Dec 21





NetSuite Surge Sparks Valuation Debate


By Ivy Lessner
TheStreet.com

SAN FRANCISCO - Mania can sometimes be mistaken for optimism. The question is whether NetSuite (N - Cramer’s Take - Stockpickr) investors Friday are optimistic or just addled.

Amid heightened publicity following its Wednesday IPO, investors poured into the stock late Thursday, and continued the buying spree Friday, driving the price up nearly 30% to $45.98.

That gives a stock deemed fairly priced at $26 a two-day gain of nearly 77%.

San Mateo, Calif.-based NetSuite sells on-demand business software on a subscription model that Salesforce.com (CRM - Cramer’s Take - Stockpickr - Rating) has proven can succeed. Although still losing money, NetSuite is expected to generate a small profit in 2008. Salesforce is expected to have just over $1 billion in revenue and produce EPS, excluding items, of 32 cents in the coming fiscal year.

“I’m OK with the coming-out price at $26,” Mark Schappel, analyst with Benchmark, said Friday. “I have a hard time valuing this thing higher than Salesforce.com,” he added. He estimates NetSuite will have revenue of $158.5 million and EPS of 13 cents in 2008.

Benchmark does not make a market in NetSuite, nor is the company an investment banking client. It is the first sell-side analyst firm to weigh in on the stock to date.

Continue Reading: NetSuite Surge Sparks Valuation Debate - News & Analysis - Technology - SAP - INTU

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Dec 21





NetSuite Keeps Climbing; What’s It Really Worth?
Posted by Eric Savitz

NetSuite (N) continues its VMware (VMW). The company, which came public yesterday at $26, and closed its first day of trading at $35.50, is up another $5.85, or 16.5%, at $41.35. That gives the on-demand enterprise software company a market cap of $2.46 billion. But remember that the float is thin: about two-thirds of the stock is held by Oracle (ORCL) founder Larry Ellison and trusts for two of his kids. As I noted yesterday, the dynamic feels a lot like VMware, in which a high profile IPO with a thin float came public, creating a share-shortage that drove up the price.

What’s the company worth? Well, my back-of-the-envelope match yesterday came up with a 2008 revenue estimate of $177 million (I simply extrapolated out their recent 67% growth rate), which now implies a price-to-revenue valuation of nearly 14x. That seems kind of insane…unless you use VMW as a comparison. VMW trades for 17x the Street’s revenue estimate for 2008.

Souce: Tech Trader Daily - Barron’s Online : NetSuite Keeps Climbing; What’s It Really Worth?

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Dec 21





High hopes for Netsuite
By John C. Dvorak

BERKELEY, Calif. (MarketWatch) — Readers of this column know that I had high hopes for the Google initial public offering. Not so much for the fortunes for Google, but for the possibility that its IPO would trigger a surge in IPOs of small tech companies.

It didn’t happen.

The main reason for the failure, I believe, is the nasty Public Company Accounting Reform and Investor Protection Act of 2002, also known as Sarbanes-Oxley. It’s just easier to be bought out or merge than it is to go public.

That said, it was good to see the Netsuite IPO succeed just before Christmas, right in the middle of what is considered a mediocre time to do an IPO. Hopefully, Netsuite (N) will be the company that leads the way for other companies to go public.

I was also impressed by the company following the Google lead and using the Dutch auction methodology for pricing the stock. In the process, it got $26 a share rather than the more typical and expected $15. See more coverage.

Now Netsuite has to perform financially and I think they will. I’ve followed this company quite closely by coincidence because there is an inner core of Netsuite executives and business journalists who share a common obsession: The Oakland A’s.

I admit. What can I say?

The company commonly invites a bunch of the top business writers who are baseball fans to A’s games to “hang out.” It’s a lot of big names from all the major media.

You should note this when you read coverage of the company elsewhere.

Chief Executive Zach Nelson is a huge A’s fan and even helped to get the A’s general manager, the fabled Billy Beane, onto the Netsuite board of directors.

Beane and the A’s are longtime users of the Netsuite product and run the company with it. The customer list is actually very impressive. My favorite is Reidel glassware.

Netsuite began as a sort of online, software-on-demand, software as a service, blah-blah-blah, pseudo-advanced bookkeeping system. Since its early days, it slowly evolved into a corporate management suite not dissimilar to SAP.

Larry Ellison is the real money behind the company, and the principal guys who started the thing were Evan Goldberg and the aforementioned Zach Nelson. Both are ex-Oracle (ORCL) hotshots.

From what I have been able to discern, it was never supposed to evolve into an SAP (SAP) competitor, but it did. I suspect Ellison pushed it in that direction.

In a nutshell, with Netsuite you should be able to do everything from CRM to fulfillment to online payments and everything in between, as well as back-end bookkeeping and reporting.

If I were to quit writing for a living and decide to sell chocolate bunnies, I’d sign up.

The thing is, it is all done online. It is genuine software sold as a service and the first real test of an independent provider of powerful high-end services over the Internet.

I emphasize high-end here. This is not the Google Calendar we are talking about. And it is not free.

Software as a service and software-on-demand are big buzzwords and might well be the future of business computing, but we do not know. This is the now-public company that will show the investment community whether the model works.

The scene changes dramatically once Netsuite begins to turn a serious profit. Put the company on your watch list immediately.

Meanwhile, let’s see if other IPOs are triggered by its success.

Source: ShareBuilder: Stock News

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Dec 21





Businesses Love Their BlackBerrys
Posted by Ben Worthen

Forget iPhones, just now. Today belongs to the BlackBerry.

phonesThe smartphone’s maker, Research in Motion, reported strong third quarter earnings today, as revenue jumped to $1.67 billion from $835 million in last year’s third quarter. Net income more than doubled to $370 million from $175 million the year-ago quarter. The news drove RIM’s stock up 10% in after-hours trading.

RIM said its strong quarter reflected increased demand for the BlackBerry, even as tech departments are scaling back their budgets. Here are a couple of reasons why we thinks this is happening:

1) Businesses get their money’s worth when they buy BlackBerrys. We don’t have any numbers, but we can speak from experience here: The BlackBerry is a great productivity booster. Workers equipped with the devices are able to respond to emails and phone calls 24 hours a day. (We can have a separate debate about whether this is all good.)

2) Purchases like BlackBerrys are increasingly coming from a business unit’s budget — not the tech department’s – giving them some immunity from a broader tech-spending slowdown.

Looking ahead, RIM will have to deal with the impact of the iPhone – particularly the iPhone’s screen size, Web browser and overall ease of use. Regardless of whether Apple releases a business-friendly version of its device, the iPhone has changed what people expect from a smartphone.

But for the time being, it’s pretty clear that businesses like their BlackBerrys.

Source Article

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Dec 21





Are Macs Less Secure than PCs?

Posted by Ben Worthen

It’s a common belief that Macs are more secure than personal computers using Microsoft’s Windows. But a new study comparing the number of flaws in Apple’s and Microsoft’s operating systems suggests that the opposite might be true.

virusPeople who use Macs are less likely to have their computers broken into by hackers or infected with viruses than people who use Windows PCs. But that doesn’t necessarily mean that Apple’s computers are inherently more secure. One familiar explanation for why more viruses and other malicious code are written for computers running Windows is that it’s the operating system for the overwhelming majority of computers. A bad guy gets more bang for the buck by writing code that attacks those machines.

In order to get a better idea about the security of these computers, ZDNet’s George Ou compared the number of flaws discovered this year in Windows and Apple’s Mac operating systems. Because both companies released new versions this year, the study included both the new releases and the previous ones. He found that security researchers discovered 44 flaws in Windows and 243 flaws in Mac OS in 2007. That’s five times as many flaws in Apple’s operating system as in Microsoft’s.

Just to be clear, a flaw doesn’t mean that there is necessarily a security problem. But it is a point of vulnerability, and as Ou writes, flaws are an indication of holes that hackers might be able to take advantage of in the future.

WSJ Article

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