Elliot,
As usual, you and I are reading from the same playbook. As of Friday my entire position passes through the window into long-term capital gains treatment. It will likely be at least another year and a half before I would consider selling. Some people are traders, and not investors in this stock. I too am a trader, in other stocks, but this one is a company in which I have so much confidence, and such a large position, that I do not want to miss the ride if I call a turning point wrong. I have friends who tried it and missed. In fact, coming back from lunch today I ran into a friend who sold way back at 7, thinking she could get back in at 4. Wrong. She had 6,000 shares. Ouch. She put the money into Silicon Graphics at 30. Double ouch!! Need I say more. To the people who try to trade it, more power to you. Me, I willing to ride the waves.
As for the prospects of the company, they are bigger than ever. Several points from yesterday's conference call come to mind.
(1) It was noted that Enlighten was not really working their Tandem line. Now that New D has it, it is apparently yielding good sales, and they noted that the Tandem customers are even asking about other New D products.
(2) The sales efforts are yielding multi-product sales, as customers become more and more confident with New D and its products.
(3) IBM is putting out that CD-ROM to 20,000 customers, and New D is the ONLY company they include on the disk in the job scheduling software area. That is a lot of free advertising. And let me reiterate New D is the ONLY(!!) job scheduling software company mentioned on the CD. That is a huge endorsement by IBM.
(4) New D apparently entered an alliance with IBM under some new development partner program that IBM started, and New D was one of the first companies to be granted that status. This includes an exchange of sales leads between IBM and New D. It looks like we are getting real tight with IBM...not a bad place to be.
(5) It sounded from the call like our alliances with Oracle and SAP should start to pick up steam this year.
(6) New D has granted Memco the right to market Control-SA (the security product) world wide. Previously it had only been in the US. If I remember correctly, Memco is doing pretty well. New D management stated that they have been pleased to date with the Memco arrangement, and that lead to it being opened up world wide.
(7) They are opening a subsidiary in Mexico to shore up sales in that part of the world.
(8) New D seems to be continuing to really push the R&D front, especially in the growth area of systems management via the web.
(9) Apparently New D is seeing a lot of demand for enhancement to the mainframe products. They also stated that commonly, organizations are putting their web applications on mainframes or AS-400's, which is an area where New D is strong.
(10) The management is pleased with the activity and product trials with Anacomp customers. Recall that the Anacomp arrangement was inked just this past January.
All-in-all, I too see this stock in the $50-70 range within the next couple of years, and maybe sooner if the current pace continues!
In today's Investors Business Daily, under the NASDAQ column, there was a blurb at the top of the third column about New D. It read:
"New Dimension Software surged 4 3/4 to a new high of 26, breaking out of a 12-week base on five times average volume. The Israel-based maker of systems management software said it boosted first quarter net 100% to 30 cents a share, 11% above estimates."
(Note that IBD was way low in stating 11%...it was 30%.)
Technicians like seeing breakouts from long bases. Fundamentalists like seeing earnings pop 100%, yet retain a valuation that is at a sizeable relative discount to its peers. Thus basically, this stock should please both the technicians and fundamentalists. That pretty much covers everybody but the dart throwers.
Later Elliot,
Mike |
