This one will take some strong management to sort out. Consider:
- License sales last Q were $17m, this Q $9m. That's the sales equivalent of driving over a cliff with headlights on and the radio playing.
- I have lost count of the number of shareholder suits filed so far, but they will soak up management resources for a while, for sure.
- Convoy merged on June 9 and Microscript on June 28. Convoy got 920k shares, which at the time were worth $40m or so, now worth $14m, Microscript got 556k shares and $9m, a deal cut at around $32m that now looks more like $17m. They won't be happy bunnies, that's for sure.
Through all of this, NEON management has to work out a new sales model that balances effort and reward. IBM deals will still soak up NEON sales time, but bring in less margin. Given they are a permanent fixture, where is the best place to invest new sales blood, selling with them for lower margins, or "against" them for higher ones?
(Having IBM on your side is like inviting a performing elephant to tea - highly entertaining, but sheer hell on the crockery.)
It will be an interesting quarter, and I wish them well.
david |
