Posts

Showing posts from March, 2007

Cash Flow of Subscription Businesses

RHT just reported their earnings. Wall Street is starting to understand the power of their subscription business model, but not quite enough yet. When the press release was done at 4:00PM, the stock dove because earnings per share only met analyst estimates. It seems Wall Street is still watching the earnings line way too closely. Of course the stock rallied in after-after hours trading, and will probably be up today because Charlie Peters (the super-CFO) said that cash for for this coming year would be $250-260M. That is well over $1.10 per share of free cash flow on a stock that trades around 24 - a a multiple of about 22-23. On a company where annual revenue rose 44% last year!

A subscription can not be counted as revenue immediately by a company. It has to be spread out over the course of the year (or however long the contract is), with the customer paying up front. This is why it is a great cash flow business. Cash flows in before the expense. In a steady-state company (…

What a workout!

The Moorestown Distance crew had an outstanding workout this Saturday. Probably the best one we have ever had - and we are only one week into the season!

The reason we are able to run so well is the ton of long slow distance so many of the guys did this winter. We had over a dozen guys running at least 40 miles per week!

The target was 2 or 3 times one mile - with each one being a faster time. We had several guys set personal records on their second and third miles (even after a hard first mile). The three stooges had a simply awesome workout - starting at 5:20, then dropping under 5:00 for the next two. It was fun to watch everyone cheer them on the last two laps!

Ryan had the breakout performance of the day, and has established himself as a serious runner after a great winter of 50 mile weeks. He will definitely be challenging for one of the very difficult Top 7 spots in the coming cross country season.

Matt also ran a great workout by himself the day before due to a trip this w…

Yahoo, Google and Search Advertising

I bought some shares of Yahoo a few months ago. Here's the logic, and it will be interesting to see if it turns out to be true...

Google absolutely kills Yahoo in search marketing. If some company wants to place ads on a search engine for certain key words, Google simply makes it very easy to do. Yahoo's software for placing and managing ads was terrible - especially if you wanted to manage more than a few keywords (like the big advertisers do). Well, Yahoo just released a new version of their ad placement software in February, and the reports are that it is not yet as good as Google, but it is good enough.

This could be a big windfall to advertisers and of course to Yahoo. Yahoo gets plenty of clicks and searches (my new HP PC has Yahoo Search on the bottom menu bar of Vista). Now they can start to capitalize on this with more ad placements. This revenue should drop nearly straight to the bottom line. For someone buying ads - they just want more clicks to their web site…

Bluestone Alumni

Barbara Murnane organized a little Bluestone alumni get-together on Friday night at Prospectors. You could recognize the Bluestone people in spite of how long it had been - we were the ones not wearing cowboy hats... There were probably 25 people or so that filtered in and out.

Tom Stiling noted that the 10th anniversary of going IPO is only 2.5 years away. Charlotte Cobb was not sure if she wanted to return to the rat race again and does not feel guilty about it. Mark Herlich is a storage consultant - doing work in the legal industry. Barbara is working down in Wilmington. Ron Welsh and Al Shaffer are working at Commerce Bank. Tom Styles is at CSC in Mt. Laurel. John Maron is still at Oracle - he and Laura have two kids that are more mature than him. Most of the Oracle folks are still over there he reports, including Erik Bergenholtz who went back after getting highjacked back to HP by Al Smith for a brief time. Greg Pavlik is a rising corporate star at Oracle because he lov…