I'm not surprised it is sleepy. Sure, PRGS has a gold-plated balance sheet, but that only gets exciting if there are a fresh round of take-over rumors or the company uses that secure base to do something exciting. PRGS has always had very conservative fiscal management and no doubt it has kept them from falling in a few pits. But, it may also have helped them keep from soaring over the trees as well. It is fine to be able to repurchase shares while pretty much maintaining your bank balance, but this is only a significant sign if there is something positive happening on the revenue side.
2Q97 *was* a lot better looking when compared to 2Q96, quarter to quarter, but 2Q96 was one of PRGS less stunning quarters. 2H97 over 2H96 then are down on everything except maintenance revenue from their maturing customer base. Keep going down that path and the company isn't going to go in the tank overnight, but it will gradually wither.
So, to me, the big question in speculating about the future of PRGS is whether their product vision now is any better than it has been in recent years. Six or seven years ago, this was a company with a product that was in front of everyone else, but no marketing to let anyone know it. In their move to GUI and client/server, they were slow and have stumbled a lot, all too often delivering less than was promised. Worse yet, despite a strong commitment to upward compatability in details, they didn't succeed well in bringing along the VAR base to the newest technology -- case of missing the forest by devotion to the trees.
In recent months, announcements of future product at the Users Conference, the Aptivity acquisition, and such seem like possibly promissing moves, but at this point it is hard to tell how real and meaningful it is. If this year's promises are followed through as poorly as the ones at the Orlando conference, then next year will be a big disappointment. If they are fulfilled, it may breathe some life in to the VAR channel, at least letting them hang on somewhat longer, but they are still not going to have retaken a leadership position. To do that will take a more sustained effort and it will take vision... an area where I remain skeptical.
Next to this, the prospects or not for stock buyback seem pretty soporific. |
