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Informatica (INFA): The Next Cloud Computing Winner?
Mar 11th
With the Nasdaq poised to resume leadership among U.S. stock indexes, technology looks like a sector with bullish potential. Even so, smart investors know that picking the right stock will still be extremely important.
One niche we like is cloud computing
. We’ve previously highlighted the cloud computing trend. We talked about several cloud computing stocks that may help investors profit from the group’s rapid growth. Today we add one more name to that list: Informatica Corp. (INFA). California-based Informatica boasts some strong fundamentals. In the most recent quarter, Informatica reported its profits rose 29% and revenue surged 21%.
Analysts are forecasting earnings growth of 11% in 2010 and 20% in 2011. Those are impressive statistics. According to Investor’s Business Daily, which features Informatica among its top 100 stocks, the number of mutual funds owning Informatica shares rose to 213 from 188 during the last quarter. That’s another positive sign that the smart money crowd is taking note of the stock.
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Informatica is taking steps to enter new business segments, highlighted by the company’s January acquisition of Siperian, a master data management company. This was Informatica’s first foray into that space and the company’s biggest acquisition to date. The Siperian buy was greeted warmly by both investors and customers. It makes sense as master data management is one of the fastest growing sub-sectors in the tech space.
Given all of the news, it isn’t surprising to see analysts enthused about Informatica. Just this week Broadpoint AmTech mentioned Informatica as one of its top cloud computing picks. The stock is up more than 15% in the past month and touched a new 52-week high Tuesday on heavy volume.
Whether you call Informatica a growth stock or a momentum stock, the signs are decidedly bullish at this point. Yet the company still has value relative to other tech stocks. For example, the stock trades for nearly five times book value and over 22 times forward earnings. Compare these numbers to Amazon (AMZN), which is trading around 11 times book value and 34 times forward earnings. Informatica looks cheap in comparison.
Regardless of comparisons, Informatica is a strong stock in a strong sector. This means more gains could lie ahead. To play the cloud computing angle with a strong company, go with INFA. Full Source
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Cloud Computing Investing Ideas
Mar 2nd
“Cloud Computing” is a new buzzword (or is it buzzwords?). Everybody is talking about it and most people don’t understand it. I will try to review the current state of cloud computing from an investment perspective and possible future developments in the area.
IT expenses are huge in most companies. At least that’s what any manager (with some exception) will tell you. To reduce those expenses, companies have adopted various business practices: cutting the number of personnel (usually with disastrous consequences later), appointing MBAs as IT department managers, buying software packages instead of in-house development (not a bad idea) and, of course, outsourcing (with the whole spectrum of results, from awful to great). In most cases, IT costs have ignored all heroic efforts of managers and have continued to grow. They continue to grow for two reasons: IT does more work every year and most of the efforts of managers are counterproductive- they actually increase costs instead of cutting them.
Looks like managers see cloud computing as a great new way to cut IT costs. They are both right and wrong. They are right because when implemented properly, cloud computing can cut costs and/or increase productivity. They are wrong because there is no such thing as a free lunch and correct implementation still costs a lot of time, effort, and money.
In the news, especially investment news, there are three different IT developments which are lumped together under name of “cloud computing”. Below is a quick review of them.
Internal Cloud
Also called server farm, this is a new way of organizing computing infrastructure. Companies set up big server farms with thousands of individual servers. Servers belong to the company, although management might be outsourced. The biggest plus of internal clouds is the fact that all data is kept on company’s own hardware. Usual features of such farms include: virtualization, automatic computer management and virtual networking. I am not going to explain all these terms, there are enough explanations on the Web. The first server farms, as far as I know, were used by Web oriented companies, such as Amazon.com (AMZN), Yahoo! (YHOO), Ebay (EBAY) and Google (GOOG).
But for investors, the most interesting companies are those which provide hardware and software solutions for internal clouds. The biggest of them are: Dell (DELL), HP (HPQ), IBM (IBM), Cisco (CSCO), EMC (EMC) in hardware; and in software, Microsoft (MSFT), VmWare (VMW), Oracle (ORCL) (which is also a hardware vendor after buying Sun Microsystems). There are also a lot of smaller players, but judging by the latest earning report from Brocade (BRCD), competition is stiff and prospects are not certain.
External Cloud
If the idea of storing data on somebody else’s hardware doesn’t scare you, the cloud itself can be outsourced. Currently, Amazon, Google, Microsoft, AT&T (T) and a lot of smaller companies provide this kind of service. I think that Amazon and Google have an advantage here, both because they are better at managing relationships and have better hardware/software combinations. Microsoft’s policy of using exclusively the Windows operating system is a drag on performance, while Amazon’s and Google’s reliance on Linux is a plus. AT&T is at a disadvantage here as well, because its problems with customer service are not restricted to the mobile phones area.
The companies provide virtual machines to their customers, with the operating system of the customer’s choice. But Linux is a better base for virtualization than Windows. Unfortunately for investors, external cloud doesn’t look like a significant piece of business for any of these companies or any other big companies which might get into it. Possible candidates are IBM, Ebay, Yahoo!, Dell, HP, Oracle. Of specialized companies, I only found Rackspace Hosting (RAX) and Enomaly, which is not public (yet?). I don’t know if specialized companies have any chance inside of the herd of elephants, but Rackspace is on my watch list.
Software As a Service
I don’t really know why is it often called “cloud computing,” it has nothing in common with the other two. These are suites of applications provided to businesses online, usually through web browser interface. True, companies providing applications might use internal or even external computer clouds, but the business model is completely different.
From my point of view, this is a very interesting development. There is only one problem for the companies here: data is kept on devices which belong to a different company. But in this case, companies don’t need expensive IT departments to run the application. It’s not a big help to big companies, which use hundreds of different applications, including a lot of custom built. But for a small company, which needs less than a dozen applications, this is a very interesting proposition. Current competitors in this area: Salesforce.com (CRM), Oracle ORCL), Rightnow Technologies (RNOW).
Salesforce.com is a leader, and any independent company is a possible acquisition target for Oracle and SAP (SAP). There is a possibility that Microsoft might get into this business, using acquisitions or internal developments, but so far I don’t see any indication.
Of the above mentioned, software as a service is the most interesting investing area. I’m looking at Salesforce.com often, but the stratospheric P/E scares me every time. I might be wrong and the P/E might be justified. For internal clouds, software companies look like the best bet with VMW being the leader. I don’t see any investing possibilities in the external clouds yet. I am long GOOG for different reasons and I think that AMZN is a great company, for other reasons as well.
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Force.com – Huge 4Q profit on big sales jump
Feb 25th
SAN FRANCISCO — Salesforce.com on Wednesday posted a 48 percent jump in fiscal fourth-quarter profit, on strong sales growth for its online business software applications.
For the three months ended Jan. 31, Salesforce.com said profit jumped to $20.4 million, or 16 cents per share, compared with $13.8 million, or 11 cents per share, in last year’s fourth quarter.
Revenue shot up 22 percent to $354 million, from $289.6 million a year ago.
Analysts polled by Thomson Reuters, on average, expected profit of 15 cents per share, on revenue of $342.3 million.
Chairman and CEO Marc Benioff said the company is benefiting from the move to cloud computing.
Cloud computing lets companies collaborate online and store data on outside servers, lowering the cost of maintaining their own computer systems.
For the fiscal year, the company earned $80.7 million, or 63 cents per share, on revenue of $1.31 billion. That compares with profit of $43.4 million, or 35 cents per share, on revenue of $1.08 billion last year.
The company said it added more than 17,000 new customers during the fiscal year, to about 72,500.
For the fiscal first quarter, the company expects earnings between 12 and 13 cents per share, on revenue between $365 million and $367 million.
Analysts call for profit of 18 cents per share, on revenue of $354.7 million. The earnings per share numbers, however, may not be comparable because of unusual items.
For the full fiscal year, Salesforce.com forecast earnings between 58 cents and 60 cents per share. It raised its revenue guidance to growth between 16 percent and 17 percent, from 15 to 16 percent. That implies a revenue forecast between $1.51 billion and $1.53 billion.
Wall Street expects profit of 82 cents per share on revenue of $1.51 billion for the fiscal year.
Salesforce.com shares wobbled in aftermarket electronic trading, falling immediately after the release before gaining $1.28 to $70.90. The stock closed regular trading up $1.20 at $69.44.
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CA Acquires 3Tera To Boost Presence In The Cloud
Feb 24th
SLANDIA, N.Y., February 24, 2010 – CA, Inc. (NASDAQ:CA) today announced a definitive agreement to acquire privately-held 3Tera®, Inc., a pioneer in cloud computing. 3Tera’s AppLogic® offers an innovative solution for building cloud services and deploying complex enterprise-class applications to public and private clouds using an intuitive graphical user interface (GUI). Terms of the agreement were not disclosed.
With 3Tera—which follows CA’s recent acquisitions of Cassatt, NetQoS and Oblicore—CA continues to aggressively expand its portfolio of solutions to manage cloud computing as part of an integrated information technology management program.
3Tera enables enterprises and service providers to provision, deploy and scale public and private cloud computing environments while maintaining full control, flexibility and reliability. 3Tera also makes it easy for service providers to offer application stacks on demand by adding applications to the AppLogic catalog, where they can be deployed to a low-cost, shared cloud infrastructure. 3Tera’s customers include more than 80 enterprises and service providers globally, which use the cloud computing technology to provide services to thousands of users.
“CIOs can use cloud computing to build and manage a new type of IT ‘supply chain’ across today’s virtualized internal and external technology infrastructure,” said Chris O’Malley, executive vice president of CA’s Cloud Products & Solutions Business Line. “3Tera technology is a powerful addition to the total solution CA provides for optimizing these high-value supply chains—from the mainframe to the cloud.”
Rapid, Simplified Cloud Enablement
Using the intuitive GUI and drawing from a catalog of pre-configured virtual server and software components, AppLogic simplifies the design and deployment of composite applications as a single logical entity in the cloud. By unifying application configuration, application deployment, and a virtual server fabric—functions that are otherwise typically performed in a fragmented manner—AppLogic helps reduce costs, improve productivity and increase service quality.
“3Tera eliminates the manual, error-prone tasks that have historically hampered an organization’s ability to deploy IT services to the cloud,” said Barry X Lynn, CEO of 3Tera. “As part of CA, we can bring rapid and simple cloud enablement to a dramatically larger group of customers, leveraging the thousands of CA sales, services and support professionals.”
In addition to AppLogic, 3Tera provides a cloud computing marketplace that allows software vendors to provide developers with production-ready cloud components and full applications that are available on a pay-as-you-go basis. This greatly facilitates exchanges of value between developers, service providers and customers.
Integration with Virtual and Physical Management Technologies
By streamlining cloud-based deployment of composite applications, 3Tera adds significant new capabilities alongside CA’s existing virtual and physical infrastructure management functionality—including that provided by CA Spectrum Automation Manager, the CA Service Assurance line of products, and the recently acquired assets of Cassatt and Oblicore.
CA plans to integrate AppLogic with these and other key technologies to provide customers with a comprehensive set of tools for delivering, managing and optimizing cloud computing as part of overall enterprise IT environment. CA also plans to extend support of 3Tera, which currently operates on the Xen virtualization platform, to include both VMware ESX and Microsoft Hyper-V™.
“AppLogic is a software platform that helps IT departments and service providers rapidly create and deploy cloud applications,” said Rachel Chalmers, research director at The 451 Group. “By adding this technology to its own strengths in IT management, CA is offering an intriguing value proposition to customers who want to both take advantage of the cloud’s adaptability and maintain rigorous control of the their virtual service delivery infrastructure.”
To learn more about CA and cloud computing, visit http://www.ca.com/cloud.
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Oracle shutting off Sun project-hosting site
Feb 4th
In the wake of its merger with Sun Microsystems, Oracle is discontinuing access to Project Kenai, which was developed by Sun as an open source project-hosting site.
Kenai, Oracle said in an updated FAQ statement for developers on Tuesday, will be discontinued for public use. “Oracle will continue to use it internally and look for ways that our customers can take advantage of it,” the Oracle FAQ said.
[ InfoWorld's Paul Krill reported last week that Oracle canceled plans for the Sun Cloud public cloud service announced by Sun last year. ]
The phasing-out is being done to consolidate project-hosting, according to the Project Kenai Team in a Web posting about the future of Kenai. “Minimizing the number of current project-hosting sites is a start in this direction,” the team said.
At the Kenai beta site, users were advised to being migrating repositories and content to other locations.
“The complete shutdown of the site and the removal of the domain will be completed in the next 60 days (April 2nd 2010). This should provide ample time for all projects to be moved to a new home of the project owners choice,” the Kenai team said.
“Any projects that remain after the 60 day limit (April 2nd 2010), will be removed when the site is turned off,” the team said..
“While it has come time to close the domain of Kenai.com, the infrastructure, which is already used under Netbeans.org, will live on to support other domains in the future,” the team said.
Oracle also lauded in the FAQ the combination of the OTN (Oracle Technology Network), the Sun BigAdmin system administration portal, and the Sun Developer Network, which includes the java.sun.com Web site.
This combination will “result in the largest and most diverse community of developers, database administrators, sysadmins, and architects,” Oracle said.
For the near future, Sun Developer Network and BigAdmin will remain in current forms, Oracle said. The company foresees an integration of these sites into a redesigned and re-architected OTN.
Also, Oracle plans to continue to offer certifications for Sun technologies including Java, SPARC, Solaris, and MySQL as part of the Oracle University program.
Oracle one week ago today detailed ambitious plans for its newly acquired Sun technologies.
This story, “Oracle shutting off Sun project-hosting site,” was originally published at InfoWorld.com. Follow the latest news in software development at InfoWorld.com.
Read more about developer world in InfoWorld’s Developer World Channel.
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Cloud Computing – Google: The Best Cloud Computing Investment
Feb 3rd
Google Inc. (NASDAQ:GOOG) has to literally be one of the most popular companies in the world. It is an internet giant, and has become such a common household name that the company’s name is used as a verb (i.e. Just “google” it). Although Google may fire China over the censorship and cyber attacks, the revenue from China is such a miniscule amount that it will be a blip on the radar. In fact, it is reported the revenue in China is less than a measly 1% of Google’s total revenue.
J. Royden Ward actually delves into Google and discusses the Cloud Computing element, which is literally the wave of the future, as more and more people demand a mobile lifestyle as opposed to being tied to one workstation. Ward indicates that Google appears to be the leading developer of cloud computing. Google employees can now store most of their business and personal software and data, such as pictures, videos, presentations and emails, on the Web. This makes software and data equally accessible from home computers, public Internet cafés or smart phones. Google’s cloud computing also makes damage to a hard drive less important.
According to a Wall Street Journal article, Google is expected to launch a service in 2010 that will let users store the contents of entire hard drives online. The company has not confirmed this plan, but Google already enables users to port personal and business data to the Internet and use the company’s Web-based software. Google’s Calendar organizes events, Picasa stores pictures, YouTube (now owned by GOOG) holds videos, Gmail stores emails, and Google Docs stores documents, spreadsheets and presentations.
Ward also discusses some of Google’s financial stats and achievements, identifying that Google’s management has aggressively stayed ahead of its competition by expanding and improving the Google search engine and advertising. Founded just 10 years ago, the company’s 2009 sales exceeded $23 billion with profits of more than $6 billion. The balance sheet is very strong with no debt and $24 billion in cash. The company pays no dividend.
Sales increased 9% during the 12 months ended 12/31/09 while earnings per share jumped 19%. We expect sales growth of 14% and EPS growth of 20% in 2010 and in future years. Google will continue to benefit from increasing Internet usage and the effectiveness of online advertising.
The January drop in share price for Google presents an excellent buying opportunity for one of the leading edge technology companies.
