I'm shorting VIASOFT and here are my reasons ... So far, the biggest argument I have against these
Y2K plays is the amount of time they have to put up or shut up ... Now, the street
always looks at least a year ahead, and boy, do they hate flat to decelerating
earnings/revenues ...
1. VIASOFT reported $43.4 million in revenues for fiscal 1996
2. 1997 revenues will most likely be greater than 1996
3. 1998 revenues will most likely be greater than 1997
4. 1999 revenues will most likely be less than 1998
5. 2000 revenues will most likely be less that 1999
Now, all I have to do is make some best case estimates ... If Viasoft doubles revenues in
1997 and again in 1998, they will have $173 Million in revenues in 1998 ... At the current
price of $45 and 16.8 million shares, with market cap of $756 million, that is about 4.5
times sales ... now, I don't think the street will put a valuation like that on a company that
will show flat earnings the next year ...
So I'm shorting this stock ... and in order for me to lose my shirt, Viasoft has to put out
number in the next few quarters that will show that they're on track to beat my best case
estimates ...
So far, they've done a pretty good job at dilluting their stock value ... at the rate it's going,
we'll see 20 million shares by the year 2000 ... or probably more ...
Yes, Viasoft's been signing contracts with this consulting company and that, but this
actually dillutes Viasoft's software pricing by making the product available to a lot more
companies ... So yes, the product gains more visibility, but the revenue goes to the
consulting companies who only have to pay Viasoft initial licensing fees and monthly
maintainance fees ...
If I were a VIASOFT holder, I will watch out in every quarterly report, the growth in
new license revenues rather than the growth in maintenance revenues ... right now, it's
telling a different story than what the Y2000 is being projected to be |
