Hi nanocap,
It's really, really nice that shorts and longs can discuss things here in a civil and informative matter. I really appreciate that (many boards simply drown in "noise" from one side or the other; hardly useful). I have written a rather forceful argument of my position; please understand it in the way it was intended (a rational debate of facts, opinion and interpretation), and not as any hostility towards you or your position. In case it needs saying, I think you are OK, I just sit on the other side of the fence from you investment-wise ;-)
We may very well have a "glass half empty" / "glass half full" situation here as you say, but I don't think so (IMO).
Daniel, today's release was quite impressive as it gives you an indication of not only the direction of the Company but the potential applications for its database technology.
I don't think it's a secret that OODBMS vendors are (desperately!) trying to escape the telecom / finance "ghetto" that they all started in. Not that there's anything wrong with telecom/finance (in fact, they are very technically demanding environments that have many applications that are possible only with OODBMSs), it's just that there are problems with *lengthy*(!! -- that's an understatement!) sales cycles with the high-tech, high-risk, high failure rate sort of glamor projects that OODBMSs tend to get spec'd for in the telecom/finance area. I think the industry has publicly acknowledged this for the past three years, and has been making every effort to get into applications for "The Web", for getting into a position that emphasizes Java more strongly (Versant and ObjectStore originated as C++ databases), and most recently, into XML (really, really exciting stuff).
Today's press release really, really set off my "fluff" alarms. This sort of application is of course the direction that the OODBMS vendors have been wanting for some time now -- so in that sense, I give Versant credit for landing the relationship. However, this is what they *must* do. This sort of deal is not optional, it is mandatory -- and even with a bunch of these, they might still go out of business.
Versant is in real financial trouble. Less so than five or six months ago, but very, very real trouble nonetheless. If they fail to execute, it's not a matter of them missing earnings by a few cents and disappointing Wall Street. If they fail to execute, they WILL LOSE THE COMPANY! I'm sorry to "yell", but it really is that serious. They must execute well in order to *survive*, not prosper. They must execute *exceptionally* well to prosper. That is why I am still short the stock, because I feel that the odds are stacked against them. Not that I wish Versant management ill, in fact I honestly hope they pull it off, however I think that there is plenty of ways for them to fail. They do not have a track record of executing well - this does not mean that they are bad, crooked or incompetent people. I think what it means is that it (OODBMSs) is a brutally difficult market to be in. In fact, even though I love OODBMS technology and think that it (the technology) will survive and prosper, my best guess is that *ALL* OODBMS vendors we know of today will probably be out of business in five to ten years. No one has figured out yet how to make money with an OODBMS company. And Versant is not the leader among OODBMS vendors, so if any OODBMS vendor fails, my money is on Versant being the first.
Getting back to my comment about "fluff", this press release did not even announce a sale! It merely said that customer XYZ (who happens to be in the very topic "e-something" world) has "chosen" Versants ODBMS. This to me indicates a very early stage of the process. Some development licence revenue might be forthcoming in 1Q2000 (my guess here), however no OODBMS company really makes any money on development licenses. At best, they cover their costs of making the sale, training the customer, and support the customer's learning process.
Where the money rolls in, if ever, is when the customer's product is deployed and product usage royalties are collected. This has been the killer for telecom/finance applications, if a product takes two, three or more years for commercial deployment, the OODBMS vendor is absolutely starving for lack of revenue from that sale during their customer's development cycle . Hopefully e-commerce customers will be able to deploy their applications quicker, however even in Internet time software projects move very, very slowly.
But as it stands, this press release does not give anyone with the slightest degree of skepticism any warm fuzzies about:
* how much revenue is going to result from this
* when that revenue will happen
* what the likelihood of this happening is
If I was a tough-talking investment banker (I am not) and Versant's management team put this press release before me, I'd tell them "Stop BS'ing me". But since I am a quiet reserved sort, I'd probably simply save everyone time and just walk away. This is what I meant by my "fluff alarms" going off.
- Daniel |
