Apollo, Terrific job on Exodus. Of course, we're supposed to pick apart some of what you said, right? :o)
My problem with them, like so many pure internet plays, is the looming competition from more mature players. Haven't both Intel and IBM announced and begun moving into this space? So, we have two gorillas trying to move against a king, I think. (IBM's gorillahood is very long in the tooth, of course, but they're still a gorilla aren't they?). In any case, they've got a lot of resources to bring to bear on the sector. A quick comparison follows. Oh, and I am for now ignoring the various lesser sorts named as competition.
................EXDS.........IBM..........INTC
................----.........----.........----
Price...........$155.........$117.25......$73
Mkt Cap.........$13.2Bn......$211.5Bn.....$244Bn
Pr/Sales........83.9x........ 2.5x........ 9x
EPS.............-1.14........ 4.22........ 2.09
Book ps......... 0.24........ 10.47....... 7.05
Cash ps......... 1.88........ 3.15....... 2.21
Zacks Est's
2000 EPS........ -.67........ 4.29....... 2.66
2004 EPS........??*(+58% pa).. 8.90....... 5.52
*(I've never quite figured out how Zacks arrives at a compounded earnings growth when a company is losing money in the beginning).
I'm not sure that the quick comparison "answers" anything, of course. It points out how much lower EXDS's market cap is than the others'. Does that mean it's undervalued? It may, if in 5 years or 10 years each of these companies is deriving the bulk of earnings growth from IDC-related activities.
otoh, Both INTC and especially IBM have such extensive relationships with the largest old-line companies, that they might be viewed as having a headstart in future growth. Which brings up another question--Do the earlybirds to the net have a permanent lead? Now as more and more of the mainstream companies begin e-commerce activities are they going to begin to steal share from the earlier players? I think today or yesterday the WSJ had an article on Schwab's prospects. The current consensus seems to be that Schwab's market share will decline as all of the established brokers do what Merrill and MSDW have already done, moving to copy Schwab's model.
If the latter occurs in books, b2b, clothes, yadda-yadda, doesn't that give IBM the inside track with a lot of these companies? btw, I'd bet that IBM would dispute the statistics about 27% of traffic, or one-fourth of traffic is now EXDS's. But, I have no evidence to dispute it.
All of the above offered as fuel for thought.
Best,
JS
PS--Does anyone know how to change fonts in SI posts? Normal html coding doesn't seem to work. |
