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Technology Stocks : Vignette Corporation (VIGN) -- Ignore unavailable to you. Want to Upgrade?

To: MGV who wrote (586)	7/30/2001 3:32:38 PM
From: Hungry Investor	Read Replies (1) \| Respond to of 628

MGV, I too am disappointed in Katz's inability to control costs. They said in their press release that they will not break even until they have $90-100 million top line. A substantial portion of their sales is software, right? Margin should be high, right? I know the margins on the services are lower - they always are - so why do they need to have a $400 million run rate to make a dime? If that's the truth, then this business is probably not worth investing in at all. Period. What run rate do they have to have to get a decent return on invested capital?? I doubt the entire market is currently big enough to do that. They may have great products and their customers love them, but if they can't make a decent bottom line with anything less than $400 million in sales, I don't think any objective investor could love them. On the cost controls side, Katz does not have a wealth of experience in running a large company - Vignette is by far the largest to date. His prior experience at Harbinger yields the same result - lots of sales with little to no bottom line. So what is the business from a valuation perspective, just hype? The inability to control costs may not wholly be Katz's problem - there is someone that he reports to - Peters - that can override any decisions he may be making internally. Maybe he just doen't have the nads to stand up and push for what he thinks is right (giving unfounded credit for thinking in the first place here). I have been pushing this idea for some time now - and I just kept getting the growth picture argument. Well, growth has slowed substantially and where are we? In the crapper unable to be profitable. They have a pretty high volume of sales to have the sales and marketing costs be 47-49% of the top line. In fact in 2000 sales and marketing netted only $40 million in profit for the whole year ($216 million in sales vs $175 million in sales and marketing expenses). In Q1 of this year, it was even worse, they recorded a net loss (sales were less than just sales and marketing expenses). I have no love for a company whose sales and marketing workforce cannot even cover their costs - before investments in R&D and the costs of G&A. Pathetic. H.I.