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

To: Sonny who wrote (11624)	8/11/1998 12:00:00 PM
From: view	Respond to of 14631

I hope you are right. One note though; In the last 3 earnings, the pre-earning run-ups were getting lower and lower. (in the last one we barely went over 8)

To: Sonny who wrote (11624)	8/11/1998 4:17:00 PM
From: Austin	Read Replies (2) \| Respond to of 14631

Acquisition will light the big fire under the stock price, IMHO. When? Who? Why? 1. When: after the consolidated law suit is settled in 1998 (Bob F. needs to get this done and it is clearly one of his priorities). This will clear the way for the big players to step in. Until it is settled, no one will make any serious overtures to Informix. They are waiting and I believe will move quickly. 2. Who: my top candidates for acquiring Informix are: A. IBM B. Netscape C. Microsoft D. CA E. Network Associates 3. Why: each can significantly leverage and benefit from a well executed acquisition. A factor that applies to all of the potential acquiring companies is the fact that Informix has an large, excellent, loyal install. This generates several hundred Million in revenues automatically, plus Informix has a small but successful consulting services with great, in-demand skill sets (DB, Data Warehousing, parallel computing, the Internet). A. IBM: - Database marketshare: they need to grow their marketshare - DB2: the architecture, technology and direction is the closest to Informix and the DataBlade technology is complimentary. Remember Informix's Mike Saranga, SRVP R&D, is ex-IBM and sometimes referred to as the father of DB2. - SP2: Many of IBM's largest SP2 customers actually run Informix because it is the best performer (scales incredibly well on the SP2). - Retail market: this is a dominant market for Informix and one that IBM has been strong in. Together, they could really dominate this sector. - SAP,Baan, PeopleSoft, Telco & Government: strong for Informix on a global basis, including over 1,000 SAP installations. IBM covets growth in these markets. - Data Warehousing: Informix has major successes in Telco, retail, and travel/airlines. Many on SP2s and terabyte level installations. - Cost reductions /consolidation: IBM could virtually eliminate huge portions of Informix and retain primarily R&D, consulting, SE's. 2. Netscape: - They are remaking the company. The new COO is ex-Oracle and understands the leverage that comes with being the installed database vendor. - All high volume, complex web sites will be database centric. The ability to "mine" the information gathered will be critical for maximizing revenue on consumer E-commerce sites. This is a perfect fit with Netscape Servers. - There are several ex-Illustra employees in senior positions at Netscape as result of the KivaSoft acquisition (Skip Glass, Mas Morimoto, and others). They understand the database industry and again the potential leverage. In addition, Informix and Netscape have done several joint developments in the past (Informix has engineers on-site at Netscape). - Netscape could really use and benefit from the "rebuilt" Informix global sales team and the install base. - Informix successful market sectors (see above), especially retail, are important for Netscape. Why retail ? E-commerce ! 3. Microsoft: they need Informix in their war against Oracle. Why ? - MS still hasn't penetrated the Enterprise at the server level in a serious manner. - Informix brings that great install base (8 out of top 10 U.S. retailers), scalability, reliability, and the best database technology. - Most of the Informix install base is Unix. Great to eventually role much of this over to NT in the next several years. - Cost reductions /consolidation: MS could virtually eliminate huge portions of Informix and retain primarily R&D, consulting, SE's. Would the Justice department allow it. Yes, add up the database marketshare of Oracle, IBM, Sybase, and CA. MS & Informix would still be a very small percentage. Larry E. would lose the argument if he tried to base antitrust complaints on System Software marketshare. This is the database segment, and it's primarily server-based, not desktop. 4. CA: same reasons as always. Marketshare, revenue base, install base to sell the other CA products into, eliminate huga amounts of the workforce and move on. 5. Network Associates: potential friendly acquisition. - William L.ÿLarson, Chmn./CEO is a friend of Bob. F. and is on the Board of directors of Informix. - Their market cap is >$5 billion on a revenue run-rate of $800 million. This would double their revenues. - Their higher end products (Firewalls, etc.) could use the boost of the Informix install base and the sales org - The two companies are very complimentary - They need to get big fast to compete against the giants and survive - They would get a great development team - Properly combining the two (reduce duplicated costs, etc.) would yield a very profitable company headed toward the $2 billion level. OK, you say, what's the price for Informix ? Depends on who makes the play and when. My guess is between $15 and $22 per share. I don't think Bob would do it even under "friendly" circumstances for less than $15 and anything over $22 would be a stretch unless Informix has a great Q3. Comments ? Other candidates that make sense ?