In order for NETA to fly, it has to:
1) Begin winning market share away from the peers of its point products: SYMC, CHKP, ISSC, and so on.
2) Demonstrate that it can create significant new demand for new kinds of products that have not yet been commoditized. MyCIO.com is an example of this, but there must be more. What fields will they be in? Not sure, but storage management has huge demand right now. Best would be for these products to be developed internally, proving organic growth capability. Second best would be to buy excellent products from early stage technology companies, putting excellent products down NETA's excellent channels. Third best would be to buy out a large yet still private player such as PowerQuest ($50m-$75m/yr in sales). Worst would be to do another McAfee/Network General style merger in order to consolidate.
One interesting thing that has not yet been discussed here: the Wall Street Journal reported that the FASB is likely to retroactively undo the changes in rulings that caused poolings of interest to become unfashionable. Those rulings are costing NETA somewhere between 10 and 16 cents per quarter in amortization write downs. If this change sticks, NETA could get rid of the whole write down in one quarter (the way everyone used to do it before the end of 1998), and retrieve these "lost" earnings. In fact, since the change is likely to be retroactive, NETA could potentially restate prior earnings upwards due to this change.
Any Comments from the gallery?
-E |
