Totally disagree. First of all, integration of enterprise systems into the Internet front-end hasn't even begun yet. Secondly, Internet technology hasn't even started penetrating into the corporate world. E-Commerce, Transaction Processing, Data Mining, Internal ExtraNets, you name it......the impact of Internet on the operational efficiencis of corporation has just begun.
Clarify & other SRM companies specializing in Internet based application are just scratching the surface. There is not telling how big this market is. Just about EVERY company -- big & small are going to have to implement Internet & Extranet applications for one reason or another.
I think the purchase price only seems high because Clarify was so cheap last year but that ONLY points out that Clarify has been winning in the CRM market and is a reflection of their success story...........
You must surely realize that if you simply invest on earnings multiple, you would have missed out on number of companies like Microsoft, Dell, AOL, Yahoo, Amazon.......should I continue?
Earnings multiple makes more sense in the mature industry. Internet you must agree is furthest away from a mature industry as you can get. Clarify is in Enterprise Resource Mgmt & CRM software business based on the Internet as a platform, Front-End, and W.A.N. This is one of the hottest SECTOR going right now -- not quite well understood by many retail investors because it's mostly business-to-business product.
In any case, the synergy potential alone makes the investment very exciting when you consider the size of the deals that Nortel is chasing..........if Clarify gives them a meaningful edge, that can translate into hundreds of millions of dollars worth of contract. Conversely, Nortel's product, distribution channel and professional sales force will allow Clarify to really leverage their business.
This is an investment risk well worth taking because it can be profitable on it's own as an investment, but more importantly, it gives Nortel an unusual, if not innovative advantage when pitching to their PTT/Telco/Carrier customers. What that is worth, no one can say right now but Clarify purchase of 2 bill is just over 2% of Nortel's capitalization AND it's non-dilutive this year and accretive next year. (look at today's price.....it appears that Clarify is trading at higher price than the agreed purchase price -- that's what I call good investment! |
