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Advent Software, Inc. Message Board

  • west_coast_movershaker west_coast_movershaker Jul 29, 2009 8:03 AM Flag

    Not a bad qtr but

    They have navigated through this economic mess quite well. Nevertheless, one has to wonder about ADVS's valuation after it only fetching 1X revenues for Microedge.

    Microedge contributed roughtly 10% of ADVS's revenues. It's operating margins are slightly lower, but one can ask a simple question--did ADVS fetch a firesale price for MICRO, or is the valuation the market attaches to it's remaining business much higher than it should be?

    Another concern is that term contract revenue had declined 46% from last year YTD. The effect of this will not be realized for atleast a year, but ADVS has seen a huge drop off in this area and it is concerning.

    My take is that ADVS is now trying to accumulate as much cash as possible in order to buy another company in order to sustain (or increase) it's growth. It must do this in order to support its valuation, and that won't be easy.

    Looks like a great short opportunity, but ADVS has managed things quite well, so who knows what tricks it has up its sleeve?

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    • If they buy another company, then I think it is time to sell. They do not have a good history of entering new markets. They are only good at selling into their existing market. They can buy small companies and resell the products into their existing channels.

      I think they will accumulate cash to buy back shares and help push up share price this way.

      I think you are correct that their sales volume has dropped and will feel the impact in the future.

 
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