Yep, the stock has been an underperformer, but deservedly so.
Here's a quick take:
Last March (1997) was ok, but the company lagged in its ability to hire sales force and predicted challenges for the June 1997 quarter, the stock collapsed. (It was a huge correction as I recall. (something like $60 to $7)
The company kept up its hiring plans and the stock had some fits and starts in late summer and early fall in the hopes of a "quick" recovery.
License revenue was decent in September and December, but earnings were not great as company continued investing.
Company's visibility in the financial community has remained low, few analysts other than the bankers have coverage because clfy is viewed as second tier.
Stamm wasn't booted, He spent quite a bit of time looking for his replacement. Like Scopus, Stamm was a founding engineer, appropriate for getting the company off the ground, but not getting the company to the next level. The reason he spent so much time without a CFO was that he knew he wanted to hire a replacement CEO and he wanted the new CEO to bring on the right CFO.
Wall Street tends to treat companies that have stumbled like they will never recover. In markets where the technology is weak and the business is maturing, that is often the case.
When you have major changes they take time to implement, perhaps as much as 9 months. In the last year, clfy has doubled its sales force, completely refreshed its product line, and revamped the management team. (Most of those changes have been within the last 6 months.)
Interestingly, they've managed to keep pretty close to Vantive in license revenue growth in a direct basis. But, ho-hum no-one notices.
(Actually they've generated more in direct license revenues than Vantive over the last three quarters, but Farber will have a a fit now that I've mentioned that.)
The last quarter was "fair" and like vantive a little weak in license growth. Right now, the new management is quiet, none of the analysts are talking about the story. (In fact, most analysts just treat CLFY as if its "game over") Except for Alex. Brown, they like the story and as an analyst team they have more experience than the other analysts covering the story, but they're waiting until the turnaround is really in evidence before pounding the table.
You can complain all you want about CLFY stock, but this year it's performing pretty much in-line with Vantive and SEBL stock.
That's what gives with the company and stock price.
TD |
