As of Dec. 2001, they did approx. 34% service vs. 66% license revenues. I think they'll probably do about $34 million in services and $51 million in licenses this quarter making it about 40% service revenue, (that's about a million less than consensus, but gives me some room to be off. I think they possibly have some upside in the revenues, where they come in exactly though???).
At the moment, I think merq's earnings are likely artificially depressed due to IT spending constraints but I think that's a temporary although longer than I'd like phenomenon. And so, yes, $1.20 is aggressive and it's dependent on the economy improving and increasing IT spending. Of course we won't know if Merq actually puts in those numbers for another 22 months, but they tend to be conservative in guidance so I can afford to be aggressive going out a couple years. Do I think they'll provide guidance that high now? Not on my life! What I meant was that I wouldn't be surprised to see them do that, not that I'm predicting that they WILL do it for certain. Over the longer term, when IT spending gets back to a more even run rate, Merq is a 35% grower, so if they don't put in $1.20 next year, I don't really care. They'll still be growing faster than most software companies for years and that's why I own the shares.
Merq was hurt in Q3 and Q4 vs. year before comparables and will probably be this quarter and next, but still managed to put in a respectable 18% year over year growth in 2001 vs. 2000 and will grow this year as well (despite the two quarters of lower comparables). How many techs can claim that with declining IT budgets?
$60 stock for forward earnings of 1.20? That's a forward pe of 50, which isn't cheap but probably doable. But the thing is, should they be able to get anywhere near there, what are earnings going to do after that? I think Merq is still in it's infancy.
Their website explains their products fairly well. www-svca.mercuryinteractive.com
On orcl... if Larry Ellison said the sun would surely rise tomorrow, I'd look out the window and see if he got it right. It must be really hard to cover that schizophrenic company, but to extrapolate Merq's performance based on what Msft or Orcl has to say is shameful, imo. These analysts make a lot of money and I'm really tired of hearing "might", "may", blah blah blah right before earnings. If they don't know, why say anything at all? How could they get Merq so wrong? They didn't do their homework, so why should I listen to them? What is more important to me is what they're going to do for the year and next year, not whether they failed to close a deal by a day this quarter. I'm tired of hearing about what some analyst says a company will do in such a short term.
TA |
