General Meeting #5
Finance & Investment Club
PHO 206 – 10/24/2012
Finance Club Long-term Goals
Long-term Goals
Education
 To offer an educational, real-life opportunity for
aspiring investment professionals
Community
 To foster lasting relationships amongst our
membership in Boston University and beyond
Alpha
 To continue professional procedures to
maintain an alpha generating process
Growth
 Personal, career and fund growth
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Investment Management Training: By Ishar Sawhney
Saturday Afternoons
Next Meeting Agenda: Regression-confirmed Comps, Beta, Debt Schedule
CLO & Distressed Investment Professional – Marathon Asset Management
Prior Experiences include:
• Founder – LeverageAcademy.com
• Founder – MarketRealist.com
• SPP Hambro Mezzanine Fund – Mezzanine Investing
• Brookside Private Equity – PE & Mezzanine
• Moelis – Investment Banking/Restructuring
• Bank of America Merrill Lynch – Leveraged Finance
• GE Capital – Structured Products
• HedgEye – Healthcare Equity Research
• KLD Research – Asset Allocation Analyst
• Batterymarch Quant Fund – Risk
• Legg Mason – Risk & Infrastructure
• Citigroup – Infrastructure
• ZepInvest.com – Business Development
© Leverage Academy 2009. All rights reserved.
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Veritas 5th Annual Conference
Veritas Financial Group
-Sheraton Commander (16 Garden Street, Cambridge, MA)
-Saturday, November 3rd, around 10:30AM - 4:30PM
-The event is free and open to all college students
-Lunch is also provided
MANDATORY REGISTRATION: http://tinyurl.com/vfgconference2012
RESUME DROP: veritasfinancial@gmail.com
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Community
Happy Birthday 23rd Kheng Ming!
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Alpha
BUINVEST.COM  LEADERBOARD
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Stock Pitch: 8x8, Inc.
Finance & Investment Club
Telecommunications Sector
Kevin Ng – Investment Associate
Arlind Hoxha – Investment Asscoiate
Fall 2012
Company Overview
8x8
(NASDAQ: EGHT)

8x8, Inc. markets and provides telecommunications services for Internet Protocol
telephones and video applications mainly for business customers. The company is also
expanding its line of services to include
– contact center services
– web-based conferencing
– unified communications services
– cloud based computing services

The company uses Voice over Internet Protocol technology which allows customers to
place calls through the internet rather than through traditional switching methods that
are more costly and harder to implement
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Focusing on Services Has Fueled Revenue Growth
$100,000
35,000
$80,000
30,000
25,000
$60,000
20,000
15,000
$40,000
10,000
$20,000
5,000
-
$-
2010
2011
Revenue (Thousands)
2012
2013e
Business Customers
 Company is focused on increasing its number of services and retaining customers
– The number of services subscribed to per business customer grew to 10.1 in the first quarter of FY13 in comparison to
8.4 in the same period last year
– The churn rate fell to a record low of 1.7% in 1Q13, down from 2% at the end of FY12
 More services and greater retention have fueled revenue growth
– Average revenue per business user grew to a record high of $250 in 1Q13, up from $200 a year earlier
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VoIP Market Growth in the U.S.
• Expected to grow from 12% market share of sector in 2010, to 32% by 2015
• VoIP subscribers are expected to grow from 21 million in 2010 to almost 70 million by
2015 (CAGR of 27%)
• By 2013, an estimated 79% of U.S. businesses will be using VoIP technologies
Small & Medium
Businesses (SMB)
Large Enterprises
Government
Sector
SMBs allocated 10% of
spending to cloud bundles
in 2011, expected to
increase to 15% by 2015
40% of surveyed
organizations use
videoconferencing
services or applications
Strongest penetration rate
with over 48% having
VoIP in at least one
location
41% of SMBs have
already switched to VoIP
with an additional 20%
switching next year
Saves money by reducing
operating costs over time
while boosting the
customer experience
Simplifies infrastructure
and management
complexity while being
easy to use
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8x8: Positioned for Market Penetration
Small & Medium
Businesses (SMB)
8x8
Large Enterprises
Government Sector
• Dominates the SMB market by providing
comprehensive VoIP services
• Larger competitors cannot focus on
advertising VoIP without drawing
business away from other segments
• Offers a full-fledged contact center
typically unaffordable for SMBs
• Cloud communication services can be
installed without an IT person and potentially
save hundreds of thousands
• Competitive advantage in pricing
• Acquisition of Contactual in 2012 brought in
dozens of large enterprises for potential
cross-selling services
• Partnered with Level3 (LVLT) for Networx and
WITS 3 Contracts
With more than 80 competitors, top market share of Hosted IP lines installed in 2011 (7.9%)
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Patents and Patent Value
Current owns 79 patents valued up to
$50 million with more pending
Most valuable patents were issued
recently can be licensed to companies
abroad
If liquidated, patents could add $15 to
$50 million as a hard asset on balance
sheet (12% to 39% increase)
Makes it an appealing potential takeover
target
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Risks
High
Probability
Medium
Probability
Low
Probability
• Litigation (medium severity)
• Competition (low severity)
• Decreasing telecommunication rates (low severity)
• Emergency calls may be delayed or disrupted (medium severity)
• Regulation changes by the FCC (medium severity)
• Another economic downturn (high severity)
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Conclusion
8x8 could potentially be a good investment because of
1)Revenue growth created by its focus on customers and services
2) The company’s position to take advantage of a growing market
3) Strong patent portfolio which makes the company a takeover target
However, the company could be overvalued at a price of 6.36 (as of 10/16)
 EV/EBITDA of 41.26x is above the comparable mean and median of
7.85 and 3.76, respectively
Company reports earnings on 10/24- do we get in before or after?
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Back Up Slides
15
Industry Breakdown and Summary
Industry Breakdown by Market Cap ($BN)
Market Share by TTM Revenue
Technology
$ 119,763.3 (100%)
Telecommunications*
$ 42057.2 (35%)
Communication
Services and
Equipment
$ 3931.8 (3.3%)
5%
8x8
27%
Vonage
Magicjack
47%
14%
Shoretel
Cbeyond
7%
Business
VoIP
$1.9(1.6%)
*Domestic and Foreign Telecom($908.1 BN), Diversified Communication Services($102.7 BN),
Communication Equipment($3931.8 BN), Wireless Communications ($37114.6 BN)
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Comparable Company Analysis
% 52 week LTM EV
Company
high
($MM)
LTM
Debt/Equity EBITDA
Margin
-
ROA
ROE
EV /
EBITDA
Churn
Rate
10.16%
89.35%
103.76%
41.26x
1.70%
15.45%
98.97%
312.48%
3.76x
2.50%
7.90%
0.65%
N/A
33.87x
N/A
EGHT
90.60%
$413.87
VG
62.50%
$499.47
CALL
72.04%
$355.38
SHOR
70.05%
$266.21
13.24
-2.51%
-3.94%
-14.22%
-42.96x
3.10%
CBEY
90.58%
$271.89
2.00
16.58%
-1.92%
-2.74%
3.32x
1.50%
High
90.60%
$ 499.47
23.20
16.58%
98.97%
312.48%
41.26x
3.10%
Median
72.04%
$ 355.38
7.62
10.16%
0.65%
50.51%
3.76x
2.10%
Mean
77.15%
$ 361.36
9.61
9.51%
36.62%
99.82%
7.85x
2.20%
Low
62.50%
$ 266.21
-
-2.51%
-3.94%
-14.22%
-42.96x
1.50%
23.20
N/A
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--- end of analyst report ---
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Tonight’s Speaker Event
 Aaron Klein – Vice President
• Joined Keybanc in 2005 where he has worked in the Energy and the Clean Tech
• Aaron is a graduate of Ohio University
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Employment Opportunities












Company: Bank of America Merrill Lynch
Positions: Investment Banking Summer Analyst,
Global Capital Markets Summer Analyst
Location: New York
When: Summer 2013
Requirements: Junior standing, 3.2 minimum GPA
Send resume to buinvest@bu.edu by 11:59pm on
October 21st
Company: Citigroup
Position: Sales & Trading Summer Analyst
Location: New York
When: Summer 2013
Requirements: Junior standing
Send resume to buinvest@bu.edu by 11:59pm on
October 21st
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Veritas 5th Annual Conference
Veritas Financial Group
-Sheraton Commander (16 Garden Street, Cambridge, MA)
-Saturday, November 3rd, around 10:30AM - 4:30PM
-The event is free and open to all college students
-Lunch is also provided
MANDATORY REGISTRATION: http://tinyurl.com/vfgconference2012
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