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Strategies & Market Trends : Roger's 1997 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Pancho Villa who wrote (6533)	11/5/1997 9:19:00 PM
From: Pancho Villa	Respond to of 9285

To all: My views on DDIM Even though the valuation is outrageuos (see other postings for details), and the fact that I believe this to be a very good short, there are several factors that in my view make it less of a sure thing than let's say ACLY (can you imagine if DDIM is good ACLY is [a] better [short]). Many of the figures I will quote are ball park figures since I do not have the time (or will) to go back to 10k's 10q's and get the precise numbers (you will to or have already done this as part of your homework). 1. even though this company has a small chance of generating the cash flow needed to justify its current valuation, compared to ACLY it seems to be a more serious operation in terms of having more employees (around 250, including a sales force and a publication to increase awareness) and annual revenues in the mid eight figures range (versus low seven for ACLY) with very significant annual growth rate (in the 200-300% range. Income/cash flow performance is louzy). However, even in terms of revenues* I doubt they will reach the year 2000 levels*** that would be required to justify valuation. 3. What is extremelly puzzling is to see outfits like FMR (and a couple more professional money managers) pumping money into this operation at some of the higher prices we have seen this year (see schedules 13). This makes me wonder: are we a bunch of nuts and the big boys will eventually laugh at us? Anxiously awaiting your input? Pancho (notice that through last fiscal cash flow from operations was negative and margins very slim for a consulting/software operation (I was surprised to see net income at less than 10% of revenues. Didn't trace the reason for this). * (revenue is their most promising item. Net income and cash flows are ridiculous) *** As all of us I am assuming the year 2000 is an important deadline in terms of showing the summit of their performance. They do talk about plans beyond 2000 but vaguely and I doubt they will have a significant reason for being around after the problem is solved. NOTICE THAT THIS IS A VERY CRITICAL BUT IMO VERY REASONABLE ASSUMPTION IN ALL THIS.