I checked out the next two weeks offerings from Schwab, Online Resources and f5 Networks.
Online Resources: I have never looked at worse financials in my life, so it will probably fly. Sales are growing at about 100% a year, not bad. Direct costs of revenues excluding administration, sales and marketing, and R&D exceed 100%. Including broader costs, their losses are typically 400% of sales, and 500% in the most recent quarter. Frankly I wouldn't pay $1 a share for this stock, but good luck to anyone who wants it. Lead Underwriter is JP Morgan.
F5 Networks: Growing at 350% a year, this company has some potential.
Their biggest problem is that Sales & Marketing expense is 79% of sales. They use multiple distribution channels through industry resellers, OEMs, system integrators, ISP's, and other channel partners. Thus I wonder to what extent these costs will fall. Until such time as it does, I see little hope of their loss margin falling significantly. If their sales expense represented a large, highly trained sales force I could see rising sales bailing them out, but given the structure of their sales I'm not so sure. Can anyone comment on this?
Between these two, F5 looks like the better company by a mile, but I'm still not confident that F5 would make a good long term hold.
Carl |
