Q3 and Q4 are generally good for VM. Certainly, Octel seems to be gathering momentum. I am of the opinion that Octel is in trouble with their technology, but I think that it will be a couple of quarters before we see the fallout from an aging Sierra platform. Mind you that sooner or later, they will have to give account for the IMA that has failed to materialize. The plain fact, is that the Sierra platform has little or no room for growth. It is closed. It is 386 bound. It can not expand. And the pathetic VPIM solution on Sierra (using a "VPIM server" to convert voice to analog which is the Sierra NW protocol) shows just how little flexability is left in this prooduct, which BTW accounts for nearly 50% of OCtel revenues. UM is a step in the right direction, but at a measly 24 ports/box, don't expect it to replace the Sierra revenues that will soon begin to decline.
In the meantime, I will step back and allow the Octel bulls to enjoy the good times. But, watch this one carefully. One question that should be in the mind of every Octel investor is whether or not this company has a clear and solid technology foundation upon which to grow the business. If you really compare the Octel line of products with the leading competititors, the answer is clearly no. The question then becomes, how long can the Octel marketing machine (Octel's strongest asset) continue to sell these products (especially Sierra).
That all being said, I will not argue the possibility that Octel could see 30 soon. Just as well, I am convinced that this company is in for soime tough times. Mean time enjoy the run! |
