ca's business is fundamentally flawed. the european shortfall was a fixable, company specific event. the company was bound to come back, and thus that shortfall was a good time to get in. this time, its a market demand issue with respect to ca's licensing structure. ca must fundamentally change their business, not just fix a short-term problem. this is why the 12/96 shortfall was a buying opportunity, while this one is a time to sell. ca must show how they can change the ENTIRE BUSINESS MODEL in order to get the stock moving. bottom line, trading on multiples at this point could be meaningless with no definitive time horizon for a recovery.
it's also interesting to note that in 12/96, some brokers kept buy ratings on the stock, reflecting the fact that it would come back over the short and long term. this time, downgrades across the board with no indications of when the stock will come back.
i have always been a believer in ca, but this is pretty bad news.
woefully,
-a poor rancher |
