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Technology Stocks : IFMX - Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: MileHigh who wrote (10743)	5/8/1998 11:50:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 14631

Thank you for your acknowledgement of my covered call strategy. I definitely played the odds on this one more than I normally do. I did not expect the price to drop like it did. It happened so quickly that I hesitated to cover. I have been away from this market too long. Fortunately a saner mind prevailed. I agree that IFMX will have to demonstrate a pattern of increasing revenue and earnings before the stock attracts money. Also here you have a sector that sold off and has recently attracted interest in select stocks, and you have ORCL, which represents the DB industry, not performing well either. So I think the market sentiment for this sector and industry needs to improve substantially before we will see action on IFMX. Perhaps it is more of a sentiment issue than anything else, and therefore it may be worthwhile to determine what is standing in the way of a more positive market sentiment toward Informix. Sentiment is only very loosley conected to a track record of a company as in reported earnings growth. Look at the biotechs for proof of this. Many of them do not deliver but their stock is kited in price multiple times over a period of time. Take a look at AAPL for instance. A company that the market sentiment was negative toward for a period of time until Steve Jobs took the helm. His name alone hiked the price of the stock and it has been moving up since. There are other companies that stumble but are quickly bought into at the first signs of improvement. So what is standing in the way of this investor enthusiasm that we have been seeing in this market over this year? In my search for clues, I consider the sentiment of the sector and industy as part in parcel to the market sentiment for IFMX. Of course when we talk about the market, we are actually talking about at least two groups: the buying public and the institutions. Ocassionally we see the public speculator trading IFMX like this last earnings play on the stock. Institutions look at the bigger picture in terms of sectors and industries, and they do look at track records. Of course there is the "cooked books" of the White era at Informix. The market abhors this type of event, which will be difficult to erase in the mind of the market. I think the book work of improving financials will need to be validated by other outward events, like a pattern of good sale wins with specified dollar figures, a growing sales and marketing staff, and other signs that "something is happening" within the company to support the book figures. The PR machine at the comapny was used as a tool just like the books were to provide for a made up picture of the company. So your standard fare of PR is at suspect and will need to provide more information than a list of sales wins and operational news that lack details. Bob F's story of his turnaround of Informix needs to unfold in both detail and clarity to the market. So in this situation, perhaps external events will need to validate the bookwork, the types of events that the market can buy into. This is opposite of the more typical situation where the book work validates the outward efforts and apparent successes of the company. Still I would of expected more turnaround play money to be entering this stock. Perhaps many have been making money on the companies reporting outrageous earnings growth. But we see that this story has ended and a new one that has started in its place of generally lower corporate earnings growth in the market which the market is reluctantly coming to terms over. Once slower earnings growth is acepted by the market, they will see how the stocks making up a good part of the market are very overvalued with respect to this new story. So perhaps then the market will look for value and be more willing to look for those "special cases" that offer value like turnaround plays. In other words, even if the time was right for Informix, the time is not right for the story of Informix. This is where sentiment comes into play. The market is not cutting Informix any slack in producing proof of its turnaround. So Informix many need to compensate for this market environment by performing very and continue to perform well before the market will buy back into this company unless something happens to change the markets perception of reality which will alter its reference that is uses to motivate their purchase stock decisions. Just some thoughts. Any thoughts or ideas? Bob Graham