--OT-- Canadian Stock.
If you want to see another Canadian stock that is very successful, that US investors don't really like, because it's growing faster than most US internet company who have PE of 467X.
Open Text
yesterday the report their earning:
For the thirteenth consecutive quarter, Open Text(TM) reported the highest quarterly total revenues in the company's history. Total
revenues for the quarter were US$25.0 million, up 112% from the $11.7 million reported for the year-earlier period.
But a very positive article :-) (that's a joke) by thestreet.com on April the 14th. Still can't believe that someone could write an article like this on an Internet company (but it's Canadian and making money)
Contrast that with Open Text (OTEX:Nasdaq), a Canadian
software company whose stock was languishing at a market
cap of around $450 million a mere month ago. It's now at
$986 million, thanks largely to its 7.7% stake in MiningCo.com
(MINE:Nasdaq), a portal site that recently went public. That's
currently worth around $3 per share in cash. Open Text,
meanwhile, has also let it be known that it owns 16% of
DejaNews, an online news search service that one day hopes
to go public. If it does, analysts think Open Text's stake could
be worth as much as $200 million, or around $6 per share in
cash, assuming an initial market value of $900 million (based
on today's nosebleed valuations).
But is $9 or even $10 per share in cash, or whatever these
companies will be worth at the time the stock is sold, worth a
doubling in Open Text's valuation near a billion bucks? Not
even red-hot Delia's (DLIA:Nasdaq), with around $500 million
in revenues, gets that kind of pop with the $732 million
Internet value of its iTurf (TURF:Nasdaq) investment. Delia's is
currently valued at $514 million.
So, what makes Open Text different? Nothing, according to
short-sellers, who believe the surge in valuation is merely the
latest in a series of issues that attracted them to Open Text
long before anybody had ever heard of MiningCo.com or
DejaNews. (Though, you probably could argue it's trying to
make up for lost time. Several years ago Open Text provided
the search engine technology behind Yahoo! (YHOO:Nasdaq).
Sometime in 1997, after the Yahoo! relationship ended, Open
Text sold its entire Yahoo! stake for a measly $6 million when
the stock traded for less than 30, adjusted for splits. It closed
yesterday at 203. Ouch!)
Away from the Internet hoopla, though, there's the real
business of Open Text: software that corporations use to let
employees view, retrieve and otherwise interact with
documents on internal intranets. It's considered a good
product, and has helped Open Text's revs grow from $22
million in fiscal 1997 to what analysts estimate will be close to
$100 million in the fiscal year ending this June. Not bad, but
short-sellers simply don't think it's worth a market value of $1
billion, or anywhere close; they didn't even think it was worth
$500 million.
While Open Text's LiveLink has carved itself a good niche,
however, it isn't without competition, especially from IBM's
(IBM:NYSE) Lotus Domino. And a stripped-down, comparable
product is expected to be included in Microsoft 2000. Most
analysts who track the company rave about it, but not Brandon
Osten of Sprott Securities in Toronto, who rates it a hold. He
thinks that at more than 8 times sales estimates, it's simply too
expensive.
"If you look at the company's growth rate, there's a big
difference between the company's organic growth rate and
what they've acquired," Osten says. "The assets they acquired
were growing at zero percent a year. They were acquired for
their customer base, but that'll dilute their growth rate going
forward. So when that happens, you're looking at a growth rate
that is safe to say will be below 50% and probably below 40%,
and 8 times sales seems high for a company with 40%
growth."
PS--I Don't own it. Just an opinion |
