5 Internet of Things Companies Investors Shouldn’t Overlook

5 Internet of Things Companies

Investors Shouldn’t Overlook

5 IoT Companies Investors Shouldn’t Overlook

• Broadcom

• Freescale Semiconductor

• Intel

• Invensense

• Ambarella

Which companies are we talking about?

Broadcom


Why Broadcom?• Launched WICED Sense device and

software development kit last year -- for just $20

• Allows companies big and small to cheaply create IoT prototypes

• Device includes Broadcom's BCM20737 chip and a long list of sensors: Electric compass, barometer, altimeter, humidity and temperature sensors, and motion-sensing gyroscope and accelerometer

Source: Broadcom.


2.18%1.6%

Why Broadcom?• Just updated WICED system-on-chip (SoC) and the

software supports Apple's iBeacon technology, the A4WP wireless charging standard, and has its own on-chip encryption and decryption security

• Also added near-field communication (NFC) capabilities to the SDK

• Broadcom’s new BCM43907 SoC is the industry's first dual-band Wi-Fi audio chip for embedded devices

• WICED software can be found in LIFX smart lightbulbs, and Homeboy security cameras


2.18%1.6%

Opportunities and concerns with Broadcom:

• Company makes the vast majority of its revenue from its semiconductors and wireless connectivity chips (for mobile behemoth Samsung)

• Doesn’t break out IoT revenue, so it’s not likely to be much right now

• Intel and Qualcomm are formidable opponents for the company

• Broadcom is getting into IoT now, for a potential payoff much later


Freescale Semiconductor


• Big play on the Internet of Things. About 44% of revenue comes from its wireless microcontrollers for the auto industry

• Additional revenue generation is derived from LTE connectivity

• Both of these markets (LTE and automotive) offer many opportunities for Freescale

Why Freescale Semiconductor?

Source: Freescale.


• China Mobile is continually expanding TD-LTE, which the company says it directly benefits from

• In 2014 the auto industry saw it’s best sales year since 2006. Expected to climb even higher over next two years

Why Freescale Semiconductor?


2.18%1.6%

Opportunities and concerns with Freescale:

• Great Q3 2014 -- sales from all business segments up double digit percentages year-over-year

• Company is working to pay off debt, but still holds about $6.5 billion. Most won’t mature until 2020

• Stock was up 53% in 2014, but is very volatile


Intel


• In Q3 2014, the company made $530 million IoT revenue, up 14% year over year

• Has its small Quark processor and Edison board for Internet of Things devices

• According to The Wall Street Journal, Intel’s chips will power the next hardware update for Google Glass

• Recently launched the MICA bracelet with Opening Ceremony as a luxury wearable device

• Founding member of the Industrial Internet Consortium to create IoT standards

Why Intel?

Source: Intel.


• Has already worked on smart city technologies with the city of San Jose

• Purchased Basis Science last year and just introduced a new smart watch under the brand

• Recently teamed up Accenture, Dell, SAP, and others to launch a new Internet of Things platform

• Working on Predictive Maintenance software to analyze IoT data. Saved $9 million in one of its factories using the software and will sell the tech to companies starting this year

Why Intel?


• Expects $2 billion in IoT revenue for the full 2014 year

• Intel is clearly not a leader in mobile, which could potentially hold the company back as stronger mobile competitors (Qualcomm) transition to more Internet of Things solutions

• Overall, Intel’s made huge strides just one year after establishing a dedicated IoT division

Opportunities and concerns for Intel:


Invensense


Why Invensense?

• Makes micro electro mechanical system (MEMS) gyroscopes for motion tracking

• Sensors are in Samsung smart watches and smartphones, Apple’s iPhone 6 lineup, Google Glass, and other tech

Source: Invensense.


Why Invensense?

• Sales of MEMS are expected to triple over the next three years -- from about $104 million in 2014 to $334 million by 2018, according to IHS

• Has clients like LG and Xiaomi which sell lots of devices, and are expanding their reach


Opportunities and concerns for Invensense:

• Drop from 50% gross margin to 37% sequentially, in fiscal Q2

• Company wrote down about $7.4 million in inventory that "is now excess or obsolete," said Martin Dentinger, Invensense's CFO

• Margins should rebound in the current quarter• Lots of exposure to larger clients, which lowers cost per

unit.• Stock was down 26% in 2014. Still lots of potential for the

company, but it needs to deliver on that potential soon


Ambarella


Why Ambarella?

• Supply camera systems-on-a-chip (SoC) for GoPro’s cameras and other wearable technology

• Chips are great in low-level light and for high-performance use

• Just introduced its high-end chip --the A9 SoC for high-definition and quick video compression. Leads in both of those categories

Source: Ambarella.


Why Ambarella?

• Big in consumer market, lots of commercial opportunity

• Chinese aerial vehicle manufacturer DJI (which makes cameras for filmmaking) just started using Amarella’s A9 chip for its 4K Ultra HD high-end drone


Opportunities and concerns for Ambarella:

• Currently has 63% gross margins

• Still slow in commercial, AT&T has some high-definition security cameras that use company’s SoCs, but want to see more of this

• Top security camera suppliers showed off cameras at trade show in October using Ambarella systems-on-a-chip


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Economy & Finance

5 Internet of Things Companies Investors Shouldn’t Overlook