Mike,
Yes, I agree, it's kind of fun to analyze a company with the gorilla methodology.
First, let's discuss the definition of a tornado.
I personally think that anything over 100% year over year growth seems tornado-like. I do think that there needs to be sequential quarter over quarter growth of some type though for a tornado to really be occurring. A company can't just post results like:
98 99
1Q 2Q 3Q 4Q 1Q 2Q
10 12 14 10 20 16
because there could easily by revenue booking games, pushing end of 4Q revenues into 1Q 99.
While there may be some seasonality in a company's results, I believe a tornado should show product acceptance so fast that every quarter's revenues exceed the previous one's. The rates may vary with one quarter being 10% higher than the previous one, followed by a 30% revenue jump to the next quarter, followed again by another 10% sequential jump. IMO, as long as the revenues keep increasing sequentially, and the year over year results show 100% revenue growth, I believe that's a tornado market. All my opinion though...
I agree with you that licensing growth is a key indicator of growth. If licensing growth slows, it shows that the market's acceptance of the company's product is weak and deteriorating. On the other hand, as Siebel gets more and more customers, I would think that their consulting revenues would continue to increase rapidly. Is there some reason why the maintenance/consulting revenues would slow from their torrid pace? I realize I may be beating a dead horse on this issue as it probably isn't that important, but I'm just curious now that I brought it up last post.
Relative to that issue, the more I think about it I don't really care (though I'm happy to have some one change my mind about this) if a company is or is not developing software to work exclusively with Siebel's software. If it also works with competing front office software it helps grow the total market. Siebel will benefit from the larger pie and will presumably get their larger and larger piece of it.
I think this shows the difference between a king and a gorilla. If no companies are developing software to work directly with Siebel's and no companies were exclusively marketing their product, Siebel would be forced to execute well quarter by quarter to maintain growth. If companies were building software around Siebel's and marketing the packages aggresively, Siebel would be carried along with Sun, Compaq, etc... into gorilladom. Easier to invest in a company you know is going to be big even if it can't execute because every other big company is pushing its products.
Gotta run to work,
Grant |
