Here's something that I clipped from the RB PRSF thread, thanks to Spatz:
Briefing's morning story:
Portal Software (PRSF) 8 5/16 +3/4: It may not be time to go bottom fishing for small cap software companies with red ink, but Portal Software is one for your watch list. Yes, the bottom line for the last fiscal year was negative, but only due to acquisition-related costs (Solution42 acquisition); on an operating basis the company was $13.7 mln in the black and was cash flow positive. Sales growth, even in this extremely tough market, has been strong...in Q4 (Jan), the company posted sales of $81.1 mln, representing 108% growth. Portal provides real-time, scalable customer management and billing software for providers of Internet-based services, and their customer list is loaded with top tier names: AOL Time Warner, Alcatel, Cisco (also an investor in PRSF), Vodafone, Nokia, France Telecom, Inktomi, Akamai to name a few recent deals. Although the telecom and networking space in which PRSF's customers reside is struggling, it will be back, and Portal's key relationships and the impending 2.5 and 3G rollout make the company a strong turnaround candidate. The balance sheet is healthy with cash and short-term investments of $217.8 mln, a 2.5x current ratio and a 25% debt ratio. In addition, the shares are liquid with an average daily trading volume over 4.8 mln. That's the short version of the bull case, here are the risks: With so many tech companies citing poor visibility into the second half, we expect the company to lower forward guidance. Current fiscal year (Jan 2002) consensus revenue estimate calls for $356.4 mln, we expect that to be pared down to about $340 mln, which still amounts to 89% y/y revenue growth. The other negative we'd like to point out is that the stock has been receiving less attention both from analysts and investors. PRSF used to be an analyst favorite, but the lack of visibility in the telecom and Internet space has resulted in less buzz and slightly declining volume. Nevertheless, for risk-tolerant investors looking for a small cap ($1.3 bln) turnaround candidate, PRSF fits the bill. |
