Although the published results don't really inspire much confidence, a listen to the conference call is really important. In it, you will understand that the company is in transition from an email notification service to a sales intelligence organization with Business Builder as the flagship product with major changes for the company's organizational structure. One thing that impressed me is how on top of things the CEO was and how clear the strategy and focus were at a relatively deep level. The ASP of the Business Builder is $12500 for 10 seats and is double that of the email service. And although it requires a more dedicated sales effort and the lead times are longer, there hasn't been a lot of push back on the price. Also, there is now copy protection so that the information of Business Builder cannot be shared, unlike the email notification service, so that should encourage more legitimate licenses. Also, they have initiatives to try to benefit from the increased govt spending, as I had suspected, from Katrina and Rita. However, more interestingly, they are trying to put together a more cohesive strategy and product offering for disaster recovery - noting that these things happen every year to different degrees - a good example of their long term thinking.
It's a good call for those interested in this company. I will wait for the stock to correct some more and then buy more. It's hard not to like the balance sheet with nearly $3 a share in cash. Also, surprisingly, looking at the chart, there's not a lot of damage. This may take a little longer than I had expected, but I am comfortable holding this longer term. |
