Re N - I challenge you to post the entry and exit of your short in this board (i assume you have no position at this point).
I think you are wrong in various respect. For one thing, you short thesis is weak, since you don't really have a catalyst for the revenue slowdown that is supposed to bring the share price down. Valuation, as you correctly noted yourself, does not seem to drive the stockprice, so I would put that aside.
You are also wrong that ERP software is a commodity. A commodity by definition is fungible but ERP software is anything but. ERP software is in fact very hard to replace, as it is in fact the financial backbone of the company. Everything that has a $ as a unit runs through it. Purchase orders, expensive reports, payroll tie ins, bill of materials, customer billing all run over the ERP network. Nearly every employee is touched by it and probably the majority uses it in one way or another. Replacing it with another vendor is a herculean task, not exactly my definition of a commodity good.
That is one of the reasons why the market values these ERP upstarts so highly - once they sell an ERP Subscription (as hard as it may be, see the high marketing and sales expenses), it's like having an annuity, as the customer are pretty much locked in for a long time.
I have not touched on the argument, that L Ellison owns 50% of the shares (trust or not) and also runs ORCL, which has been very acquisitive in the past and paid top$ too, for Peoplesoft, Siebel etc. OK, there are safeguards in place presumably to prevent conflicts of interest, but L. Ellison has a way of getting things done, if he chooses to. |
