April 2007 Archives

I just finished watching the final episode of The Apprentice Season 6: Los Angeles. James and Stefani as well as Nicole and Frank were the four remaining candidates. Stefani won to become The Apprentice.

Trump quickly dispensed with Nicole and Frank, largely on their video being the weaker of the two videos. Then he deliberated between James and Stefani. James was the creative genius who led several tasks, but his weakness was perceived that he was sometimes scattered. Stefani spoke well during the final interview and discussed how she contributed to the team's successes throughout the interview process. Others wondered, because she seemed to fly under the radar with being in the direct line of fire, if she has leadership potential.

Based on James's performance throughout all the roles, I would have chosen James. I think he created the opportunities for Stefani to do well. He has also proven himself a risk taker and entrepreneur, both on the show and in real life. However, Trump saw it differently, and it is his view that counts.

If I were to speculate, I think Stefani might be a better fit with his organization. She is already well versed in the construction language and legal aspects of the business. She is an accomplished and confident person who presents herself well. James's internet background does not lend itself as well to the construction business compared to Stefani's. So perhaps, given that it was a close call either way, Trump decided to go with the individual who would fit best within his organization even though another candidate performed better at the given tasks throughout the interview process.

As I mentioned in my prior post, I had a slight preference for James, though not an overwhelming preference. I think both James and Stefani were two deserving candidates. Trump would do well with either of them.

Congratulations to Stefani. I am sure she will do extremely well and I am confident that she will thoroughly enjoy herself.

I listened to Interwoven, Inc.'s (IWOV) conference call this afternoon. This article should be read in conjunction with my prior Interwoven article.

Because the company is still in the process of a voluntary review of its past option grants, its financial statements have not been completed and cannot be released. Consequently, the information was rather sparse. I will highlight in point form key points.

• Joe Cowan, the newly hired CEO, was excited to be at the company
  • Of all his employment options to choose from, he chose IWOV because it is a company with accelerating opportunities to grow and prosper (of course, he is going to say positive things, right?)
• Revenue for the first quarter was $52.7M, slightly ahead of the consensus figure $52.45M and 13% from first quarter last year
• License revenues were $19.6M, an increase of 12% from same quarter last year; and Support and Services revenues were up $33.1M, an increase of 15%
• The company generated $11.9M during the quarter and the company now has $188.3M in cash and cash equivalents
• Deferred revenue increased to $62.3M, an increase of $4.5M from $57.8M; deferred revenue is largely maintenance renewals, which is a good thing
• The company gained 74 new customers, for a total customer base of 3,866 customers
• Employee head count increased to 779 employees, up from 774 employees at 2006 year end; this is important because it shows that, although revenues are still increasing at a healthy rate, the company is able to leverage its employees to generate more revenue per employee and, I hope, increase margins
• 44.8M shares outstanding (I am not positive on this item)
• Days Sales Outstanding (DSO) is 56 days, at the lower end of its historical range
• Company believes it is still doing well against its competitors by taking away their customers
• The company guided revenues for the next quarter at $53M–$56M, within the general range of the consensus figure of $54.8M

Like other investors and analysts, I would like to have a better and more information that comes with the financial statements. But until the company completes its option review process, investors will have to work with limited information.

My overall impression is that the company is continuing to do well. I note that the stock fell today and again after hours. Perhaps some investors were hoping that the company would greatly exceed the consensus forecasts and raise guidance substantially. In terms of share price on Wednesday, I am not sure what to expect. My guess is that the results from Yahoo, Intel, and IBM will have some bearing on the markets in general as well as Interwoven. Because the company is continuing to hit the consensus numbers, I do not believe that there is any cause for concern. The light hiring might be indicative of increasing margins and profitability. Joe Cowan hinted at customer momentum and continued strong growth. As of right now, I am inclined to continue holding the stock until at least the next quarter's results are released. I want to gain more insight into the company's performance and its longer-term growth prospects.

As an aside, for those interested, the company has provided a more comprehensive profile (pdf) than I provided in my earlier post.

Disclosure: I remain long Interwoven stock.

I have owned for about four years and continue to own Interwoven, Inc. (IWOV), a small cap company, one whose market capitalization is between approximately two hundred fifty million and two billion dollars. So far, I am up considerably on the stock with most of the gains having occurred in the last six months. As an aside, you can view the Yahoo Finance stock chart for the last five years here. Interwoven will provide its first quarter 2007 financial results after the market closes tomorrow on Tuesday, 17th of April, followed by a conference call at 5 p.m. ET.

I have used the company's 2005 10-K filing to provide a description of its business.

Interwoven, Inc. provides enterprise content management (“ECM”) software and services that enable businesses to create, review, manage, distribute and archive critical business content, such as documents, spreadsheets, e-mails and presentations, as well as Web images, graphics, content and applications code across the enterprise and its value chain of customers, partners and suppliers. Our industry-specific solutions enable organizations to unify people, content and processes to minimize business risk, drive revenue growth and maximize operational effectiveness. Customers have deployed our products for business initiatives such as improving customer experience, streamlining information technology processes, managing compliance mandates and much more. To date, more than 3,400 enterprises and professional services organizations worldwide have licensed our software solutions and products.

I interpret the above information as Interwoven provides the tools to allow companies to manage their critical information more effectively. Business processes are complex and becoming more complex, and regulations, such as Sarbanes-Oxley and others, require strong controls and retention of critical information.

Using Yahoo Finance, I have gathered some key financial metrics ahead of the conference call.

The market capitalization and enterprise values show that Interwoven is a small cap company. Because it is a small cap, investors should exercise additional caution because small caps are often more volatile. Moreover, a few key developments can significantly affect the value. Moving along, the P/E ratio by itself appears to be a bit high. But when factoring growth, the PEG Ratio appears rather modest at 1.16. The growth is strong as evidenced by quarterly revenue growth (yoy) of nearly 16 percent. There are significant short sales, which I consider a positive in our example, with about 3 million shares short, which translates to 7.2% of the float being short and to a short ratio of about 8.5 days.

A revenue and earnings table is provided below.

The revenue and earnings data is always important information to track. As soon as the results are provided tomorrow, speculators and investors will begin adjusting their positions in after hour markets. That is why it is good to review the company's key metrics in advance of the release.

Interwoven appears to be in a sweet spot as companies are spending money to streamline their information flow. Companies want better control and, even more importantly, want less bureaucracy and redundancy of information. Unless the company releases extremely poor news, I am likely to continue holding the stock.

Disclosure: I am long Interwoven stock.

I just finished watching The Apprentice Season 6: Los Angeles thirteenth episode.

The task for this week was to create a commercial for Renuzit Super Odor Neutralizer and show their commercial in a theater before a live audience. The two remaining teams brought two additional past contestants to assist them with this last task.

James and Stefani chose Aaron and Angela as their sidekicks. They produced a commercial about a wife accusing her husband of stinking up the home after a night with the boys playing poker. Overall, I liked their commercial. I thought both Stefani and James performed well. I give James full credit for his energy, enthusiasm, and creativity for a task that was outside his prior experiences.

Nicole and Frank chose Surya and Tim as their sidekicks. Their commercial was a professional businesswoman who used the product on her clothes before receiving an emergency call to visit her son in hospital. At the hospital, the son makes reference to the smelly person next to him, and the businesswoman sprays the room to remove the odors. Me, I do not like hospitals. So if I were watching, I would change the channel. That said, the theater audience seemed to enjoy their commercial, perhaps even more than the other team's.

At the end, Trump did sent the last remaining four team players home for a one week rest before appearing live where The Apprentice will be chosen. I have a slight preference for James. I think he has demonstrated leadership, creativity, drive, ambition, and an ability to deal with whatever challenge is given to him. I am undecided about the order of the next two candidates. Stefani might be strong too, but unfortunately, because of the show's format, the viewers never got a chance to review her leadership skills. I have a suspicion that she is a strong leader, someone who can delegate and get things done. Frank has surprised me. He has gotten stronger as the season has progressed. He has a lot of heart and determination. I think he is a bright person who will find a way to accomplish whatever task he is given. Nicole, though strong, is my least favorite. In last night's challenge, Frank was definitely the stronger player and I did not appreciate her disrupting the flow of the shooting of the commercial to get some face time with the executives. Moreover, I think she was extremely fortunate that Kristine got fired last episode and not her.

We will learn next week which of the four remaining candidates wins the prize of being The Apprentice. While I have my favorite, I think any of the remaining four candidates have an excellent shot at winning. Regardless of who wins, all remaining four contestants should be proud of their accomplishments. I am sure that their exposure on this series will help their careers immensely. Next week's last show will be exciting.

An Associated Press article (subscription required) in the online Wall Street Journal indicates that Saudi Arabia plans to increase its production.

RIYADH, Saudi Arabia -- Saudi Arabia wants to increase its oil production so it can meet domestic and international demand while ensuring "fair" world prices, King Abdullah said Saturday.

Now pumping just over 11 million barrels a day, the kingdom is the world's largest oil producer and the biggest supplier of petroleum to the U.S.

The king did not say how much Saudi Arabia might increase production, but it has repeatedly said it was prepared to do so. Last May, Oil Minister Ali al-Naimi spoke of raising output to 12.5 million barrels a day by 2009.

Because oil prices have been and are likely to continue to remain volatile, I am not sure if Saudi Arabia's decision will have an immediate affect upon world oil prices.

The Associated Press does have one fact wrong, however. According to the Energy Information Administration's information, Canada is the largest exporter of crude oil to the U.S. In January, Canada exported 1.86 million barrels per day while Saudi Arabia, in second place, exported 1.56 million barrels per day.