Listened to conference call. Points:
1. Overall Dale was very pleased with this q. Turnarounds take 6-8 quarters and he felt BORL was executing well.
2. Major revenue is still from C++ and Delphi. He considers JBuilder to be very big and pointed out how in 2-3 years down the road people would look back and consider JBuilder a key reason why the company turned itself around (paraphrased).
3. JBuilder sales going very well - in first few days of product realease Dale said product was sold out and consequently reordered. If Delphi moved the company two and a half years ago and we believe the significance of JBuilder I think we can see a 30+% increase in reveneue next year (conservative).
4. There is still very little coverage from analysts - only 3 calls (I consider this a good thing - for now - I'm still in accumulating mode). One from UBS, one from Putnam and one other I did not catch. 2 congratulations - "good job" etc.
5. Did detect sense that the Putnam guy was fishing for sources of revenue growth going forward. Suggested 40-45 million was breakeven. CEO pointed out - JBuilder (though admitted this was linked to JAVA growth), enterprise/c-s emphasis (key), Midas/Entera(sp?)...
6. Expenses well under control suggested by one of the analysts. DSO at 45 days - "good".
7. 52% US and 48% international (I think these are the right numbers - close enough!) - Dale said this was good considering Europe vacations (this European part sounded a bit flaky to me!)
8. Expects JBuilder C/S to be a big hit. Expected release - NOv. timeframe.
9. Though Dale felt "cautiously optimistic" about oct-dec.'97 q, he did ask the analysts to be "conservative" in their estimates. Another very good thing IMO. Main reason was that turnarounds take time - 6-8 quarters.
10. Interesting hint of progress of company - Dale said he'd like to have a sales staff 2-3 times bigger than the current staff. But he was not rushing into this - because of the new emphasis on the corporates side (55% of this q sales) they want to make sure they do the right thing.
11. No questions or comments about increasing competition etc - a good thing!
12. Emphasized the partnerships with IBM, MSFT (said though people would regard them as competitors MSFT realizes the importance of BORL to developers - if true, and I think it is, because MSFT is involved in the "JAVA wars" and needs good windows development tools which BORL has, BORL is in good shape. Can't see why MSFT would focus on crushing BORL at this stage - MSFT has to worry about ORCL and JAVA. Quite different from 5 years ago!), ORCL, SAP, Netscape...
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Overall the call went quite well I thought - perceived a quiet confidence though perhaps tempered with a dose of caution & consevatism. The key issue is revenue growth and how will that come about. If JAVA plays out (and if SD'97 was any indicator there is oodles of interest) BORL will do extremely well over the next year at least I think; if for some reason JAVA falls flat BORL might still do quite well though clearly not as well as case 1!
RE: valuations who knows - because earnings are changing P/E is not the right indicator. Probably should look at some multiple of sales.. I think because of proper expense controls over the n/t profitability looks okay...
Enjoy. The call was quite short - interested to hear other's observations on the tone and substance of the call. |
