I'd be very interested in comments from anyone about the email below that I sent a couple of weeks ago to Persistence Software.
I've not received any response yet, which may not be surprising since last week was a holiday week.
Since sending this email, I've learned that Mr. Hootnick has moved to another firm. I've also read, on a Yahoo message board (unfortunately I don't now have the link) a suspicion that perhaps Caching may be superceded by streaming technology, and that's what might be the source of PRSW's stock price decline.
Any comments would be much appreciated.
Cordially, Roger Folsom
Subject: PERSISTENCE.COM: Investor Relations Request
Date: Sun, 24 Dec 2000 02:47:02 -0800
From: "R.N. Folsom" <rnfolsom@redshift.com>
To: ir@persistence.com
Dear Persistence, Investor Relations:
When I originally invested in Persistence Software earlier this year (2000), I understood its primary claim to fame to be dynamic transactional and replicating caching software: At any point in time, all users can access the cache simultaneously; each user is unaffected by other users until one of the other users does something (e.g. buys something and reduces the available inventory) that the first user needs to be aware of; caches on different servers synchronize with each other, and users are balanced across servers to equalize loads (and to deal with server crashes); and all of that great stuff was well protected by patents.
Since then, as you know, Persistence stock has collapsed, especially dramatically in the last few weeks. I do realize that not only Persistence, but almost the entire internet software sector has fallen since March, but Persistence's recent drop strikes me as particularly severe given that its caching product line sounded so excellent. And more recently, I have learned about rumors that your sales force has become ineffective or is quitting or both.
This evening I finally found time to investigate your web site, to see if I could find any clues about what is going on. I noticed several things:
1) Your web site notes that "Persistence Software has Field Offices & Distributors in USA, EUROPE, ASIA, SOUTH AMERICA and AUSTRALIA" --- which seems to cover the entire globe except for the former Soviet block, the Middle East, and Africa. Such an extensive presence sure sounds like a company that is or is going to be highly successful --- or that is seriously overextended. I hope for the former, but given the collapse in the stock price which suggests that somebody out there knows (or thinks they know) a lot more about Persistence's situation than I do, I fear the latter.
2) Product emphasis: I was surprised to discover that on your web site, your PowerTier development tools get much more emphasis than your Dynamai caching software (for example, your "Company Tour" doesn't even mention Dynamai, I think). At least to a non-programmer such as myself (dabbling in Fortran 25 years ago doesn't count), development tools sound like a much more competitive market than your caching offering, assuming that your caching is in fact protected by very strong patents. I'd be very interested to know the extent to which you expect the company's survival and future prosperity to depend on Dynamai, and how much on PowerTier.
3) Your site does make clear that you are definitely in the job market. And although you are looking for worker bees, I was astonished at the extent to which you are looking for what appear to be leader bees: VP Engineering Operations - San Mateo or San Diego; Professional Services Director - New York; Sales Directors - New York, San Francisco, Seattle, Dallas, Denver. If Persistence stock was rising, or at least doing better than its competitors, I'd simply assume that those leadership positions were for expansion, but since Persistence stock has fallen dramatically, I fear that some (maybe most?) key people have left a sinking ship and you are looking for replacements.
Incidentally, where did Larry Hootnick, formerly Persistence's President (although maybe not CEO) go?
I'd very much appreciate your commenting on those three issues. I realize that you are constrained by the new Securities and Exchange commission's new Fair Disclosure rule, so perhaps you could issue a press release and/or explain these issues on your web site. You might not want to discuss bad news on a customer oriented web site (as yours clearly is), but on the other hand your customers surely are sophisticated enough to know that your stock has tanked and will therefore fear doing business with a firm that may be about to die, killing all support in the process. These issues need to be addressed.
A more fundamental question about Persistence's lack of dramatic success so far is the following:
Even with the best development tools, developing something inevitably takes time. And people get wedded to their old tools (I'm writing this on a Win95b 166mhz Pentium MMX machine, simply because I don't have time to reinstall my fairly complex set of software and utilities after moving to Win98SE on either my present or a new machine, and my experience is that Windows "upgrades" vice clean installs rarely work well.) So it is understandable to me that the market for PowerTier could take time to grow.
But I simply don't understand why the entire internet isn't already using your Dynamai software, especially since (as I read on your web site today, although maybe I read too quickly) it can be installed in only 1.5 hours? That's unbelievable --- especially since I spent several HOURS this morning on the Timex.com web site looking for a particular watch for my daughter; a task that should have taken 15 minutes max --- never have I suffered a site where all pages took minutes to load (or so it seemed). I stayed there only because I already knew that nobody else had the product characteristics I was looking for. (I found it and got the model number, but it was out of stock, at their site and also in seven Monterey CA stores today.)
Why hasn't Dynamai already taken the internet by storm? Is your pricing out of line? Or does Dynamai have major bugs? Those are the only reasons I can think of.
As suggested above, I hope you can find time to address these issues, if not to me personally, then by press release or on your web site.
Cordially, R.N. (Roger) Folsom
P.S.: My investment in Persistence Software was on the advice of Michael Murphy's California Technology Stock Letter.
The issue of CTSL in which Persistence was first highly recommended was #454, dated 17 December 1999, pages 8-10, and my description above of Persistence's caching technology is my understanding taken from page 9 of that document.
More recently, in May 2000, Mr. Murphy posted an enthusiastic review of Dynamai on the public portion of his website (http://www.hitechstocks.net, although I don't think that the Dynamai review is still there). In that review he mentioned Larry Hootnick "who led the licensing effort at Intel" as Persistence President.
His most recent CTSL newsletter, #479, 15 December 2000, page 16, is where I learned about rumors of sales force problems. |
