It is time to accumulate:
I got to know IONA through my friend, who is now a V.P. in a big Wall Street Firm using Corba everyday. I have been watching this stock frequently since last October. And I talked to a lot of my undergraduate and graduate classmates who are using corba or in computer industry, here are the reason why it is a buy:
1) The whole industry is growing, and the corba concept makes a lot of sense to me. My Yale classmate told me, "I am betting my future on Corba".
2) The company is gradually becoming the standard. Previously one of the problem of corba is that very little documents are available. I believe one of the reason that my undergraduate friend got a V.P job is because he bought all the books available in the market about corba and worked around clock to finish learning them in a very short period of time (He is also very smart). Now IONA is releasing a whole set of documents, if everyone is starts using them (because they are the leader and not too much others available), it will help them to be the industry standard.
3) No competition available now. Their competitor (Inspire ) is in a bad situation, both CEO and CFO resigned recently. IBM and Orcale are spending some money on corba research, but their products, if do come to the market, will not be competitive at least until 2001 as predicted.
4) To some extent the management can be trusted, because these days you can so easily get lawsuit if you are giving the wrong information. I believe many of the company management hold a lot of the options of the company, they don't want to upset Wall Street later to see their option profit evaporate completely.
5) The reason of the shortfall of revenue makes sense. They said they were changing to the enterprises model. I know that one month ago, big firm like MER, Bear & Sterns are using the products of Inspire, (which was my concern at that time), it seems that the company is moving to capture that market share.
6) As to the whole computer industry, because of the Y2k problem, a lot of people are delay spending on software purchase until they are sure their current software system is bug-free. You know if you delayed purchasing something several months later, it will be better and might save you a lot of headache, what do you do? I remember delayed buying a computer while I was told that pantium II and MMX would be coming in a few months back in 1997.
7) All my friend who worked in this industry of corba are buying or seriously considering adding their positions, I decided to go with those people who have a better understanding of the industry.
8) The risk/reward ratio is better now. Though several days ago, $14 per share looks very good, no one knows what was going on. Now we have a clear picture of what caused the problem, and how they are going to solve the problem.
9) The major problem of the company is to keep the key people in the company while their company option lost tons of money. This is one of my guess : remember when the company first announced the profit warning, the CEO even refused to comment on the problem of the company? Doesn't he know this will cause the stock price to go down? And one week later, he clearly explains everything. Is it true that he actually want to cause a panic situation so that he could grant those key people a lot of new options at the low price? but this is my guess.
Enjoy the ride. |
