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Strategies & Market Trends : Bosco & Crossy's stock picks,talk area

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To: PuddleGlum who wrote (3466)	6/25/2003 5:40:52 PM
From: Crossy	Read Replies (1) of 37387

re: OTC/BB : CRVU (Corvu Inc.) - $0.95 is the most recent addition to the thread portfolio. Will post some summary DD on it. it's main corporate activity is in business intelligence software. BALANCED SCORECARD ANGLE Parts of its offerings are geared towards augmenting customized implementation of a very popular strategic management concept called "The Balanced Scorecard". I would highly recommend the underlying book by Kaplan & Norton with the same title. It connects corporate strategy development with the often neglected process of STRATEGY IMPLEMENTATION. Many Fortune 500 companies are using the concept. This is also the very lucrative target market of the company and the potential geographic scope of Corvu's activities is certainly global alike. Many PR's describing new customer wins are testimony to this. COMPETITION are typical business intelligence offerings like Business Objects (Nasdq: BOBJ) and the like. However I'm not aware of any other player with such a close tie to the award-winning Balanced-Scorecard concept as Corvu. VALUATION Ratios are not ultra cheap but certainly acceptable for a company with growth potential like this. For a software company active in the business intelligence segment they are very low nonetheless.. Industry standards for profitable and growing business software firms are Price/Sales of 3-5 and PRice/Book of up to 10. However on software companies balance sheet, the devil is in the details as Intangibles (capabilities, technology, talent) are the most important ingredients of succesful software companies and all of them are not visible on any standard balance sheet. Corvu is no difference here, so closer analysis is warranted. Price $ 0.90 (Low : $0.16, High $1.02) Avg Volume - 20000 shares / day Beta : 0.14 MarketCap : $ 20m Shares Out 22.7m, Float 11.6m Financial Strength Quick Ratio (MRQ) 0.39 Current Ratio (MRQ) 0.50 LT Debt/Equity (MRQ) NM Total Debt/Equity (MRQ) NM Valuation Ratios Price/Earnings (TTM) 9.00 Price/Sales (TTM) 1.28 Price/Book (MRQ) NM Price/Cash Flow (TTM) 8.65 Per Share Data Earnings (TTM) $ 0.10 Sales (TTM) $ 0.71 Book Value (MRQ) $ -0.19 Cash Flow (TTM) $ 0.10 Cash (MRQ) $ 0.04 Profitability Gross Margin (TTM) % 79.78 Operating Margin (TTM) % 10.40 Profit Margin (TTM) % 14.22 The company has slightly negative shareholder's equity, however this is caused by deferred revenue (a common billing practice in the software industry). Apart from this the company is almost debt free. Revenue has almost doubled this year from last year's levels. And 6 of the last 5 quarters were soundly profitable. In the last quarter some balance sheet writeoffs produced a small loss of $0,02 which was all caused by noncash charges. This restructuring should bode well for future profits. My future scenario for corvu involves further revenue growth of at least 25% annually and associated earnings levels of around $0,10 per quarter. New product offerings are around the corner too. to me it looks like an underfollowed gem in the software universe. What distinguishes CRVU from other OTC/BB listed software firms is their ability to ACHIEVE REAL REVENUE GROWTH and not just profitability. best rgrds CROSSY

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