it's shares over the past decade, a trend that will likely continue. The company pays no dividend, but given the extremely high internal returns it generates, that is actually a positive for shareholders. Better to keep the money in the business to continue compounding.

Margins

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Check Point Software (CHKP) is a Free Cash Flow Machine

Twine, easy-to-use free software, brings interactive-fiction game development to the people.

These days, regular folks across the world are using free software to easily create homespun music, Webisodes, and movies, so why not interactive fiction? A little program called Twine (download for Windows or Mac) that brings a DIY ethos to text-based Web games has slowly emerged as a huge player in the indie-game scene. If you're new to Twine, it's freeware that lets users develop their own interactive stories and games. It enables players to determine their own adventures by clicking on hyperlinks scattered throughout the text.

Originally developed by Chris Klimas, Twine has been used by myriad storytellers to great effect. A directory site called TwineHub lets users upload their completed stories and games for the enjoyment of others, and it is packed to the gills with submissions. From the teeming mass of Twine games, I've selected a few of the best or most interesting:

Howling Dogs (by Porpentine)

Opening scene from Howling Dogs

Bklyn Trash King (by Ben Esposito)

Opening scene from Bklyn Trash King

Hypnagogue (by Mitch Alexander)

Opening scene from Hypnagogue

If any of the above stories inspire you to create your own Twine game, then download the freeware and follow these simple directions:

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Choose your Twine adventure

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By: How2Tutor

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how to upload images on google | How to upload pictures to google images 2013 - Video

SUNNYVALE, Calif.--(BUSINESS WIRE)--

Moxie Software, Inc., the leading provider of customer-centric enterprise social software, today announced the availability of Social Knowledgebase, the first application that combines collaboration technology with knowledge management.

Social Knowledgebase allows enterprises to tap into the collective knowledge of their employees to enhance service levels by getting the right answers to customers faster. By bridging the gap between knowledge workers and contact centers, Social Knowledgebase enables enterprises to deliver the exceptional customer experiences that socially connected consumers expect.

How Social Knowledgebase Works

Social Knowledgebase is a single application that combines the capabilities of Moxie Softwares industry-leading knowledge management application with its collaboration software. The product allows users to recommend and promote content from the collaborative application to the knowledge workflow, where it can be certified and published to employees or customers. Social Knowledgebase gives companies the ability to easily harness the power of employees tribal knowledge to both dramatically reduce costs and deliver exceptional customer experiences.

Key features of Social Knowledgebase include:

Watch video.

Insights into Social Knowledgebase and its Benefits:

People are more productive when collaborating to find a specific answer that benefits employees and customers, said Tom Kelly, president and CEO of Moxie Software. The result of purpose-driven collaboration is actionable knowledge. Organizations analyzing big data are really after big knowledge intelligence they can put to use making their enterprises more agile to efficiently serve customers by creating superlative customer experiences.

Social Knowledge is about harvesting the potentially rich stratum of information created in social networking sites and discussion forums, said Johan Jacobs, research director at Gartner. It is about sifting through this input to decide what is appropriate and applicable to your organization, and using that information as input in the development of product- and service-specific content. (Report: Use Social Knowledge to Enhance Your Customer Self-Service, Nov. 11, 30, 2011).

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Moxie Software Ushers in the Era of “Big Knowledge:” Brings Crowdsourced Intelligence to Customer Experience

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Advent Software (Nasdaq: ADVS) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Advent Software generated $84.3 million cash while it booked net income of $35.2 million. That means it turned 23.1% of its revenue into FCF. That sounds pretty impressive.

All cash is not equal Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Advent Software look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

See the article here:
Why the Street Should Love Advent Software's Earnings