...did a very poor job of articulating the bull case on ADVS (possible take-over candidate, will rebound with the market?), and I'm SURE does not reflect the thesis underpinning SPO's investment. This is a business with a dominant competitive position serving a niche that is currently shrinking, but obviously won't be forever. At the same time, the economic model of the business is extremely attractive - the value of the contractual commitments of current clients, ignoring the benefit from new business that will be sold over the next decade, coupled with the cash, is worth more than the current price of the stock. If you don't understand why being the biggest is a HUGE asset in the enterprise software business, ESPECIALLY during bad times, you don't understand the enterprise software business.
I'll be brief, too -- to cite WB in connection with a high-tech company is evidence of some "crossed wires" in your analytic process -- he looks for consistent earnings and a "franchise." The first one -- for whatever reason(s) -- is clearly absent; I repeat that -- Microsoft (probably) notwithstanding, a software company is among the least likely to "be able to bottle it."
I went short out of a sense that the man at Stiffel N. was "right on the money" in projecting a fair price (well before 18 months go by) of 8-10; in that I think the market as a whole (and well-run tech stocks in particular) will make a nice run north, I can think of no better way to "hedge my bets" than to be short ADVS.... You're welcome to the last word -- hope you learn something if you're as wrong as I think events will prove you to be.... ADVS doesn't have "value" in a classic Graham & Dodd sense -- watch their cash shrink as they continue to do things like reprice options so that they (management) profit at the expense of shareholders. Somebody once crowed how every dividend payment was an "up yours" to the shorts -- I suppose they're right, if only literally.... But I sure feel like I'm on the right team when there's the kind of self-dealing that ADVS' honchos are engaging in -- I'm inclined to think that their lack of savvy in this regard is of a piece with their having taken their eye off the ball that is the company of which they're "stewards."
You sound like too bright a fellow to be backing such a lame horse!
I think a poster some time back pointed out that it's not just dinosaurs who couldn't capitalize on being biggest through thick and thin -- there's Lotus in nearly modern times.
Very seriously, when I heard that today's dull-as-dishwater trading day had a billion shares trading hands! ... This is an industry characterized by rapid change. Posters more knowledgable than I have questioned whether ADVS has stayed current -- there ARE/WERE naysayers -- not to mention staying "ahead of the curve." ... I'm partial to sports analogies -- Detroit (hockey) had a bullseye on their chests/backs/wherever and Anaheim had awfully good aim. That IS a characteristic of being an industry leader -- you can't help but challenge -- "Can you do this, this and that?!" The answer is almost always, "Of course, we can" ... and the contenders can and will (one can argue about the fairness) underprice folks like ADVS, so that in times like these ADVS can't hold onto its base, let alone grow it or expand.
Business Week may not have said what you would have liked them to say, but I believe they, along with all the analysts & institutions, are doing the right thing (if belatedly) -- bailing out before $14 becomes $7. If there's one lesson from the dot-bomb era, it's that cash on the bal. sheet doesn't support a stock for long; it's like a snowman in April -- and the potential acquirors also see the meltdown in progress and sit on their hands until ADVS and its ilk issue an SOS, which leads to a change in control at firesale prices.
Full disclosure -- I'm short ADVS; fuller disclosire -- only someone nearly braindead would bet the other way; I insist that every holder is just trying to time his exit at this point -- the lucky ones will get double digits when they sell (probably to shorts covering stuff they sold short 10-40 points higher); plenty of others will sell when there's a s***storm in progress -- and this "sandstorm" isn't gonna be 24 or 48 hours in duration, either!
It bothered me that I couldn't "close the loop" in my argument that the dot-bombers *DID* have a ton of cash on their balance sheet just before they flamed out -- well, 6-18 months before at any rate.
Thought I might have spotted the next set of scandals a la Enron for a few minutes.... But the explanation -- I think -- is this. Boards, VC's, institutions, etc. eventually *DID* get around to asking mgt. -- "Any chance you guys'll ever go from red to black?! ... We've had great parties and all that, but we just might have to change some faces at the top if we don't see some improvement."
So, mgt. spent cash to do just that; sometimes, it was acquisitons; sometimes, it was Superbowl ads; seldom, was it either well-thought out or more than the tiniest bit effective. It probably played an insidious role that mgt could bet the ranch because they had so well feathered their own nest that their only hope to get to the next level was to get their options out of the toilet.
I'll admit that Advent isn't a dot-com; maybe, they even learned something from the above. But their performance -- raspberries for it, in case it's not obvious -- at the recent conference call makes me VERY doubtful of the latter. When I said that they reminded me of Hugh Grant, I *WAS* thinking of his recent performance as a slacker and his less recent arrest for depraved behavior.... Mind you, I believe that ADVS' mgt. is depraved only in terms of their managerial actions, but I can't understand why seemingly intelligent people don't find that reason enough to sell the stock.