Ok, enough of the snappy one liners -- don't we get enough of that on the free message boards?
Let's talk about the company. First Aid v.1 was a wildly successful program. Unistaller and and Oil Change both lead their markets. CYBR was on a roll and shot up to 33. The company got ahead of itself and got caught with excess DSOs, had to take drastic action to put the house back in order and the market has severely punished it. Throw in the early release of a defective Oil Change v. 2 and it is obvious that management made some serious mistakes.
That's the history that brought us to where we are now. Let's look to the future. This quarters results have to be better than last. I estimate an improvement to around $7.5 million to $8 million in sales this quarter. I cannot predict earnings because of the likelihood of additional charges. The company is doing very well with Guard Dog, it has fixed the First Aid bugs, it has improved Unistaller and teamed up with Gateway. I think Guard Dog alone is worth a market cap of around $40 million--it doesn't matter that computer geeks can create the same functions through shareware--most people will pay the $59.95 to get these functions quickly and easily. I also understand the next version is going to be a substantial improvement. There is currently no commerical "on-the-shelf" competition--throw in the markets facination with anything "internet" and Guard Dog's growing name recognition and Guard Dog is arguably worth $60-70 million.
One thing is clear, this company is not going to go bust anytime in the very near future. With competition like Network Associates and potential competition in MSFT, long-term prospects are questionable, but we are going to see a price of $10 before we see a price of $2. Investors got their fingers burned pretty badly recently and no one is willing to touch this one until management proves it has learned from the past. But should management regain investors confidence, we will quickly move beyond the $4-5 range.
Now why all the recent activity? The Gateway deal cements CYBR's survivability, at least for the next several quarters. There is talk of additional deals, including the possibility of a large new investment. Recall the market's reaction to Softbank's recent investment in E-Trade. Suppose Intel or Microsoft (two of the names we are hearing) were to invest $20 million in CYBR -- would anyone be repeating their prediction of CYBR's imminent demise? Under those circumstances, would CYBR be worth $60 million or $200 million? None of us knows for sure why CYBR has recently surged, but given all of the rumors floating around and the reality of the Gateway deal, I believe that I understand why the market has bid up the price. |
