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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Madharry who wrote (20686)	2/18/2005 8:23:07 AM
From: Mark Marcellus	Respond to of 78683

I took a glance at this one. The size of the company, my lack of knowledge of the business, and the fact that there are no SEC filings to look at are enough to keep me from going further, though that's my problem, not the company's. However, I would caution you IRT thinking of this as a software stock. I think a better comparison might be a company like Keane, EDS, CSC, etc.. To be a software company, or at least a software company that deserves the high P/B ratio you were discussing, the majority of revenues needs to come from licensing or other forms of software sales. This company appears to have a heavy services component, and the higher the ratio of services to revenues, the less desirable the company, at least when viewed through that lens. I also notice that from 2001 - 2003, operating costs have risen sharply as a percentage of revenues. That is exactly the opposite of what you would expect from a growing software company. This is all from a five minute look at their Annual Report, so take it FWIW.

To: Madharry who wrote (20686)	2/19/2005 10:38:37 AM
From: Paul Senior	Respond to of 78683

CRYP. Madharry (and others who might be interested), you might want to check latest Barron's for cover story on online poker. CRYP, apparently one of the few US publicly-traded firms in the sector - and one that can report earnings - is mentioned favorably. Of CRYP, Barron's says, " Given CryptoLogic's strong growth... and solid balance sheet with over $6 a share in net cash, the company seems like a reasonable bet on the online-gaming boom." My opinion: "boom" might be a key word. At 27 x last year's earnings (per Barron's), and with no 10-year public history, I'd say the stock cannot be a Graham value. OTOH, IF the company can maintain it's juicy profit margins - i.e. IF the boom doesn't become bust and/or if new entrants to CRYP's business don't crimp CRYP's profits (margins), then imo, CRYP would be a value still and a buy at current p/e. The 'ifs' scare me though; I'll not add shares, but I will stay a holder for now.