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Versant Corp. Message Board

  • gordongecko143 gordongecko143 Jun 5, 2006 11:47 PM Flag

    Fact for newbies 2

    Oh, forgot some more nuggets of info....

    Gross margins are as follows:

    4/05 = 58.9%
    7/05 = 60.6%
    10/05 = 63.7%
    6/06 = 80.5%

    Does anyone see a trend here? Does anyone know what will happen when revenue grows by a fart? It's sure to raise a stink in the short camp!

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    • How did they grow earnings so fast over at SHLD?

    • Gordon

      nice snapshot of the current status of VSNT. Without any other information, the company certainly looks promising.

      Here is the problem: today's snapshot has just as much promise as any snapshot taken in the past two to three years. no debt, some cash, good guidance (from the ex-CEO and the current CEO), and seemingly one quarter away from big dollars. Other than a few short spikes (of which I was a very happy beneficiary twice), it is mostly based on hype and cost cutting as of this point.

      That said, there are some reasons why people might risk beng in VSNT. However, risk is likely the most appropriate word as there are very sound reasons why people (especially newbies) should not be in this stock. Danger signals include top line revenues that have not risen in any substantial way and a CEO hasn't verbalized any such plan to raise them (kudos on the cost cutting though). Everyone is hoping that gaming could be the key to market expansion but 1) there is no guarantee and 2) even if gaming works out and grows the market, there is certainly no guarantee that an $X Billion casino consortium will ever contract with a $low teen million market cap niche player. Given that such a technology change won't happen overnight (or even in a year), I'll wager that other larger and more established DB players will have sufficient time to ramp up their offerings and resources to meet the requirements.

      If you are going to chime in about an acquisition, please explain what is so compelling to acquire here:

      - the cash in the bank? a few million is chump change to an acquirer
      - the technology? quickly replicable by a large vender....any worthwhile IP is cheaper to license in the short to mid term
      - the customer list? Given the paltry revenues, it is hard to argue that any big name customers are actually paying
      - the management team? Good execution on the cost cutting to raise net income but not much execution on the sales side. You can only cut costs for so long.
      - did I miss something?

      My guess is that the buy decision point for this company is long past given that Oracle went on an acquisition spree some time ago and VSNT wasnt even in the running. Dumping the .NET business likely ruined any chances of an acquisition by Microsoft. That leaves some much smaller players but lowers the liklihood significantly (and with it the valuation).

      In summary, some of us dont care if you are short or long in any stock. Have at it. But at least be willing to differing points of view...not everyone is a basher who disagrees with your opinion. A good trading stock has plenty of potential to make money either way at the expense of the other. However, it is short-shighted at best to post what is metaphorically a balance sheet without liabilities....highlighting the positive without any downside.

      My take? VSNT stock has behaved fairly rationally for a lack of growing revs with positive net income -pretty much bouncing in a tight range with only pennies to be made. To me, this is the biggest problem. It isnt going *anywhere* any time soon...neither up nor down (much like Microsoft's stock price problem on an exponentially smaller scale - cant grow the market but making money) so both long and short opportunities are limited....to stay in this stock in the face of such an opportunity cost is simply gambling and there are stocks with better overall execution and more sure indicators of success out there.

      Given the fairly tangible opportunity cost and lack of concrete upside/downside on both the short and the long side, wouldn't the movie Gordon Gecko term this stock a dog with fleas?

      best of luck to all

      marfie

      • 4 Replies to marforton
      • VSNT was on the rise when they were focused on their core business. When they pursued other areas (Websphere services and .net) is when they began to faulter. They are a small company and small companies aren't able to absord and withstand mis-steps like 300 pound gorrillas can. New management has dropped lines of business that haven't shown promise and are not in-line with what had put VSNT on the rode to success. In the meantime we're growing closer and closer to that point in time when data access demands will require object databases. Could be 1 year - could be 100 years. I'm betting it's closer to 1 year then it is to 100 years. The writing is on the wall ... it's simply a matter of time. The relationsl database will be obsolete in larger scale applications given time - leave it to Moore's Law, Programmers, and Technological Prowess - it's inevitable. I hope VSNT is the one that will be there when it happens.

      • Nicely put and points well taken. However, I agree with Brad_company regarding revenue growth. They will sell more of what they have to more customers with the veteran sales people they now have in place that wasn't there before. es, the gaming thing is out there and we don't know if that will blossom. However, should they company land just one of these, the stock will react like a raped ape to the upside.

        Also, I see no "hype" from the company. They have been very conservative and I believe they continue to do so. That said, they placed the high side EPS at .81 from .58 - thats a large increase. If they continue to add to cash per share by remaining profitable, the stock will have to climb. I don't think I have ever seen a stock trade below cash (WHILE PROFITABLE). I could see if they were burning cash but this is not the case here.

        I also disagree with your use of the term risk. A CD is a risk to own to some degree. I simply believe the downside "risk" is very low based on the balance sheet and current income trend.

        Again, this really depends on ones time frame for the investement,,,,in this market, I think VSNT is the best place to be with limited downside and great upside when the market turns and/or when the stock is found based on various reasons, new contract, coverage, etc.

        BTW, I so happened to place a order in today and 6.25 but only got 100 shares...hate when that happens but at least commissions are on $10. The good thing is I did buy (even if it was 100) at the low tick of the day!

      • How do they grow more Revenues.... sell their product (object database solutions) to more customers.

        Why is that such a mystery to the people on this board.
        What can they offer customers that Oracle can't... a greater personal level of service and custom-designed solutions... the advantages of being small.
        One of the things that Progress did to successfully compete against Oracle was to string together a bunch of boutique shop solutions.
        Warren Buffet trades in the same markets that everybody else does. Doesn't mean that only Warren can succeed. Oracle is also not interested in persuing all the contracts that are out there.
        There mission in life is not to squash a small player like Versant. It would be like a whale being worried about a barnacle.

    • one questions remains gordon:
      how will management raise their revenues?
      they didn�t say it, maybe they don�t know it.
      anyways even with no revenues, in a few q�s it�s a nice value play.