HO - Didn't you like this one???
Pervasive Software [PVSW-$17.19]
Using, AXXel Knutson's
VTART
["Volume Trade Analysis Research"T]
"Manage the risk.the profits will take care of themselves"
"In this business, being right is not as important as making
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of the 'obvious risk'"
>From AXXel Knutson,
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We are recommending the immediate purchase of Pervasive Software, Inc.
[PVSW-17.19]. PVSW is a worldwide provider of ultra-light, embedded
database and information management software for packaged client/server
applications. With no debt and cash items 60% greater than all of current
liabilities, this company is in strong fiscal shape. There are only 15.6
million shares outstanding and about 2.5 million loose in the float, so care
should be taken in the entry of orders, as the stock is thin. Institutions
own over 75-90% of the stock. The price range for the stock has been $8.88
to a high of $35.44 as can be seen by the chart above. Given the collapse of
the stock in early autumn, it is unlikely that there will be much of a
concession from current prices even in view of the recent move on Friday,
last.
Insiders have been selling and the insiders have been wrong, as the stock
has moved to the upside. They are very strong in data management and
application server software and have a niche in embedded systems as well.
We like the business model of this company.
The stock moved smartly on Friday, up 34% as traders positioned themselves
for an expected announcement relative to Pervasive Software's likely plans
to make a "Tango" version of its application server. The announcement of
the assets deployed relative to this new product was, in fact, the reason
for the stock to fall out of bed in September and October. An odd reaction
for a high technology company with mounds of cash and a mandate in the IPO
to develop such products, we think. Nevertheless, that drop has given us an
opportunity to buy this stock at what we believe are very depressed numbers.
And it appears as if the investment in the Tango product is paying off
already and will probably be ported to Linux. Note this as an example of
just how well placed those assets were directed by Pervasive Software:
10 December 1999-MACROMEDIA Dreamweaver web-design platform, announced the
following in relation to PVSW's role with Dreamweaver.
"With Pervasive's Tango 2000, developers can deliver sophisticated,
intelligent Web-based solutions in half the time it takes with other Web
development environments.
Tango 2000 vastly simplifies the creation, modification, and maintenance of
even the most complex Web sites," said Greg Hemstreet, Tango general manger
for Pervasive
Software. "To design the visual front end for a Web application, we needed
to have a top Web authoring tool to support our technology. Tango Objects
for Macromedia
Dreamweaver reduces development time, saves money, and speeds time to market
of Web-based applications. Tango developers can use Macromedia's Dreamweaver
to visually create and manage dynamic Web sites by integrating the visual
Web page design environment of Dreamweaver with the power of the Tango Web
development environment. For example, developers can use Dreamweaver to
embed Tango objects and variables in their Web applications enhancing their
applications with robust database connectivity, dynamic e-mail, business
functions, and many other features to create truly exciting Web solutions."
AND NOW THE BAD NEWS
Wolf Haldenstein Adler Freeman & Herz LLP Announce That a Class Action has
Been Commenced On Behalf of Purchasers of Pervasive Software Inc.
WEDNESDAY, DECEMBER 8 1999 6:50 PM EST
NEW YORK, Dec 8, 1999 (BUSINESS WIRE) -- The following is an announcement by
the law firm of Wolf Haldenstein Adler Freeman & Herz LLP:
Wolf Haldenstein Adler Freeman & Herz LLP, announce that a class action has
been commenced in the United States District Court for the Western District
of Texas on behalf of purchasers of Pervasive Software Inc. ("Pervasive")
(NASDAQ:PVSW) common stock during the period between July 15, 1999 and
October 21, 1999 (the "Class Period"). The complaint charges Pervasive and
certain of its officers and directors with violations of the Securities
Exchange Act of 1934.
Specifically, the complaint alleges that after its initial public offering
in September 1997, Pervasive stock traded in the $9-$15 range as Pervasive's
revenue and earnings showed little growth in the first two quarters it
reported as an independent company. By October 1998, the Company's stock
price was trading at just $8.50 per share. The Company then began to move
its focus more to Internet-related tools and saw its stock price increase to
above $18 per share. On July 15, 1999, Pervasive reported strong revenues
and earnings and strong
networking revenues.
In a conference call after the release, Pervasive management discussed its
new product ("Tango"), its new focus on Internet-related products and touted
the Company's prospects. As a result of defendants' statements, Pervasive's
stock price was inflated during the Class Period. Top officers of Pervasive
took advantage of these inflated share prices, selling 492,250 shares for
proceeds of $11 million over the next two weeks following these statements.
By October 1999, Pervasive's stock was trading at as high as $38 per share.
Pervasive's business and prospects, however, were not nearly as favorable as
defendants had represented. On October 21, 1999, Pervasive issued a press
release announcing its 1stQ F2000 results. Later that day, Pervasive held a
conference call and admitted that its results for the 2ndQ F2000, ended
December 31, 1999, would be much worse than earlier represented and that
costs of the development of Tango-related sales would cause losses in F2000
instead of forecasted profits of $.50. On these shocking disclosures,
Pervasive's stock price declined $24-1/16 to $12 per share on enormous
volume of 11.8
million shares, a 67% decline in one day.
Plaintiff seeks to recover damages on behalf of all class members.
IMPLICATIONS OF THE CLASS ACTIION?
Minimal, we think. High tech investing has its rewards, to be sure, but
also its risks. That given how fast the marketplace changes, we would
suggest that this sounds like a bunch of babies that should have invested in
GM.
FROM THE QUARTERLY REPORT IN OCTOBER
"During the quarter, Pervasive shipped its next-generation Tango 2000
product family and announced the Pervasive.SQL 2000 family of
small-footprint database engines for embedded, mobile and smart card
applications. Tango 2000 dramatically simplifies the creation and deployment
of Web applications, enabling developers to achieve faster time to market
and develop e-business applications with "point and click" simplicity.
Scaling from the wallet to the Web, Pervasive.SQL 2000 delivers high-speed
transaction performance for e-business and wireless Web applications. Also,
Pervasive recently began shipping Pervasive.SQL for the Sun Solaris
operating system and for versions of Linux from Red Hat, Caldera and SuSE.
"Together, Tango 2000 and Pervasive.SQL 2000 provide the software foundation
for e-business, desktop and wireless Web applications, as we continue to
expand the operating system platforms for our software solutions," said
Harris." The 12/99 quarter will be released 1/21/00. Pervasive Software
stock traded publicly for the first time on September 26, 1997. The initial
public offering price was $10 per share. On March 18, 1999, Pervasive
completed a secondary stock offering of 2.63 million shares at $17.25 per
share. 1.5 million shares were sold by the company and 1.13 million shares
by selling shareholders.
These are important customers.
FYI:
For more information on Pervasive call (800) 287-4383 or (512) 231-6000 or
www.pervasive.com, or email info@pervasive.com. |
