Pardon...let me back up a minute.
I am assuming that most of the people on this board are not institutional investors and don't have access to the resources that are required in a detailed analysis of the numbers (and thus gave the advice to look at the strategy). But since that assumption was apparently WRONG, I will be happy to engage in a discussion of the numbers:
I'll start off by prefacing that if you don't believe NETA's auditors for the last three years on accounting issues (excluding the recent in-process R&D controversies spawned by the SEC) and believe they are cooking the books, then you shouldn't be investing in any company that uses those same auditors (Coopers). Now...
1) I think the cash flow question has been addressed in prior posts. Cash flow from operations in the fourth quarter was again positive. Management did not state a value.
2) Deferred revenue again increased in Q4. No issues.
3) Cash balance was up (again)in Q4 by $70 million. DSOs were in-line. Collection cycles look pretty good.
4) The Sniffer business was $95 million in the 4th quarter vs. $69 million in Q4 of 1997. That's 38% growth from a business people thought would only grow 15-20%. I might also add that they have converted the sales model to channel-driven, giving higher margins and better profitability. That's my answer to "what was the value of the NETG deal?" Same deal with subsequent acquisitions.
5) Acquisition-related charges: from what I hear, investors (that's right, INSTITUTIONS) are going to start looking at numbers excluding in-process R&D charges. Take a look at how YHOO, AOL and some others are being analyzed. Even if this doesn't pan out, NETA has enough control of its sales accounts that it can use OPERATIONAL efficiencies, not accounting tricks, to make up the difference.
6) Over 50% market share in anti-virus, over 50% share in helpdesk, 190% growth in the security space, and sniffer is fine as previously mentioned. Penetration remains relatively low, providing a lot of opportunity in the installed base.
At the expense of writing a novel, I'll stop. However, I know that you can still come up with a dozen other financial concerns that I will be happy to address.
-ranch |
