Sunday, October 24, 2004

Hit #26

Not exactly a victory this one, but nevertheless a hit!

Daleen Technologies (DALN) is being taken private by Quadrangle Capital Partners for around $0.04/share! The announcement was made a few months ago.

On my part, this was mostly a penny-stock speculation, fueled by some understanding of the billing software sector. I lost money here, since I had bought the shares at around $0.15/share and was prepared to see a bankruptcy filing.

The billing software industry cannot continue for too long as an independent sector. It will get folded into the CRM and Enterprise Integration area. Siebel, PeopleSoft, SAP are likely buyers.

The entire sector is hence a target - the question is, how speculative are the players. Here is a list.

  • Amdocs (DOX) : The strongest and most stable player. While it is a target in the long run, for now it may be looking at buying its smaller/cheaper competitors. The stock is fairly valued now.
  • Convergys (CVG) and CSG Systems (CSGS) : Both stock seem cheap right now, and both surely are targets. One may end up with Amdocs. I own both and plan to keep adding.
  • Boston Communications (BCGI) : Recently hit by bad news. This is highly speculative, but recent insider buying is encouraging. Most likely will end up in the arms of a larger player.
  • Portal Software (PRSF): Dangerously speculative. Could end up in the bin. This is among the worst companies as far as shareholder value destruction is concerned. The management has essentially milked it for all it is worth and dilution is just mindboggling. The analyst activity here is suspect too. I am surprised that no one from this company is behind bars yet. Given all this, why am I even mentioning it ? That is because I have used their software, Infranet. While not the easiest to use/configure, it runs without problems once setup. They could have done a better job with their API too. Anyways, the last I used Infranet was in early 2001. Not sure what state it is in now. I would still consider this as a takeover target for the installed customer-base. Hopefully, the takeover will happen before management succeeds in destroying it! I got rid of most of my position after the last reverse-split, for a small profit. I was lucky - the stock has lost more than 90% of its value since then.


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