Fortinet (NASDAQ: FTNT, $24.18) is a name that has recently been recommended by a NY-based portfolio manager.  The company is one of the top 4 vendors in the network security space and has the #1 share in unified threat management (UTM).  UTM in particular is seeing rapid growth, and Fortinet is very well-positioned for more share gains due to its superior platform.  The company’s penetration of mid and high-end segments of the market has been ramping up, as large enterprises are increasingly choosing Fortinet over rivals such as Cisco, Juniper and Check Point.  The presenter argues that the company won’t stay independent beyond the next 6-12 months, with IBM being one of the potential acquirers in his view.  His target is $32+ in 12 months.   In his opinion, the stock will get there on its own, even if a takeover doesn’t happen, given favorable dynamics in the space and Fortinet’s growth rate.

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Anyone who doubted that Nordstrom wasn’t experiencing good business, at the time of the company’s July sales release, had to have been more than reassured with the August report. In July, total comparable sales increased 1.3%, for the full-line stores and 9.7% for Nordstrom Rack. The explanation for the soft full-line comparison was that the company’s major annual promotional event, its Anniversary Sale, shifted out a week this year, so that the second week was in August, rather than in July as was the case in 2011. August sales came in with a 24.0% full-line increase and with 7.1% in the Rack. And the increase was sufficient to lift year-to-date comparable full-line store sales to 8.6%, from 6.8% in the first half, or to get back on trend prior to the July distortion.

Although much of the credit of the Nordstrom superior performance is due to the company’s integration of its full-line stores with Nordstrom Direct, so as to enable superior customer service and to enhance the productivity of both individual sales associates and stores, the company has announced two new stores, to open in the fall of 2014. One will be 138,000 sq. ft. in General Growth Properties’ The Woodlands Mall in The Woodlands, TX, north of Houston, and the other, a 124,000 sq. ft. unit, in St. Johns Town Center in Jacksonville, FL. St. Johns is owned and co-developed by Simon Property Group and Ben Carter Properties. The two stores should foster penetration in these markets. Jacksonville is a new market, but Nordstrom enjoys online acceptance there, and in the Houston area, the company’s only other full-line store is far removed in the Galleria. The move signifies more growth as omnichannel shoppers spend more money than either exclusively direct or full-line shoppers. And accordingly, we are delighted to see the company undertake this expansion.

 

Gilliam & Co. is an independent research and advisory firm, specializing in retailing and related fields, and providing consulting and advisory services for both businesses and investors. The company publishes the Gilliam Viewpoint®, a monthly synopsis of current topics, with particular attention towards their longer-term significance, and intended to be an extension of Wall Street Research. This publication is supplemented with timely updates for subscribers on our Website. This article is taken from September’s issue of the Viewpoint and if you are interested in subscribing please visit http://gilliamco.com/?page_id=183.

“Valuation in JC Penney is in a state of flux for 2012. Volatility in the short term will reflect short term announcements and short term trading opportunities. There are few fundamentals to adequately measure progress until the 2nd quarter of 2013. At that time, comparables will have a benchmark. Sales will be lower. The couponing will not be the relevant attraction or comparable. There will be a further transformation to 30-40 shops (40-50% of store). At 10 shops we are now only seeing a taste. Buying the stock above $25 in 2012 is simply a momentum purchase. The fundamentals don’t yet justify speculation without an adherence to monitoring the process of the four silo implementation. It is a monumental undertaking of ALL management, not just the leader. We see few signs of recognizing this issue on the Street. It may make us sound bullish to talk about these steps and progress. Some are simple, some are unique, but many are more complicated and the discussion on these may sound overly optimistic (like prospects in a draft). This is not just a merchandising transformation. It’s exciting for retail, but cannot be scored via quarterly financial measurements alone. We will focus on unique insight to the four issues of culture change, technology, merchandising through the stores and the management and employee adjustments. These will all affect the long term growth and bottom line and create the new culture.”

This is just a small portion of the report. If you are interested in viewing the full version please contact Tom Roulston at tom@roulstonresearch.com.

Shell invested significant resources since 2008 exploring for oil in the Chukchi and Beaufort Seas in the Arctic, which according to the U.S. Geological Survey, has more than 90 billion barrels of recoverable oil and nearly 1,700 trillion cubic feet of recoverable natural gas. After years of delays from the Obama Administration, the company was allowed to move forward with “certain limited preparatory activities in the Chukchi Sea”, according to the Bureau of Safety and Environmental Enforcement (BSEE). Regulatory challenges have postponed plans of other oil companies to invest in Arctic oil exploration that has cost Shell $4.5 billion already without one well drilled. Shell spent $2.1 billion for its tracts in the Chuckchi Sea in a 2008 lease sale and was expected to start drilling in the summer of 2010 until the BP oil spill occurred in the Gulf of Mexico resulted in a moratorium on all offshore drilling in deep and shallow waters in the United States. Shell had been arguing that this kind of incident is far less likely in the Artic because it is only in 150 feet of water and will tap into reservoirs that are under far less pressure, which reduces the risk of a blowout. Energy companies such as Conoco Philips and Statoil, a Norwegian oil company, have started exploratory drilling in the region and will be interested in seeing how Shell fares after strict scrutiny by environmental agencies in the area. To read the full article please visit http://www.instituteforenergyresearch.org/2012/09/20/oil-exploration-in-the-arctic-is-the-obama-administration-really-interested.

Thomas J. Pyle is the president of the Institute for Energy Research (IER). In this capacity, Pyle brings a unique backdrop of public and private sector experience to help manage IER’s Washington, DC-based staff and operations. He also helps to develop the organization’s free market policy positions and implement education efforts with respect to key energy stakeholders, including policymakers, federal agency representatives, industry leaders, consumer entities and the media. To read more about the Institute for Energy Research and their mission please visit http://www.instituteforenergyresearch.org/.

Our September 14th Healthcare Roundtable led by Carol Harding, Executive Director, Strategic Partnerships, Cleveland Clinic Health System, Former Vice President of Reimbursement, Edwards LifeSciences, who has been in the healthcare industry for nearly 30 years and Bill Greenfield, Managing Partner at Novation Healthcare Solutions, Former Regional Vice-President at HCA, who has 25 years of experience as a healthcare executive focused on EMR/EHR vendors and adoption, Revenue Cycle Management companies and the competitive landscape, Clinical Decision Making vendors and software for achieving cost effective, high quality care, and healthcare reimbursement under the healthcare reform model. The roundtable began by discussing more general issues focusing on comparing the healthcare industry with the cheesecake factory, conflux clinical issues, market segment, primary care position and healthcare reforms models. The speakers explained how the primary care position is being incentivised and in the healthcare reforms, there should be a dynamic shift from volume to quality care perspective. The models focus on aspects that would improve outcomes, increase efficiencies and lower costs for healthcare providers.

The roundtable later focused on more reforms facing the industry and highlighted certain topics such as; moving the volume to quality standards, incentivise people differently, changing the payment system, Group Purchasing Organizations and the competitive landscape, Devices, the future of outpatient centers, supply chain innovation, differences in policy models by region, market segmentation, culture change and cost shifting. Carol and Bill touched on these topics by referencing companies such as HealthStream, Vital Health Premiere, J&J, Athenahealth, Allscripts, HCA, UnitedHealth Group, WellPoint, Universal Health Services, Aetna, McKesson, Humana, AmerisourceBergen, Cardinal Health, and Community Health Systems among others. The industry still awaits a government spending cap announcement regarding limits for different healthcare situations. This announcement affects cost structure and payment reforms of companies moving forward.

If you would like to follow-up with either presenter for a 1 on 1 consultation please contact Tom Roulston at tom@roulstonresearch.com.

Google was presented on July 31 at our idea forum in Boston.  The stock has been on a tear since then, rising 16%.  The presenter remains very bullish, despite the runup.  As he pointed out at the forum, the share of mobile in the total advertising spend will continue to increase with prices for mobile clicks rising fast, as the relevance of the mobile platform becomes more and more evident.  Mobile search will be key to incremental cash flow growth, but a range of products yet to be monetized will also contribute to an increase in estimates and a multiple expansion in the next couple years.

If you look at the complaints surrounding iPhone 5 and those surrounding Windows 8 you’ll see mirror images in that one is the reverse of the other. The iPhone 5 is too boring and Apple seems to have intentionally limited it’s evolution while Windows 8 has people wishing for Windows XP 3.0 instead as they freak out about the changes. We love the excitement of change we just don’t seem to love the reality of it and it will be far harder for Microsoft to be successful with their high change move than it is for Apple with the iPhone 5.

This does suggest two product lines for both vendors, one from Apple that provides that iPad 1.0 kind of excitement from time to time (granted they do this when they bring out new categories) and one that is more staid (at least this round) from Microsoft. I expect we’ll find that Apple will do far better for the marketing money spent than Microsoft on this later round and that difference will have everything to do with how much we hate change. To read the full article please visit http://www.tgdaily.com/opinion-features/66225-the-iphone-5-vs-windows-8#.

Rob Enderle is President and Principal Analyst of the Enderle Group, a forward looking emerging technology advisory firm. He specializes in providing rapid perspectives and suggested tactics and strategies to a large number of clients dealing with rapidly changing global events.