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Technology Stocks : OBJECT DESIGN Inc.: Bargain of the year!! -- Ignore unavailable to you. Want to Upgrade?

To: GUSTAVE JAEGER who wrote (2172)	7/22/1998 12:34:00 PM
From: ahhaha	Read Replies (1) \| Respond to of 3194

When you want to assess the impact of intrinsic factors you go to the marginal effects. These effects in ODB are more pronounced in the instantaneous expectations as represented in stock prices. You certainly can't look at CA's stock price as indicative of the intrinsic state of ODB software. It is only a small part of their revenue stream. Thus, by shadow I mean that VSNT's stock tells you how the intrinsic demand for ODB software is doing. Scale changes will show up there first since they are more sensitive to such changes. ODIS has signed so many deals you can't tell when their effective "sale" took place. A company could buy 100 licenses and after warming to the product during a year's usage, buy 500 more. In comparison VSNT gets 200 now and that's it. Your statement, "an exhausted market leader (ODIS) struggling to keep a flat revenue", isn't a necessary condition of your conclusion, "the challenger's growth always ends up coinciding with the overall market's intrinsic growth". The market is rarely determined by the relative competitiveness of the players, rather it is determined by exogenous factors like the cost and share of alternative almost equivalent products. Competitiveness only keeps product quality up and prices down, both of which are in the long term interest of the competitors. These factors invite long term stability which end up in market growth. The competitors view their adversaries as slowing market growth because they believe that in a more concentrated fewer supplier environment with them as the monopolizer, the market would experience rapid sustained growth. It never works that way because competition forces you to create a better cheaper product against your better judgement. So I sure hope you're wrong about it being a "winner take all" market. You are forgetting the quite a few other competitors and the possibility of the large alternative almost equivalent software houses getting in the game when the game starts growing at your claimed 40% growth rate. In a way it must at least be expected to be growing at that rate because the various players all have at least 40 multiples on next year's earnings. It is well-known that VSNT has larger and more erratic sales. Several months ago I think it was you or one of the regulars here that made exactly that observation. It is interesting that you say ODIS has invited itself to all the parties. They don't get invitations but they show up and just sit in the corner. I think they call that a party pooper.