>How does this Systemsoft scenario relate to WIND??
I made a strong defense of SYSF on this thread a few months ago in response to goading by Mark. The Systemsoft scenario is vintage Mark, delighting in rubbing my nose in a statement that, in hindsight, seems silly in light of the surprise (at least to me) announcement by SYSF last week. My formal policy is to ignore Mark, but once again he cleverly posts things that can't be ignored.
After last week's SYSF announcement, the SYSF thread makes for interesting reading. A number of the posts were putting a positive spin on the announcement, when along came a realistic interpretation by Peter Grossman. He posted the equivalent of "the Emperor has no clothes" observation. Is Peter correct? Hard to say. I have a number of theories I want to check out before I complete my assessment of what went wrong, and how I feel now about SYSF's future.
If you believe management, SYSF came close to reporting a bang-up quarter. As late as mid-January, when the new COO insider was buying SYSF stock, management thought they had $13 million in revenue bagged for the quarter. That would have beat all the estimates, and when combined with a couple more SystemWizard deal announcements, including another top ten computer maker, SYSF would have taken off. Analysts were set to up their rating once the new COO had cleared the deck (the analysts were set for writeoffs and reduced revenues) and once it was clear that SystemWizard revenues were starting to ramp and significant SystemWizard deals were inked. Beating the estimates would have been a very pleasant and unexpected surprise.
Then the wheels came off. Unbelievably, contracts were cancelled here and abroad to the tune of $1 million a day, resulting in quarterly revenues of about $4 million and massive losses and restructuring. Setting aside whether this nightmare occurred because half the sales force walked out en masse, presumably in reaction to the new COO, how is it possible that most of the quarter's revenues were waiting to be signed within the last week or two of the quarter. That folks is the so-called hockey stick in action, on the luck of which many companies live, and occasionally die. Contrast this unfathomable situation with what was going on at the time at WIND (both companies end their quarter on Jan 31). On January 8, WIND issued a press release about the NCI technology buy, in which they stated that they expected to make their numbers. In other words, a week or two before SYSF began to experience gut-wrenching revenue shortfalls, WIND had already bagged the quarter. This contrast is so sharp that it is difficult to argue that SYSF management is up to snuff, even though I firmly believe that something akin to SystemWizard is essential in the consumer PC space.
Were there hints all along that SYSF management was lacking critical skills. Certainly, and I noted them, but all in all I thought the franchise promised for SystemWizard would compensate. It seems that perhaps I was too lax in my standards, and I didn't pay close enough attention to the staying power of SYSF's core business. Any long-time readers of this thread should know I have been concerned for over a year about powerful forces constraining opportunities for software companies. I think I have a better understanding of those forces now, and I think they have been unkind recently to BIOS companies among many others. The Asian crisis has exacerbated, not created problems that have much deeper roots.
The fact that any of us say things that turn out later to be suspect is not something that should be belittled. These are the things that need to be admitted, re-examined, learned from and built on. Given the evidence existing about SYSF when I made the post Mark tore apart, was I wrong to say what I said? In similar circumstances in the future will I be more reserved? These are certainly important questions for me, and you can bet I am thinking about them. Unfortunately you can't discuss them intelligently on this or the SYSF thread without Mark screaming "I told you so and taking sentences out of context to provide juicy emphasis."
After Mark gave Peter a left-handed complement on the SYSF thread about an August statement that turned out true, but not as brutally negative as Mark's assessment, Peter responded thusly: "I'm glad you reposted my thoughts of August, though I am familiar with some of your other self-serving, sophistic, sometimes personal and mean spirited posts." It appears that Peter is honorable man willing to give honest assessment of companies and people.
If the point of this thread is to blow our own horn and belittle or discredit others, then let me be very clear in stating that I can't imagine anyone with any taste that would have interest in reading or posting on this thread. Childishly ridiculing statements made in good faith, whether they turn out to be true or not, is degrading and is behavior unbecoming mature investors.
I'm going on another trip for a few weeks, so my lack of near-term posts is not a reaction to Mark's put-down. However, in my absence I trust the thread returns to making posts respectful of other investors, whether or not you agree with their opinions. Any alternative is both improper and unacceptable.
Allen |
