All this talk about liquidation value is depressing!
On the plus side, Inprise isn't anywhere near liquidation. Its products are strong contenders, though in a crowded field. In the growing CORBA market, VisiBroker is very well respected and is probably their best card for the immediate future. The application server may do well - if they can get by the anti-Borland bias that is held by many executives. Moving the dBase white elephant to Interbase is a good move as is the stock buy-back. Now that Sun is subsidizing the port of JBuilder to 100% Java (if you read between the lines), the Unix market should be very strong for JBuilder. (I personally know a major St. Louis based brokerage house is moving from C++ to all Java. However, they're coding it all using the Unix vi text editor because of a lack of quality tools in the Unix arena!!!)
On the down side, Inprise just ain't making enough money, even with all the big deals they keep announcing. Again, here in St. Louis, TWA is experiencing record levels of utilization (80+ pct of the seats are filled), but they just posted a loss for the quarter. Obviously, I'd rather see 10 deals yielding $100 million than a 100 deals yielding $1 million. Also, too many of the deals are with other software companies that can present a competitive threat in the future and whose revenues are at risk at the same time Inprise's are. I'd much rather see some big sales to utility companies, financial institutions, telecommunications giants, hospitals, etc. than more sales with Oracle, Sun, and IBM. When, and if, IS budgets dry up, Inprise could feel a double whammy as these other software companies fail to exercise their purchasing options.
Finally, a little chastisement is in order. When Inprise knew it wasn't going to meet the street's estimate for 0.05 cents a share, it owed us all a warning. A simple, "Because we've decided to defer some revenue to future quarters, we probably won't meet the 5 cents a share estimate for this quarter, but it will still be a profitable quarter for us."
Sure, many would have sold off, but many others would feel like the company was displaying a level of integrity that's essential for building trust in a shaky stock market environment. (Recall the prior CEO went on CNBC saying everything was rosy, then a few weeks later announced dreadful earnings. Now, every time Borland/Inprise is (rarely) mentioned, they say, "Yeah, I remember that CEO coming on and lying to us all.")
Instead, we all got to wake up seeing Inprise listed on Zack's Biggest Earnings Surprises List, showing earnings 60% lower than estimated. If you want us to have faith in you, then you'd better show some faith in us.
Jack |
