<< Ouch! >>
AGIL got hit today....BUT I feel folks are forgetting about the real potential this first mover offers. AGIL only has a $1 Billion market cap. and incredible growth prospects.
Look at what ARBA has done in its first few months as a public firm. AGIL has a slightly different business model but they are both great B2B plays. Here is a nice review of AGIL....
<<Agile Software Succeeds by Design
by Hal Plotkin
Silicon Valley Correspondent
Product-design software maker Agile Software Corp.'s {AGIL} has high hopes it can use its early success to become the dominant player in an emerging new market.
"Agile has at least a couple of years lead," over would-be competitors, says
Bruce Richardson, vice president of research strategy at AMR Research Inc., a
software market-research firm based in Boston. "The company created a new
product category. Right now, they have 100 percent mind share."
San Jose, Calif.-based Agile produces specialized software that taps the power
of the Internet to help companies better manage product design and
pre-production processes, as well as coordinate design changes with outside
suppliers.
The company's stock went public on Aug. 20 at $21 a share, higher than the
original price range of $15 to $17. Recently, the stock has been changing
hands at more than twice its original offering price.
AGIL stock performance chart since its IPO
Many companies sell enterprise resource planning software that coordinates
production processes within a single company. Agile's products, on the other
hand, are designed to help companies achieve a similar level of real-time
coordination with outside suppliers.
"They've taken the next step," says George Gilbert, an analyst at Credit Suisse
First Boston Corp. based in San Francisco. "They're focused on product
information, not taking or processing an order."
Two key trends are contributing to Agile's growth: outsourcing and shorter
product lifecycles.
Last year, 15 percent of all manufacturing in the United States was outsourced,
a figure that's projected to grow to 40 percent next year, according to a recent
study by Hambrecht & Quist, based in San Francisco.
In recent weeks, for example, telecommunications supplier Ericsson {ERICY}
sold its Visby, Sweden, manufacturing facility to Flextronics International Ltd.
{FLEX}, a custom manufacturer with headquarters in San Jose, Calif.
Likewise, IBM {IBM} announced it would outsource manufacturing for its
Netfinity servers to Milpitas, Calif.-based Solectron Corp. {SLR}.
Cutting Wires with Ericsson by Frances Hong
Both Flextronics and Solectron are Agile Software customers. Other Agile
customers include Texas Instruments Inc. {TXN}, Lucent Technologies Inc.
{LU}, and GE Marquette Medical Systems. "The move toward outsourcing is
critical for us," says Bryan D. Stolle, Agile's founder and CEO.
Check out Agile Software's Web site
Stolle says outsourcing requires close coordination of growing supplier
networks. "A lot of companies don't really make anything anymore, they are
design and marketing operations," he says.
While most large companies already have internal computer systems that tie
their different divisions together, Agile software helps eliminate divisions
between companies so the impact of changes to designs or parts can be
instantly assessed.
In essence, Agile is creating a kind of nervous system for companies involved in
a design process.
"One of their real strengths is the way they're creating a supplier daisy-chain,"
Richardson says. "Once they get one company, say Solectron, they move
down the chain to sign up Solectron's suppliers, and then the companies who
supply those companies, and so on."
Solectron Shines in Outsourcing Sector by Hal Plotkin
Ever-shortening product lifecycles are also helping spur demand for Agile's
real-time design-coordination software, Richardson says. "We're in the very
early stages of what will be a huge market. Product lifecycles will only get
shorter."
Customers using Agile's software, for example, change designs on the fly
whenever less-expensive parts become available, or for any other reason. All
companies involved are then immediately notified of the change to make sure
no problems are inadvertently created.
"Our average customer makes 600 changes per week," Stolle says. Although
some of those changes can be quite minor, such as a change to the
documentation for a product, "It's important that everyone have the most current
information," he adds.
Right now, Agile is facing very little in the way of direct competition, Richardson
says. Motiva Software Corp., a privately held firm based in San Diego, is
targeting some of the same customers in partnership with San Rafael,
Calif.-based Autodesk Inc. {ADSK}.
Meanwhile, the traditional ERP vendors, who might have been Agile's most
formidable competition, were slow to recognize the need to coordinate
pre-production design processes. Several of the leading ERP suppliers,
including Oracle Corp. {ORCL}, SAP AG {SAP}, and J.D. Edwards & Co.
{JDEC}, are now working in partnership with Agile to link the company's
pre-production software to their own ERP products.
Microsoft and SAP in Mobile-Devices Pact by Erich Luening
Checking The Pulse On ERP by Frances Hong
"We expect more competition." Stolle says. "Our visibility is too high, and this
is too interesting an opportunity for others not to want to get in. But we've put
over $50 million in the last five years into what we've got, and it will be hard for
anyone to compete with that kind of hands-on experience."
At least some investors are betting that Agile's early success will open up
additional opportunities for the company.
"Brian Stolle is exploiting all the chains," Richardson says. "ERP vendors might
become alarmed when they realize how deeply he is getting into the DNA of
their key industries."
Eric Upin, an analyst at BancBoston Robertson Stephens, based in San
Francisco, says he thinks Agile probably deserves its already high valuation.
"Technology companies are often richly valued," he says. "But when you look
at this company's management team, customers, and market, I'd say
emphatically yes, it's worth its valuation. This is a very strong company going
forward."
Agile Software posted a loss of $4.1 million on revenue of $5.9 million for the
fiscal first quarter ended July 31, compared with a loss of $2.6 million on
revenue of $3.2 million for the same period last year. >>
I continue to be LONG on AGIL for the LONG RUN.
Best Regards,
Scott |
