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Sapient Corp. Message Board

  • What do you think of IDTI?

    Really going down.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • IT spending is not down. It will continue to
      grow, but more slowly than in the past.

      The
      problem with SAPE is more with unrealistic expectations
      than with a collapsing market.

      Also, SAPE can
      easily grow revenues.....the trick is to maintain
      margins, which have been historically very high.

      In
      recent times many companies panicked into overspending
      on ebiz and were not very price sensitive. Part of
      this was based on competition from dot coms....now
      that that threat has diminished greatly, many
      companies are taking their time and doing alot more in
      house......and when they do select a consultant they are tighter
      with the budget....

      As always, I am not
      presenting myself as all knowing about the future.......the
      future is inherently unpredictible.....but when you buy
      a stock you have to make judgements about it's
      future.

      My judgement is that SAPE is overvalued, will not
      sustain 33% EPS growth over a long period, and is at
      significant risk of not making next years
      numbers.

      Make your own judgement, but please don't suggest that
      I have any evil motives in presenting my
      thoughts.

      cheers. JBD.

      P.S. It's tough to compare the
      Andersen business model....it's a partnership and it's
      financials are not public.....but they did grow revenues
      damn fast for a long time. Alot of that growth was
      based on long complex projects (ERP or big Defense
      systems) that took years to complete. It's a different
      world now, with many projects requiring fewer people
      over shorter periods.

    • there's been alot of back and forth, but my basic
      argument isn't exactly as you set it out....my basic
      argument is this:

      1. During normal times, tech
      services companies are worth anywhere from 1-3 times
      revenues based on what they sell for in private
      transactions. In the past few years lots of deals got done for
      cash that implied a higher multiple....but most of
      those are now selling for less than 1 times revenues
      (MRCH, CATP, and others). Using this measure SAPE is
      worth anywhere from $5 - $15 using trailing year
      numbers.

      2. During normal times, solid growth stocks sell for
      a PEG (PE to EPS Growth) of 1. Year to year SAPE is
      now expected to grow EPS 33 % (.46, .61). Assuming
      you believe next years projections and think 33% EPS
      growth is sustainable, you can come up with a fair
      valuation on this measure of $15 - $20 depending on which
      year you apply the measure to.

      3. There is more
      downside risk in next year's earnings than upside
      potential. Despite every competitor bringing down
      expectations and fears of a slowing economy....Sapient has
      maintained it's outlook.

      4. Sapient's stock has been
      tanking suggesting bad news on the horizon. Stocks
      usually don't bottom on worry alone....it usually takes
      cold hard facts to force out all the weak hands. It's
      possible that worry is overblown and SAPE will not be
      negatively impacted by the industry wide slowdown......but I
      don't buy it.

      In the end it seems to me that the
      risk is by far on the downside, and there is limited
      upside.

      Even if I were 100% confident of SAPE earning .61 next
      year, I would still only give it a 30 PE or a $18
      value. Of course I don't have that certainty so I need a
      discount from that......which gets me to my fair value
      right now of $12.

      Keep in mind that even a 30 PE
      is quite high for normal times, and believe me
      things are getting more normal everyday as dot com mania
      dies.....and we may even have a recession.

      At $12 there
      is enough upside to justify the risk, but it's still
      risky in my book.

      The other thing that suggests
      that SAPE was/is a bubble stock is that despite
      marvelous growth ....anyone who bought the stock in the
      past 2 years is underwater. This flies in the face of
      common sense and suggests that expectations got way out
      of hand.......and are now being deflated.......It is
      always risky to predict a bottom in such a dramatic
      bubble. Often, you are just as shocked at how low it can
      go, as you were (or at least should have been) how
      high it went.

      JBD...

    • >My words are seldom without rationale, so you
      can always provide alternative theories about where
      is fair value for SAPE....

      Oh, you seem to
      have rationale, but so far, from what I can tell, it's
      largely unsupported by any fact.

      You're basic
      arguments:

      1) SAPE is overvalued because it can't possibly
      continue to grow at more than a 40% clip simply because
      CATP couldn't.

      Preposterous. This has got to be
      the worst example of anecdotal evidence I've ever
      seen. CATP failed to grow for lots of other reasons
      besides the law of large numbers (i.e. poor vision,
      failed to change successfully, etc.). You yourself
      confirmed that Andersen has grown at a similar rate. Even
      Andersen has reinvented itself better than CATP over the
      years.

      2) SAPE could not possibly do well in a downward
      economy.

      You say you've spent time in the industry, but yet
      you seem to lack a basic understanding of how it
      actually works. I too have been in consulting for a long,
      long time and I've seen many economic cycles.
      Companies experiencing market difficulties are quick to
      call in consultants. And let's face it, the dotcom
      competition may have softened, but IT spending is just not
      down. I challenge you to show me one shred of evidence
      that proves that IT spending (especially for
      e-business projects) has been curtailed (and I want numbers
      - not anecdotes!) If you really talked to anyone in
      the industry instead of just making up stuff, you'd
      realize that.

      3) SAPE is going down because people
      have all of a sudden figured out that the company is
      overhyped.

      This is just plain silly. Did you listen to the last
      earnings call? There was no downward guidance for 2001.
      I'll grant you that perhaps much of the air has come
      out of the Internet balloon since March, but there's
      just no way you can honestly tell me that there's no
      correlation with the broader market sell-off. It's easy to
      sound prescient when everything's
      falling.

      >Focus on the ideas and analyses and not on the
      personalities

      I'm focusing, I'm focusing, but I don't see much
      beyond unsupported claims. To my knowledge, you haven't
      yet directly answered anybody's challenges on this
      board with anything resembling cold, hard fact. Until
      that time, I regard you as a shorter with a mission.
      As others have stated, it is awfully curious that
      you spend so much time on the Sapient board (and no
      others in this sector) when you have no position in it.

    • cifrocco....

      Just stating my
      opinion.

      I can't say that I have strong feelings about
      people I don't know personally, but all of my thoughts
      about SAPE are sincere.

      I follow stocks, I
      follow this industry closely...these are just
      opinions...don't be afraid of them...just take them for what
      they're worth...

      The truth is none of us really
      knows the motivations of any others.....so you just
      have to be critical of what you read....

      But,
      cifrocco, buddy....I think I can make a pretty good
      argument that so far I have been right......doesn't that
      count for something ?

      I am not railing you just
      because you are trying to make SAPE holders feel more
      comfortable about their investment....despite what I believe
      is an overvaluation.....

      Doubt my
      words......it's always good to be skeptical in this type of
      forum....there are certainly alot of idiots out
      there......

      My words are seldom without rationale, so you can
      always provide alternative theories about where is fair
      value for SAPE....

      But instead you seek only to
      undermine my credibility......

      Focus on the ideas
      and analyses and not on the personalities.....it will
      serve you better.

      JBD.

    • You're inviting JBD to another messageboard so he
      can consult you guys on that stock the way he's doing
      with SAPE.

      Well guess what? JBD could care less
      about IIXL and all the retail, small-time investors on
      that board. He's really only interested in SAPE.
      Doesn't that strike you as a little odd? If he cares
      about his fellow investor shouldn't he be doing his
      rounds on other boards, preaching his gospel to as many
      as possible, as you so desperately
      wish?

      Again, I ask, what is his motivation for posting here so
      frequently, so eloquently, so convincingly? Until the answer
      to that question is found, I will always doubt his
      words, just like I do those of a short basher or a long
      hypster.

      We seem to be a little too naive and we forget how
      the world is made. It's all about money and the
      relentless pursuit of it, in this setting it can only happen
      at the expense of our fellow investor. Dog eat dog.
      Do you think JBD really has your interests at heart?
      Time is money and that goes as much for him as for
      everyone else. Why is he wasting all this time on this
      board if there is no payback for him? C'mon guys, wake
      the hell up.

      This was the point I was trying
      to make a few days ago, but it went largely ignored.

    • bulldog--please spend a few hours on the iixl site here--we could use your refreshing wisdom and perspective. Give our posting a look see and share some insight.
      Thanks.

    • your point about Sapient being the imitator is a
      good one...

      it just underscores how stupid
      people behave when a stock price rockets as SAPEs did.
      many, if not most, people don't even understand SAPEs
      business.....and say, for example, how it differs from a software
      publisher.

      Sapient is an aggressive company, which has grown sales
      dramatically. Unfortunately the business model of consulting is
      not that great....it relies on increasing headcount
      one-for-one with increasing sales....compared to software
      sales where once you write the software your upside is
      only limited by the number of copies you
      sell.....that's an asset that's much easier to manage that
      consultants which can bolt to a competitor or ask for more
      money or sue the company......etc. etc...

      back
      to your point, though......many buyers of this stock
      don't have a clue about Sapients business.....and
      certainly anyone that was willing to pay 40 times sales,
      30, 20, 10 times sales...etc.....is either a fool
      (lots of those in the market), a blind buyer (index
      funds forced to buy), someone playing with someone
      elses money (a fund manager), a trader, or a
      shortseller.

      The only rational ones in the group are traders and
      shortsellers. Traders are just playing the supply/demand and
      understand the foolishness of the valuation, and
      shortsellers recognize that the price is too high......the
      rest of the group is foolish.

      One man's
      opinion.

      jbd.

    • How can you CLAIM SCNT, CATP are imitators of
      Sapient? It shows your shallow knowledge. Sapient imitated
      Fixed Price/Time strategy of CTP and remember most of
      originial Sapient employees are Ex-CTPers. And regarding
      Scient, they wont even compete in the same space. Scient
      is not a fixed time /Price. Scient only does
      e-businesses whereas Sapient does every thing from
      Client-Server to ERP.

    • This is absolutely the best postings I've seen
      yet on this board in years...

      A very good read
      from an ex: Android, SAPE-oid person.

      one
      thing I'd like to note, is all those people who joined
      in the first year since public (4/1996) have had the
      ability to exercise all of their options before the
      market fell as they had 4 year vesting
      periods.

      Hopefully they smartly divested some of it, and can afford
      to wait a few years for the stock to
      recover.

      The employees who started later also got good stock
      in the ESPP which rewarded nicely in the past
      years... and any SAPEr reading this knows how they want
      this thing to stay low through 1/2 when they lock in
      for another 6 months.

      As long as they keep
      staying staffed, and keep working they will make
      earnings. Simple as that. I haven't heard of any low
      staffing rates lately... has anyone?

    • Yeah, yeah, yeah. So it's the same arguments over
      and over, huh? Nothing new to add to the discussion?


      For a supposed industry insider, you really have
      little knowledge from which you speak, other than to say
      the economy is slowing (thanks alot!) and that the
      stock price is falling because investors are suddenly
      becoming rational again (now that's a joke if I've ever
      heard one). You clearly have no real working knowledge
      of Sapient, just vague generalities and comparisons
      to poor imitiators like SCNT and MRCH and
      CATP.

      Let's review:
      > unfortunately for the employees
      investments are very boring. and especially when they
      consider it may take them 5-10 years to make what the
      early folks made in a year or 2.....it's not going to
      look so attractive.

      Gee, if all investors are
      suddenly rational now as you argue in all your posts, why
      should employes be any different in looking at SAPE as
      an investment? And where else are they going to go
      in this market for something "more exciting or
      lucrative"? Apple? I think NOT. And if that's your argument,
      why would anyone in their right mind go to AC, PWC,
      Deloitte or any other private firm for the same
      salary?

      >When stock prices come down from absurd levels, many
      people delude themselves into believing that bottom has
      just been reached and it can't go down any
      further.

      I like to think that I'm not generally delusional,
      but history also shows that what goes down also goes
      up. Remeber the crash of 1987? I do. I didn't
      sell.



      >1. Sapient will do even better in a slowing economy.
      Big companies need even more help and MBA's are gonna
      flock to the company !

      For a former Android, you
      should realize that this is the case. But you were
      probably on the TIS side, and can't see the forest for the
      trees. Frankly, I'm surprised at you. Big companies need
      help ESPECIALLY when economies turn sour so they can
      "change to be more successful" (yeah, I know the AC
      motto). And as someone who is very in touch with what's
      going in the MBA job environment, I'm well aware of
      where people are going, and MBA campuses ARE good
      indicators of the economic environment. Sapient is a HOT
      commodity right now on campuses because it is viewed as a
      stable consulting firm that was not just invented
      yesterday. In fact, I'm told that right after the recent
      MRCH layoff announcements, Sape received a flood of
      walkup resumes for strategy consultants.

      >2.
      Employees want cheap shares.
      >
      >Anyone who
      can't see that these arguments are crap spewed from
      investors that love Sapient and can't detach themselves
      from a fantasy world should check into a clinic for
      sick investors. Basically, the authors of these silly
      ideas can't foresee any circumstance that might
      actually be negative for Sapient and it's stock
      price.

      Again, you missed my point. My point isn't that there
      isn't any negative circumstance for Sapient, but rather
      that it's not as one sided as you make it seem in your
      endless and repetitive posts. Not to mention that you
      would like us to believe that you spend probably 3-5
      hours a day posting on a message board that you have no
      vested interest in just to tell us "irrational
      investors" the sky is falling. I say,
      BULLSHIT!

      >some people fall in love with stocks......and can't
      seem to accept that maybe they are going down for good
      reason.

      I'm not in love with it, but I don't necessarily buy
      the "good reason" that your "unbiased" posts are
      putting forth. You just don't seem to have enough
      knowledge of the company to back up what you post. I've
      noticed too many inaccuracies.

      Again, just MY
      opinion.

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SAPE
14.55-0.26(-1.76%)Sep 15 4:00 PMEDT

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