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CNTR stock is poised to potentially become one of the most successful
turnaround plays ever in the software industry. Trading as low as $3.00
per share on 11/08/96, CNTR is considerably undervalued for stock that
can boast of an impressive Price/Sales ratio of only .58 (vs a software
industry average of 4), and possibly one of the best value strategies in
the market even thought it is still above Centura's tangible book value.
While the company was not profitable since its IPO in 1993, it embarked
on an apparently solid reorganization plan on January 2, 1996, and has
since made considerable progress both financially and in positioning
the company's product line to more aggressively meet emerging market
opportunities in next-generation client/server computing.
The company recently (3Q) reported its third profitable quarter (with new
32-bit products introduced in May already accounting for 35% of sales!);
and has somehow managed to reduce its operating expenses by 29%
while developing promising new 32-bit development tools that support
both Java and ActiveX controls and can connect to industrial strength
databases using native APIs (including the industry's first intuitive
Windows development environment for SAP's R/3), and continuing to
enhance its highly regarded SQL product line!
Centura's well deserved reputation for innovation and excellent product
quality; as well as its growingly aggressive next-generation marketing
approach (generations are measured in months in Internet time!) has
been documented in a variety of leading trade publications such as
InformationWeek, CommunicationsWeek, Computer Reseller News,
ComputerWorld, Datamation, VARBusiness, and even emerging trade
publications like Netguide.
CNTR's key market position in the software industry is also reflected in
the fact it has long been one of a handful of companies chosen by CW
analysts to represent the software industry in CommunicationsWeek's
80 Index; and its little-noticed presence in TechWeb's 200 index (it is
erroneoulsly listed as GPTA!).
Rumors have been recently circulating of merging/buy out talks with
players like Informix and financially strong Computer Associates.
Computer Associates, who already owns more than 10,000 copies of
SQLbase and who has an outstanding multimillion dollar loan made to
Centura Software, makes an excellent suitor because it lacks powerful
front end software for its vast database engines.
Given Centura's low acquisition cost and the rapidly accelerating pace
of Internet/Intranet development, it could feasibly make more sense for
Computer Associates or other suitors like Informix, Oracle (who already
tried once), or even foe Microsoft, to simply buy out the company rather
than attempt to develop its own tools in-house or, at least in the case of
Microsoft, to kill the threat of growing competition given that Microsoft
currently still lacks a veritable front end for its own SQL Server.
Takeover scenarios vary widely of course, but a buyout range of $12.00
to $20.00 per share seems quite plausible given the time-tested quality
of Centura's previous products and the rapidly gaining acceptance of its
new 32-bit Web enabling tools.
Centura's beta is interestingly low and possibly related to the relatively
small number of investors (currently less than 300). CNTR (previously
GPTA) traded at one point for more than $30.00 per share, has a 52-week
high of $8 1/8, a 52-week low of $2 7/8 and, as mentioned earlier, is
currently trading for about $3.00 (11/08/96).
Factors contributing to its long slide to current levels include its until
recently unprofitable history, long-term investor apprehension resulting
from the founder's retirement, a slowly but steadily worsening liquidity
situation, delays in filing its 2Q report, a recent name and ticker symbol
change, and uncertainty (rapidly disappearing by the way) over the level
of acceptance for its new line of Web enabling products.
Current investors in the company include software industry expert
Bruce D. Scott (co-developer of the original Oracle engine who owns
10.5% of the outstanding shares), Umang P. Gupta (retired founder who
still owns 18.5%), Venrock Associates (one of a handful of successful
aggressive-growth capital firms who owns 9.08%), Novell Inc. (8.61%),
Oracle (who still owns 7.46% even after seemingly giving up on their
first attempt to buy out the company!).
And institutional investors like New York State Teachers Retirement
(122,000 shares), Lighthouse Capital Management (57,550 shares),
Rockefeller Financial Services (54,828 shares), Vanguard Index Small
Cap. (48,300 shares), Vanguard Index Total (45,600 shares), and DFA
U.S. 9-10 Small Co. (33,700), and others with lesser numbers of shares.
Of general interest to everyone considering investing in Centura should
be the encouraging fact that more conservative institutional investors
have started nibbling away recently in spite of the stock's long decline
such as Barclays Bank (who acquired 216,454 shares in 2Q), Bernstein
Sanford Co. (who bought 125,000 shares also in 2Q), Dimensional Fund
Advisors (who bought 114,600 shares), and others.
New institutional investors during 3Q have up to 45 days after the end of
the quarter to file holding reports and will not be known until mid or late
November (it will be interesting to see who has been buying all those
10,000 to 50,000 blocks during the last few weeks while insider trading
reports still show no recent activity!).
Of particular interest to me personally is the fact that I have discovered
a strange pattern of gradually-lower bid/ask sizes which, if my findings
are correct, have gone as low as 10 (I was not even aware someone
could buy/sell blocks this small. Could someone be trying to manipulate
CNTR's performance perhaps in the hope of receiving more shares as a
result of the recent settlement which is tied to share price?).
Centura Software is expected to have a profitable 4Q (marginally perhaps
but profitable nonetheless!) in spite of the high cost of introducing its new
products and having to post an expected $9M charge against earnings
for the recent reorganization.
CNTR is currently engaged in an aggressive recruiting campaign and
hiring from programmers to marketing to VP-level management.
And last but not least, their long-awaited marketing push has apparently
begun with a truly impressive ad in this week's issue of PC Week (my
thanks to Jim Malone for pointing it out!).
A corporate background section will follow for those new to the Centura
Software saga, but you may still find some of the information of value to
you even if you have been following the company for some time (I did!).
In closing, I would very sincerely appreciate everybody's *** active ***
participation in this thread and welcome not only comments & questions
but also opposing views of any kind. To that extent I also promise to
reply to every posting directly addressed to me (you can also E-mail me
at 105211.140@compuserve.com if you prefer!).
WARNING: While every effort has been made to post only accurate and
easily verifiable information, I am only human. Therefore I strongly
recommend that anyone interested in Centura also carries out their own
research. Let's all continue to learn and hopefully profit in the process
from a collaborative effort!
Whether Centura's looming potential is actually realized or not is still to
be determined, but anyone looking for aggressive growth and a stomach
for comparatively high risk should probably seriously consider investing
in CNTR! (Do you remember Oracle going from $27 to $5 and now being
widely regarded as a powerhouse and trading in the $40 range?)
Good luck to everyone! But if you actually read this far, you probably
won't need luck because you are obviously doing your research and
possibly already have the steel nerves that might be required to wait for
CNTR to bear potentially incredible results (specially if the target of a
likely take over for $12-$20 per share in 1Q or 2Q, 1997).
COMPANY BACKGROUND
Centura Software Corporation (CNTR), until recently known as Gupta
Corporation (GPTA), was founded in 1984 and has traded quietly on the
NASDAQ exchange since 1993. The company is one of the leading
providers of client/server development and deployment software in the
world. More than 100,000 developers have licensed its award-winning
SQLWindows application development environment and more than a
million users have deployed its SQLbase database system.
The company's new product line consists of robust, Internet-enabled
application development tools, a powerful relational database, and
transparent connectivity software (all support its successful SQL line!).
Centura's customers include the market research leader ACNielsen;
automotive giants Ford Motor Company, Mercedes-Benz, and Toyota;
telecommunications' 500-pound gorillas AT&T and INTELSAT; globally
automated Seagram; financial powerhouses like ADP, Duff & Phelps
Credit Rating, Deutsche Verkehrsbank, Citibank, Massashusetss Mutual,
Merck, Price Waterhouse, and Allstate Insurance; manufacturing giants
Siemens, and AEG Hausgerate AG; government organizations like the
State of Delaware, and the Counties of Ventura and Los Angeles; military
customers like the USA Air Force's Space Command, the British Army,
and two new USA Navy contracts; retailer JC Penney; long-time software
customer PeopleSoft; utilities such as The Southern Company, and
Ontario Hydroelectric's Nuclear Power Facility; oil and gas international
presence Arco; industry recognized transportation giants United Airlines,
and Singapore Airlines; aerospace leader Rockwell International; parcel
service leading contender United Parcel Service; world-acclaimed and by
many accounts one of the Internet's Seven Wonders: Louvre Museum;
plus a slow but steadily growing list of other leading companies in a
variety of different industries.
Potential customers who have shown an interest in Centura's products
and/or attended their many recent conferences include Internet banking
leader WellsFargo, online factory outlet Gateway 2000, and Internet
communications services leader MCI.
COMPANY INFORMATION
For new product information, upcoming conferences, hiring opportunities,
case studies, etc., you would probably be well advised to start with the
Company's Web site (www.centurasoft.com) and then proceed to your
favorite search engine and/or research methods to get third-party views
and confirmation.
Centura Software Corporation
1060 Marsh Road
Menlo Park, California 94025
(415) 321-9500
(415) 617-4690 Fax
(415) 617-4728 Investor Relations
www.centurasoft.com
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