Tokyo, hear me out.
You are right about my previous dctm trade. I lost a little money on DCTM (but did sell in $26+ range).
However, I stand behind my reasoning. I thought that DCTM was a well managed company and that management had set the estimates-bar low to offset any unforseen y2k risk, much like SEBL did. Morevoer, they (dctm) did not let wall street analysts build in any upside for their new packaged app that is out this spring and let on that there was $5mm+ in incremental license revenues from such a product. I thought that even if they were hit with a few pushouts due to y2k, their new product would replace these lost revenues. Well, multiple large deals went soft at the same time and Q498 proved to be light enough to change guidance on the year. Note I wasn't just reactive, my posts on this thread demonstrate this (pre-earnings release):
"To: +Platter (366 )
From: +Wizard
Wednesday, Jan 20 1999
3:49PM ET
Reply # of 431
no reason to think dctm is going to perform. i own a little but won't buy any more until we get better visibility on license revenues. it looks like the numbers are ok but the mix of license & service revenues is trending negatively. i would wait. either buy on thursday
and risk the call or wait until after the conference call and buy it on a gap up if the license revs are ok... I would not buy this stock otherwise."
look, small cap software is a place you don't want to be unless you are extremely confident in near-term earnings estimates. dctm books a lot of its deals in the final 2 weeks of the quarter so that means from March 15th-March 31st of this month. Today is only March 4th so its all strictly a guess. Who knows if they close the quarter or not? Mark Garrett (the CFO) has no idea. It is unknowable because some key sales rep might just close 70% of the deals they currently expect to close by March 31st.
Therefore its about pipeline and if you trust the company to close on the pipeline. Let's review, dctm was talking about conservative estimates in december, a big pipeline and then lowered guidance in january. Guess what, dctm has no visibility. |
