Hi Joel,
<<I wish I had taken a small position when it was down in the 70's just a few days ago.>>
You know, when that stock was dropping 5 points a day, I bet you would have been content saying that you were glad you were out of that one. That 20/20 hindsight always has a way of giving us all the blues when it comes to issues we don't own that rocket. Let's try and deal with the future issues instead.
That being said, there is no doubt that Ariba has a lead in the B2B space. It's just that for me, valuation is the biggest hurdle. I don't get comfortable when analysts glibly throw out "fair valuations" of 80+ times forward sales for any stock. I believe such valuations are beyond the range of prudence. When the hot air gets released, as you can see, the price drops like a stone.
That's why I like to play it at least from a more sensible standpoint. A main competitor to ARBA, Commerce One (CMRC) was comparable to the Coyote (you know, the Roadrunner...) having run over a cliff, and realizing that he wasn't standing on anything. It dropped from the IPO price because given its competitive position, its previous valuation in the $1.5 billion range wasn't justifiable. Especially when you've got a tiny player like Clarus (CLRS) with a $110 million market cap, and with a similar competitive position. You short CMRC and go long CLRS. Up to now, that would have yielded you positive results as CMRC has dropped, and CLRS has risen, and overall, you would have remain hedged and kept a zero-exposure to the market.
Other players I'm aware of are:
1. Concur Technologies: CNQR
2. CareInsite: CARI
3. Cybersource: CYBS
4. Software.com: SWCM
Oracle is also making an entry into the field, and I understand Peoplesoft is getting involved as well. Of them all, ARBA has the biggest lead.
It's a big playing field, but one that definitely has lots of growth ahead of it. That's what I like when I play from the approach of the Gorilla Game.
--Rainier |
