Uh oh. The consensus was .06 and they did post .08. But, look closely. Product revenue was up only about 6%. Surely the help desk market is growing more than 6%. That means RMDY is losing market share, and fast.
I realize that VNTV, SELB, CLFY, et al are not exactly in the same market, but they are sort of related. Those guys are posting license growth anywhere from 50% to 100% or more. Look at the growth in the help desk competitors - SWRT, McAfee, and everyone else - lots of little guys.
The RMDY growth was all in services. And without more license revenue, you eventually run out of service growth.
About .03 of the .08 was simply interest on their cash. And, their effective rate of return on the cash seems to be about 3.9%. With their kind of cash, 4.5 - 5% would be better - which would have jumped earnings roughly another cent. So cash management is not so good.
The competition is causing trouble. Watch for this stock to take a drop tomorrow, unless something very positive happens in the conference call.
What do you do if you are RMDY? You can't go upmarket - too much established competition from VNTV/CLFY/SCOP. Lots of pressure in the existing market with 100+ competitors. You've got to execute to win back market share ( I think it's now under 25%) and maybe look for other markets. so, RMDY should be focused on execution, execution, execution. They need to grow field sales force. any other thoughts here? |
