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You say "If every store in the mall is a JDA customer there is no room for incremental growth". I disagree. If that was the case then there would be no incremental growth for Microsoft (its software is used in almost every household and most businesses). This takes me back to the question: Why are Large Cap stocks outperforming samller caps? Answer: Although there may be MORE room for incremental growth with smaller cap companies, DISTRIBUTION is just as important, if not more important, than room for incremental growth. As the number of clients increase, the marketing and distribution becomes just as important as technical superiority. Example: If a software company sells $1 million this quarter. It may take just a few more sales to increase that number to $2 (which means sales increased 100%). Now if that same number was $1 billion, it would take much more distribution and marketing channels to increase sales to $2 billion. Ultimately, all the small players want to be big players. So marketing and distribution become more important as company size increases. This is what really impressed me about the news release that showed 24 new clients added during the quarter. Yes, they may sell fewer and fewer of the ODBMS software, but this is the age where buyers (i.e. retailers) are smart. They don't want to tie down thier money in a proprietary enterprise system. If JDA can continue to add substantial new clients to its list, then more than a few will opt for the ODMBS, if that system PROVES to be superior. Regardless of high end or low end, my main concern remains with the interantional sales. If they can streighten the mess they put themselves in, then I see room for much further upside. Now one analyst said two days ago that they have addressed the international issue and are trying diligently to increase sales abroad. Anyway, I just bought myself another 1000 shares and now own 4100 shares total. Sword catching or not I feel the stock is moving higher. |
