I wish I had all of the answers. Based on what I know, the type of administration product that SFTW offers for the UNIX and Windows NT market, the ENlighten DSM, is similar to Computer Associates (CA) Unicenter TNG and Tivoli's (IBM) product (don't recall the name). These are REALLY hot products right now. Check out CA's news to read about Unicenter. There are possibly others. I think Platinum Technologies is active in this market also. The best place to start is the sftw.com web page - check out some of the UNIX magazine articles that came out last year.
As far as propsects, SFTW has a line of TANDEM software products, which has been their bread and butter for years. Lately, TANDEM products are flatlined, so their future hopes are pinned on the DSM product. There was an article (don't recall where I saw it) that said the market for UNIX/NT administration software was about $5 billion; of that, about $1billion of that market is in the low-end, meaning, smaller users, fewer machines, etc. SFTW has stated in their 10-K that they are focusing on the low end of the marketplace, meaning that they are not intending to compete directly with CA and Tivoli. So, it looks like there is a $1 billion marketplace out there and fewer competitors in the low end.
You can look at the company's balance sheets, and see that if they can get revenues up to $10 to $13 million per year over the next two years, they can probably be making $0.50 per share, which is a fair share value of $7.50 or greater. That's why I think this can be a $3 to $6 stock in the next 12 months.
You can also check out the Red Chip Review, www.redchip.com, which analyzes this stock. You have to subscribe to get the info. The last I saw, they have a cautious outlook with a 12-month target of $3-1/2.
There is alot of info out there if you look around. Suggest you start with www.sftw.com, and also check out the SEC reports on edgar online (can access from www.nasdaq.com).
Just a few more tidbits. The CEO owns just under 50% of the shares, and insiders control about 70%. As I understand it, the float is about 900,000 shares out of 2.9 million shares outstanding. It is difficult to trade this stock in large volume. That's why the stock will suddenly drop from 1-3/8 to 1 with only 5,000 to 10,000 shares traded, if the guy who is selling sells at the market price. This happened in late June at the end of the 2nd Qtr. I figure the same will hold when the DSM sales improve, and the buy orders come in - you'll see it shoot up on small volume. If you decide to buy, the best approach is to buy in small chunks.
Paul |
