Hey, Kumar:
I attended a conference in San Francisco - just flew back home. It was unbelievable. The most impressive presentation was from Intel - these guys literally have the chip market by the balls. In the MMX chip today there are a total of 5.5MM transistors. By the year 2011 they want to achieve 1 billion!
The clock speed will be doubled every 12 months now instead of 18 before. This means we should see a 400 MHz chip by next May!
Let's talk about Verity. The presentation was excellent - very professional and to the point. Here are some highlights.
Strategy
To maintain the de facto enterprise standard Verity purchased Cognisoft. Why? Push technology automatically delivers information based on the user's preference - a total paradigm shift from traditional search engines. The main guy, Courtot, believes that pushed data must be filtered to be useful - the data based on broadly defined preferences can easily amount to information overload. Courtot strongly believes that the combination of Verity's search engine (Search'97) and IntelliServ will make an unbeatable combination and produce very serious stream of revenues. Verity now is totally focused on the IntraNet.
The combination of filtering and push technologies will provide a huge opportunity. What Verity ultimately wants to do is to dominate Internet Broadcasting Services two to three years from now!
Revenues / Profits
You all know they paid $10MM for Cognisoft. It is a huge gamble for VRTY with annual revenues now at roughly 30MM / year. Verity must grab strategic edge over PointCast, Marimba, BackWeb, Intermind - all broadcast vendors. Today, VRTY has a leg up on all of them. They make money by selling license seats. Based on what I heard they are "comfortable" with First Call consensus of 0.25 to 0.28 / share in FY'1997. You probably noticed much less "announcements" - they are working on producing revenues now. I do not know whether they will be able to show profit first quarter - they are pumping 30% of their revenues in R&D, we'll see.
Rumors
I heard rumors that Marimba and Verity may do some joint deal together in the near future which will benefit both. Verity will build a software delivery system based on Marimba protocols that uses IntelliServ as a filter! Really wild shit!
New Stuff
What I saw blew my mind. The 30% R&D money produced a new product called Courier. This software allows search results to be viewed as a graphical map instead of a list of documents. The wilder side it is a learning program that will understand and map where the information is and help find it using visual aids.
Bottom Line Assessment
As I have mentioned many times before I am very bullish on VRTY. However, this investment is a 9-14 months out for seeing real stock results. I do believe they will make the year. I also believe, if they have a bit of luck, VRTY could be trading in high 50's in the next 2 years.
Happy Trading!
Jack |
