William, re-post of an earlier post.
Perspective on the stock decline (From my yahoo post)
The company has been on the road a little talking to institutions about the reasons for the merger, but the only people i know that "get it" are from within the industry and a few institutions.
You must keep the following in mind: Institutions are not very sophisticated, they have lots of money, but it's typically spread out over 150 to 300 positions in many industries!
They can't know the companies very well and depend on the brokerage analyst community to provide understanding and comfort.
MAJOR PROBLEM IN THE DEAL NUMBER ONE:
Of the analysts that covered hysw and arsw stocks, THERE IS ALMOST NO OVERLAP OF DUAL COVERAGE. Even at Robertson Stephens, Marshall Senk covered arsw and Eric Upin covered hyperion.
The only analyst that covered both companies was the very respected Chuck Phillips at Morgan Stanley. BY LAW CHUCK PHILLIPS MUST BE SILENT ON THE DEAL UNTIL AFTER IT CLOSES!!!! That's because Morgan stanley advised arsw on the deal.
The same is true for Goldman Sachs! They advised HYSW on the deal. However, the analyst at Goldman sachs, Sophie Chang is young and doesn't have the credibility that chuck does. I also think she didn't cover hysw.
Stocks are a reflection of growth, earnings power, and PERCEIVED certainty/risk. The CERTAINTY factor is the MOST IMPORTANT.
So you've got no analyst that understands both companies able to communicate with the investment community and owners of both stocks scratching their heads about the other company....the uncertainty and risk factor goes WAY UP!!!!!!
Look at the arsw and hysw threads they're almost mirrors of each other!!
ARSW: ARSW's such a great company, they're kicking butt, partnered with ibm, psft, itwo, essbase 5.0 is a killer product, why'd they buy this slow growing remnant of a company like hysw? Look at what hysw stock is doing to my arsw!!!
HYSW: HYSW's such a great company, dominance in consolidation and a global presence with 3000 customers. Accelerating growth in Pillar and enterprise and MBA...analytical applications that have no competition, why'd they merge with junky arsw that has some strange olap product that msft is giving away!
Look at what arsw stock is doing to my hysw stock!!!!
Now trader dave's dumb mistake:
"Wow! This is fabulous, arsw gets great applications, global distribution, services and a great customer base!!!
HYSW gets a great development engine and tools, great partnerships and a growth engine. They have a vastly increased footprint and instead of competing with each other because customers can't decide whether to buy or build, they can now offer an end to end solution that offers flexibility and rapid deployment.
Now we can watch the birth of the undisputed analytical gorilla in analytical solutions!!! Cool, this is the next oracle (No sleazy management though, too bad 'cause that seems to be worth a P/E premium these days. How about it John? Consider a date with Monica to spice up the stock!"
I can't call the trading, I hope for some life when the analysts re-initiate coverage after the deal closes, but many institutions might wait on the sidelines until the September quarter is produced.
I'm a pure technology investor, I am comfortable with the short term increase in risk and uncertainty for the massive increase in size and opportunity that the combined company has. I feel very very lonely right now, but my conviction remains the same.
(I took the confusion as an opportunity to do my due diligence on HYSW since I was an arsw owner, so actually my conviction is higher since I'm impressed with hysw. However, I'd bet understanding arsw would be harder for hysw owners.)
TD |
