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Strategies & Market Trends : YEEHAW CANDIDATES
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To: Galirayo who wrote (17209)4/8/2006 2:04:27 PM
From: Sergio H  Read Replies (1) of 23958
 
CALD - fundamental perspective.

CALD is an enterprise software firm. A competitor in the same arena as ORCL. The company IPO was in Nov. 2003 with almost 6 million shares offered at $14/share. CALD now has over 27 million shares outstanding and its selling at $4.51/share.

The achille's heel has been the long sales cycle for their software products, creating an unpredictability in forecasting licensing revenues. In 2003, licensing revenues were over 50% of the total revenues. These revenues dropped off in 2004 and then significantly increased in 2005. 2006 is expected to see a reduction in licensing revenues, factoring in the lengthy sales cycle for their new product line introduced in late 2005.

Service revenue should increase,due to new customers established in 2005, but overall margin numbers will be lower and expenses higher.

CALD's succes depends on securing new customers as their licensing sales have been on a perpetual basis. The company has a new management team as of 2005 and has significantly expanded their sales team. Historically, more than 90% of sales has been in the U.S. and an effort to increase international sales is also a key to future success.

Earnings for the last four Qs exceeded estimates, but only because of the company guidance. For example, for their last report guidance lowered estimates by 12.5% and then earnings exceeded expectations by 11.43%. The next report is due 4-26 and estimates have been lowered. What will be of interest in the next report is if the new CEO will announce a cost cutting plan for 2006.

There is no debt and over $2/share in cash. The stock price at just over 2x cash makes the shares a low risk despite the volatility in CALD's revenues.
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