Evalution of Q4 Results
Hi Eric...Contrary to the mixed views I am getting from several posts, I am extremely happy with Q4 results. This is the beginning of a major turnaround and we are going to get rewarded handsomely in the long term. Consider the following:
1. For the first time since Q3-95, revenues grew 5% sequentially. This translates to 20% annual rate.
2. They projected sequential revenues and EPS growth for Q1-97. In Dec. 95, they said Q1-96 will be flat with Q4-95 because of the holidays, but they didn't use this excuse this time. Also, they didn't commit themselves for FY-97 beyond saying that analysts estimates fall between $.8 and $.9. They are taking it quarter by quarter. I like this approach because if they meet their own quarterly projections, Wall Street will reward them.
3. Server sales (Netware & Intranetware) increased from 216M in Q3-96 to 246M in Q4-96. This is the first increase since Q3-95.
4. Most impressive, Intranetware sales which started in October (only 4 weeks of sales) were 103M, which tells us that Intranetware is doing fine indeed.
5. Groupwise and Managewise had double digits sequential growth.
6. With education and Unix royalties down 13M and a distribution problem in Japan (which they are working on), they still grew revenues by 5% sequentially.
All major products are selling very well. This was my major concern and I feel very confident that they will keep it up. Definitely, this will change perception and mindshare postively. Further, during FY-97 they are coming up with several additive products to NDS which should increase revenues nicely.
These results explain the reason for the poison pill. With the stock price at this low level and the company believes they are turning this thing around, they clearly would be concerned at a low hostile bid at this time.
In summary, for the first time since I have owned this stock, I feel real good after the announcement of the quarterly results.
Regards
Salah |
