Are we investing in INPR's business or just playing the stock???
- Yes, INPR's technology direction was initiated years ago,
- Yes, INPR does not (yet) have leading market share in any particular area of distributed enterprise computing (save VISIBROKER seats),
- Yes, Del diluted the capital (in order to stabilize the company, retain talent, acquire missing key technologies, etc.)
- Yes, Del's salary is high and he has not (yet) bought additional shares with his own money to boost (manipulate?) investor confidence,
- Yes, INPR's PR policy does not (yet) get the business message out to Wall Street and support (hype?) the stock price.
Notwithstanding all this, I disagree with the essence of the recent posts. The suggested "measures" to boost the stock, while well intended, are short sighted: they would only lead to hyped short-term expectations and more volatility.
INPR's share price will ultimately rise over an extended period of time, as the company's REVENUE AND EARNINGS start showing significant, sustainable growth (>30% p.a.), due to rising acceptance of its technology suite at large corporations, and continuously swelling DEPLOYMENT REVENUE streams, as pilot projects go on-line at multiple locations with thousands of users on dozens (hundreds) of servers. Within 3-4 years INPR could meet or exceed the stated goal of $500 million in sales, with a net margin of some 15% (call it >$1.30 EPS?). You need to look at Del's actions (and the board-approved paycheck) from THIS perspective, not based on current numbers during the transition.
INPR carries a huge stigma of failed execution from the past. In order to truly realize the technology vision, retain the fleeing talent, and finally ensure execution on all levels (on-schedule product releases, Fortune 1000 sales, global consulting, service and support, major OEM partnerships etc.), the company needed a top executive with a proven track record in the "technology big business", a strong belief in INPR/BORL's long term future (remember, he wouldn't go to AAPL?), and the guts to take unpopular, often lambasted, decisions geared towards long term success, such as:
- diluting the capital to raise a safety-cushion of cash,
- counter-attacking MSFT over the employee raiding,
- "splurging" on hiring new top-management talent where needed,
- "overpaying" for VSGN, for sake of long-term integration and leverage,
- alienating some established users by "moving" them to C/S development, revamping desktop distribution, support policies etc,
- angering momentum players by predicting future acquisitions, targeting 8-10 quarters for the turn-around, etc.
- disappointing Wall Street traders with a declared PR policy of under-promising and (clearly not yet) over-delivering (could have been managed differently, see my post 320, but that's the way he chose to go...)
The board needed an executive of this world class calibre and commitment, and approved a commensurate pay package in order to get him. If he and his team execute over the next few years, and I'm quite convinced that they will, Del's compensation package will have been worth every penny in the end.
PS: I'm also convinced, that we'll get the first tangible results (Revenue and Earnings Growth) latest in the 4th Quarter of 1998, when the Application Server gets released. We MIGHT even get some encouraging news earlier: during Tuesday's analyst call, Del stated "we want to blow the lid off the $46m revenue figure", emphasized the exponential growth of 6-figure deals, especially several which are expected to close "within 30 days", and promised the Analysts some guidance "right after Borcon", i.e. mid August... |
