Hello Mr. Perfette:
I think the CTXS PR for Monday 4-19 would be very well received by potential new investors; and would likely induce them to buy in. I am disappointed that the opening wasn't stronger upward.
2 years ago MSFT had the position to shotgun CTXS while it was still in the cradle. A rumor back then dived CTXS sharply, with a rebound after it was not true. MSFT has managed to botch the release of NT 5.0 for several years now. That has allowed CTXS time to work. The relationship to MSFT remains a jeopardy to CTXS, although with the antitrust issues, MSFT would have to be extraordinarily stupid to strong arm CTXS out of business now.
The reference to a wash with the raising of major capital, then a major buyback on the heels of a split and a stock price nearly half its high is a little odd. For existing shareholders it is a swap of debt for a somewhat higher stock price. It is a positive that the terms of the debt seem favorable and it was at a time they did not need the money--you should be able to get the better terms in those circumstances. I believe CTXS did. But the buyback through financing. It elevates price but at increased liability--that should largely be a wash to existing shareholders. But to incentive option holders, it would be a way to raise the value of employee options by increasing the stock price through a finance transaction. I would rather the money have been used to increase returns on investment.
But CTXS already has a large amount of cash. Relative to the cash, the marketing expense and administrative expenses are the major operating costs. The total development dollars for new products is much less than the interest on the cash. Developing product is a very minor cost for CTXS. A few million dollars. Many other firms can afford a few million dollar efforts, too. It strikes me that competition could heat up from just about anywhere. The internet application for VDO, for example, why schedule that for delivery for something like $1.8M delivery in mid A.D. 2000? Why not complete that in the next quarter or two with a few more dollars. Why not more aggressively accelerate the product? Is it that sterile of an environment for the VDO client to give it over a year foward launch?
I think the CTXS execs have shown some long tooth in a potentially devastating environment and have had the luxury of time to gain a foothold. That's a good exercise period for them to learn the ropes. They remain at the mercy of MSFT, yet. I would like to see that tooth applied more vigorously to building the business independent of MSFT broad shoulders.
I'd like to see a stock price in the 40's to 50's. I am having a hard time getting a sense of when that might be. The stock seems to be languishing. But as it languishes it looks like a marvelous opportunity to trade for 1 to 3 points a day if one can get in synch with the swings for the most part.
In summary, I cannot put my finger on a single specific factor. There are several circumstance that give me the "I might be in the prolonged 'ick' " with my position in CTXS--where am I stuck or should I wait is the key question. And I cannot count yet on a 5 year horizon. MSFT or other OS's might loom in that timeframe as major factors outside of CTXS control that could substantially affect the business adversely.
I can't chalk this up to enterprise computing software is down. The numbers for CTXS dispel that in black and white.
Meanwhile, it almost looks like if the present pattern holds, there may be a few weeks to months of buy below 30 and sell at 32 for nice returns. If this pattern holds for 2 weeks after Monday's 4-20 report, I would hazard that would be the best strategy for me to realize a better return on CTXS...and hope it doesn't break majorly while I nickel and dime positions that way.
I hope that helps perspectives. Not much is clear and the stock is not trading as I would have expected it to trade. I am left puzzling over what to make of it all.
Best regards,
m
An afterthought. The late night TV infomercials sell cheap products to produce and the major expense is selling the products. It bothers me that CTXS's cost structure parallels that structure. But there is a sharp separation between late night trinkets and software development. Trinkets are cheap to develop, and severely marked up over cost to pay for the hard sell. Good software is an elegant development, which remains the elusive grail of most software companies. Hardware still overcompensates for weak software. I am not trying to equate CTXS with late night TV hypesters. I just don't like the late night cost structure, and unfortunately CTXS has that shape at this time. I wish CTXS had more dollars in development and more blocks in a pipeline to broader lay the foundation for their future. |
