I am a recently registered SI member, but have been following (with a vested interest) the Neon thread for a while. Here's my 2c on Neon and the EAI market:
Enterprise application integration is experiencing explosive growth right now because it is currently a nascent service in the largely saturated ERP market. Traditional ERP vendors such as Baan, SAP, Peoplesoft, etc. have expereineced significant slowdowns this year because of 1) market saturation of their core offerings, and 2) companies turning their attentions away from their back office systems toward revenue enhancing solutions such as customer relationship management and sales force automation. Regardless of the slowdown in ERP spending, ERP applications need to be integrated with other key business process areas, and EAI spending should continue and even increase for the rest of this year and into next.
What does this mean for Neon? Neon has emerged as a dominant player in the EAI space. They have positioned themselves well in a largely underserved area, and the company should continue to grow at a rapid pace over the next few years. Does this mean that the stock is worth $70? In this regard, I tend to agree with Jim Paxton who said
"The last report did show sales up 200% and net earnings up 500+%, but a small, growing company with such a high valuation in terms of PE can not afford to come in with "good" earnings - buyers are looking for blow-out numbers." This is unfortunate but true - although the company will coninue to post strong results, the nose bleed heights that the stock reached in February/March will be difficult to acheive again without blow-out earnings. Just my 2cents. |
