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Advent Software, Inc. Message Board

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  • lemonyelow1 lemonyelow1 Apr 21, 2003 9:02 PM Flag

    Business Week blurb...

    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!

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    • 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.

      • 1 Reply to lemonyelow1
      • Breathtaking analysis - congratulations. You clearly don't understand the economic model of an enterprise software company, and if you're banking on the analysts being right this time, did you own the stock at $60 when they loved it? The reason cash is a real asset in this company is because they are going to be cash flow neutral this year, in spite of it being a terrible year for new software bookings.

        You could be right about two things - 1) competitive threats could emerge which would significantly damage the business, but there's been no evidence of that so far and 2) the price could hit single digits sometime in the next two years. Neither of those statements are inconsistent with being long this stock if you're an investor, i.e. someone with a multi-year time horizon interested in owning terrific companies navigating difficult patches but paying small multiples of potential earnings power in recovery.

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