Doc I usually don't post on SI but it seems you hang out here more than AOL. Wanted to provide my responses to your AOL post in a timely manner :-)
Subject: Re: Last chance to buy at 14
Date: Wed, May 13, 1998 12:59 EDT
From: Bonzo3
Message-id:
>>Doc: Sorry folks, the story as far as I am concerned is tarnished. I used to be a big believer, but TAVA has disappointed for the third quarter in a row. They could not even meet modest projections.<<
As far as I am concerned the story is not tarnished, it still glows in my eyes. After meeting and talking to Jenkins I believe that more than ever. Projections? By the Company? Analysts? SI or Fools boards? I never made initial projections because I didn't have a handle on the total business potential, still don't. Most projections made on this board and SI were "pie in the sky" and left little room for even the slightest disappointment. TAVA imo, still does not have a complete grasp (I got that much from the first CC I listened to) of the total market potential for their Y2K business, and certainly the analysts don't have a clue. The story remains intact, and getting better imo, and business is burgeoning. 150 new hires this quarter is proof of that. $8-10M booked in new Y2K SO FAR in May (>Doc: The Cd-ROM has barely made back its expenses, and the high margin front end work has simply evaporated. <<
Really? For now I will take your word for it. "Pilot Projects" are a thing of the past" This from Jenkins. TAVA is moving into full scale projects without the Pilot nonesense. As far as the CD is concerned. Does it mean that the CD is not selling? No. Does it mean it won't continue to sell? No. Is the Component Database expanding? Yes. >15K devices and growing. How many Industry specific CD's are there now?
At least 7. Yes the WW distribution is disappointing to the Company and to its shareholders. Hence we have a bit of a sell-off now. Jenkins told me about WW sales last Friday and I reported it Fri. nite. However, almost in the same breath he quickly told me that they were achieving much better results from their direct sales staff than they had projected. They are now staffing up their sales force with greater urgency. The WW distribution has raised
the level of awareness making it a bit easier for TAVA's direct sales staff to make their presentation to high level mgt. This has resulted in a "tag-team"effect. Dead? What a leap (pile) that is!
>>Doc: Backlog does not appear to have grown from the 18 million as of 12/31/97. <<
My notes indicate that backlog increased 15% from Dec. 31, 97 to March 31, '98. From the CC. Think its gone up since March 31st? I think so.
>>Doc: Q3/98 was hyped as the big quarter by comapny officials.<<
TAVA does not hype. That I can assure you. Just the opposite. However, hype on this board was rampant when I first came on last Oct. and continues on SI. The shareholders themselves, and short-term traders, (there is a difference in my view) got overly excited and are guilty of hype not TAVA mgt. They raised their own level of expectations exceedingly high and when they were cautioned about it they thumbed their nose at the poster and continued thier party. If you met Jenkins you would come away with an impression of a conservative, low key, button down, technically knowledeable professional. He was the only presenter at RedChip that actually verbally read to the audience every single word from the "Forward Looking Statements" disclaimer that precedes every slide presentation. He is anything but a hypester. Please don't make those statements Doc.
>>Doc: Now they are pushing out the big quarter to Q1/99. And excuses continue to mount: Last qurter it was "Holiday season led to less billables." Before that it was "Software development reduced billable hours." Now it is delay in anticipated y2k orders, front loading of personnel in first part of quarter.<<
Excuses? How about the reality of running a business whose business model and strategy is so new and dynamic that it could change from week to week. I ran a high tech business for a number of years (electronic test) with only 10-15 employees and I can attest to many of the problems, albeit on a much smaller scale, that TAVA is working through.
>>Doc: The stock is way overvalued at 14 based on trailing revenues. Future forecasts are uncertain. Fairer valuation would probably be in the high single digits.<<
Trailing revenues? Now that you sell we are going to finally focus on trailing revenues? Since when did anyone buy this stock based on trailing revenues? Its future earnings potential that I continue to maintain my position and add to it going forward. The only uncertainty about TAVA's potential is how large a market they will be able to address in the next 2 years or less. With the "Solution Partner Provider Program" to some extent, they have answered that for me. They have found a way to leverage into a WorldWide presence. Thank goodness for the Internet. Database access and compliance reports from every major industrial region of the World. More than a dozen partners signed up so far and growing. Why hasn't this been mentioned and discussed? This has enormous potential. Instead its CD sales. I did not buy TAVA because of potential CD sales. I always thought it was gravy. Now we have the "mashed potatoes" to go with it :-)
>>Doc: Reasonable people can disagree about future growth, but I think we can agree that the huge ramp up in fat margin software sales just ain't gonna happen.<<
After this post I still hope you think me reasonable :-) However, I guess we can't agree about anything with regard to TAVA today. Define "huge ramp up"? By whose definition? Gross margins are at 44% and growing rapidly. Jenkins personally told me that by '99 TAVA would probably be charging over $200.00/hr. for remediation work.
Doc good Investing to You :-) |
