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Technology Stocks : Raptor - Where does it go NOW?
RAPT 57.67-0.1%Feb 2 3:59 PM EST
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To: Doug Willmarth who wrote (449)8/13/1997 10:07:00 PM
From: van wang   of 652
 
commodity like characteristic is seen in the pricing mostly...margins can improve depending on business model--see DELL, CPQ in a commodity business...again, if they had a strategy i like then it doesnt matter if firewall is a commodity business...but software is not hardware...if you have similar products, use creative business strategy like MSFT with DOS...if software is difficult to develop, then keep investing in new versions, etc

for RAPT, margin increased because RAPT is a software co. and is small at present....COGS on a per unit basis fall as units increase (cost is not constant esp. with software cos. and with acctg methods)...it is expected for a small co. like RAPT to see margins improve esp. when the mkt is not even close to being saturated and working off small units sold base

when i pay for price above book , I pay for future growth (future cash flows)...and that is what we are talking about...if your growth predictions are based on selling lots of high end from the WALL customers then this should be easy to model

high end is UNIX based..the WALL sells mainly to smaller customers...this is not a transitional product like VCRs...either they need a high end firewall or they need a low end firewall...if that is in fact the business strategy (not stated in the annual), then I stand behind by view

even at the high end, my bet is with CYBG...in the high end, its crowded too

as for MSFT, pls go post on NETM's board and ask them what happen when MSFT invaded with an inferior product (and MSFT's product was inferior and still is)

good luck
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