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Technology Stocks : Citrix Systems (CTXS)
CTXS 103.900.0%Nov 2 5:00 PM EST
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To: JMD who wrote (7997)5/7/2000 11:49:00 PM
From: Heeren Pathak  Read Replies (1) of 9068
 
Mike,

Here is the chain of logic between to dot.com retail to the ASP market to Citrix. It is a bit of a stretch, but I do think it could impact how quickly Citrix will start generating real return on its ASP investments.

1) Dot.com retailers are losing money and the market is worried about their survival. This worry is causing the dot.com IPO market to start drying up for weaker offerings. In fact, I would go as far as to say that the IPO market for non-profitable dot.coms may become totally non-existance. This would have a very chilling effect.

2) On the surface, ASPs are dot.com companies. While I do believe that their revenue streams and stickiness factor will be higher than a typical dot.com retailer. I also believe the market will not distingish this difference.

3) I believe that ASPs will have a long rampup time as they convince a business oursource functions to an ASP provider. This will require them to obtain capital to stay afloat.

4) If the dot.com and IPO markets remain out of favor for any appreciable length of time, ASPs may find it difficult to find the capital they need to keep going (either via the market or via a VC). While the VC community has a lot of money floating around, they are going to be a lot more stingy if they feel that they can't quickly convert their equity into capital via an IPO.

5) Citrix has invested a lot of equity to get the ASP market started. If the ASP market has trouble taking off due to financial reasons, it would impact the future ASP revenues that Citrix is betting on.

Heeren
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