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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Uncle Frank who wrote (28299)	7/18/2000 6:19:37 PM
From: Mike Buckley	Read Replies (3) of 54805

Thanks for Siebel's pdf file, Frank. I've got a couple very quick observations. I'm probably taking the wind out of my own sails for my upcoming quarterly report on the Front Office Gorilla Game, but so be it. If I don't do it, someone else will. :) 1) Y-O-Y licensing actually increased more this quarter (119%) than last quarter (104%.) That a company of this size is doing that says an awful lot about the size and growth of its market as well as the strength of its value chain. 2) Gross margins slipped in the quarter from a tad shy of 78% to less than 75%. That's somewhat because the services revenue continues to grow faster than the licensing revenue, but I don't believe that explains all of it. 3) Net margins also slipped, naturally. But it's getting in a range I'm not used to seeing of a major software gorilla. Separating Siebel's numbers from OpenSite's so we have a one-time gauge, the "estimated," reported net profit is $57.6 million. But we need to subtract from that the $5.2 million one-time gaine from the sale of USinternetworking shares. That makes it $52.4 million. Divide that by the revenue ($384.1 million) and the net margin is 13.6%. Going the wrong direction too fast. Oh well. 4) The company now has $1 billion in cash and equivalents. I can't wait to see the operating cashflow statement. 5) We all knew this was going to be Siebel's first billion-dollar year in sales, but it's now very reasonable to expect $1.5 billion. Relative to that, trailing revenue went beyond the $1 billion mark for the first time this quarter at $1.189 billion. The remarkable thing is that revenue for the 3 (not 4) most recent quarters is just a tad shy of $1 billion. No more watching the round number with nine zeros. 6) The point that jumped off the page the most for me is that the IBM partnership resulted in 60 new customers in Q2. I haven't been following that number but that strikes me as a lot. That information bodes well for the future. No more time to study the details. Back to writing music. --Mike Buckley P. S. Someone please tell them to make the numbers in the fiancial statements just a wee bit larger next quarter. :)

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