3SOF

Hi Berloga,

I think I might use my GSB money to add to my CIMT position instead of rebuying GSB.

GSB finally issued a press release regarding their earnings. and lowered their revenue forecast for 2007 from 20M to 17-18M, blaming the shortfall on delayed orders.

http://biz.yahoo.com/bw/071115/20071115006056.html?.v=1

Hi eggman,

I already added to CIMT a while back, so don't want to overweigh the position. Since the price is not going up, but volume is up, I assume that some folks are losing patience with this "nanocap" and are using the chance to get out. I am willing to ride this stock another 6 months to see what happens.

My portfolio has been not the Zambezi rapids this past week! Down 4% today. 

At least it sounds like a reasonable explanation to me ... let's give the CEO benefit of doubt for now I will say.

Quote from: eggman11 on November 15, 2007, 02:27:24 PM
GSB finally issued a press release regarding their earnings. and lowered their revenue forecast for 2007 from 20M to 17-18M, blaming the shortfall on delayed orders.

http://biz.yahoo.com/bw/071115/20071115006056.html?.v=1

Quote from: realcoolhead on November 15, 2007, 03:45:15 PM
At least it sounds like a reasonable explanation to me ... let's give the CEO benefit of doubt for now I will say.

Quote from: eggman11 on November 15, 2007, 02:27:24 PM
GSB finally issued a press release regarding their earnings. and lowered their revenue forecast for 2007 from 20M to 17-18M, blaming the shortfall on delayed orders.

http://biz.yahoo.com/bw/071115/20071115006056.html?.v=1

Agreed, order shortfall can and does happen, this is  CEO who is gunning for the moon and might have gotten a bit overzealous in his guidance, but he still has vision and implementation under control it would seem.  We could see a huge quarter next quarter as these delayed orders get added, as well as any surprises.  Wish I had sold and bought back today, but still I feel good about GSB long term.  Now if only CIMT would behave as expected instead of being flat, at least I would offset the GSB loss lol.... 

Quote from: realcoolhead on November 15, 2007, 03:45:15 PM
At least it sounds like a reasonable explanation to me ... let's give the CEO benefit of doubt for now I will say.

Quote from: eggman11 on November 15, 2007, 02:27:24 PM
GSB finally issued a press release regarding their earnings. and lowered their revenue forecast for 2007 from 20M to 17-18M, blaming the shortfall on delayed orders.

http://biz.yahoo.com/bw/071115/20071115006056.html?.v=1

I agree, reasonable explanation. We'll see if the $750,000 kick in the 4th quarter. It was a serious setback, but the long term outlook remains very positive.

"We feel very good about our progress and our performance so far this year. While the Third Quarter would qualify as outstanding performance by virtually all yardsticks, it could have been better," commented Randy Poole, President and CEO. "The DOD has not completed its order with us per its original schedule, delaying $750,000 of revenue, and some other larger deals have also been delayed. While the third quarter revenue was up 50% and the fourth quarter outlook is also good, we expect to see variations in our growth from quarter to quarter like most software companies do. For the full year 2007, I expect we will have revenue of $17.5MM to $18MM, short of our $20MM prior guidance.

"We like our unique position in this marketplace and we are excited about our plans for 2008. GlobalSCAPE is spending an increasing amount of our engineering resources on improving the speed, security, and network optimization of file transfer over our customers' networks. Our unique WAFS product ensures bandwidth-efficient WAN utilization because only incremental changes to files are actually transferred over the network," added Poole. "We are also exploring several new product enhancements and partnerships involving all of our product offerings, where we feel the potential is large.


RB Quotation:
GSB Conference Call Notes, Comments

About the $17.5-18.0 million revenue guidance just given, down from the expected $20 million for 2007. It's a matter of timing other firms' purchases, something Globalscape can't control, and these firms have some concerns about the economy, and want to delay software purchases at this time. Delay is the key word. These are LARGE deals, there are THREE of them, they are NON-government firms, and Randy Poole will announce who they are and the details as soon as the deals happen. Asked whether these likely to occur at all or what, Randy Poole stated, "I am absolutly convinced we will complete the deals...."; and asked whether the statement in the news release meant that the three deals were all larger than the DoD order in Q2, he again said he didn't want to comment on that, but that yes, these are all 'material' and significant orders. Material information. The statement I refer to is: "The DOD has not completed its order with us per its original schedule, delaying $750,000 of revenue, and some other larger deals have also been delayed." Because of these delays, even though they could very well make up the difference during the 4th quarter, he said he wanted to be safe about the forecast and "certainly that's the low side (the $17.5 to 18.0 million)" that he's certain they'll make, and "it IS possible we WILL make up the difference in Q4." [I believe knowing Randy as long as we have, the veterans can back it up that Randy is basically conservative, so he'd rather say $17.5-18.0 million as a low-side estimate and then bring in $20 million if those deals come in between now and December 31st (Q4). While he was holding it pretty tight to the vest, we did manage to get this fact from him, that's these are in Healthcare and in Manufacturing.

So ... some of what else I got from all this part was ...
There's the Globalscape-Synteras partnership, which I'll get to some great stuff in a minute, and then there is besides that, while we were all here waiting for them to start bringing that to fruition through FIPS certification, assuming that is going to be a strong driver for them with Synteras contracting with the government, Globalscape actually telling us today on the call that they have THREE OTHER partnerships in discussion. Randy Poole used the plural in describing Availl as leading the charge with those, that these companies were excited about getting involved with the CDP and WAFS softwares as partners, and they are "significant partnerships", too. Also, they need to fit the WAFS/CDP softwares to fit each partner, and that's one of the things they're working out with them. Yes, I said THREE! How significant? Mr. Poole said, "It gives me goosebumps," at one point. He wasn't just trying to be cute. Wait till you get the news, I think you'll agree you got goosebumps too.

These guys have got THREE partners they are talking to. Besides Synteras! More on partners: Synteras is in THREE negotiations in which Globalscape is part of the presentation. Yes, right NOW. I thought we were waiting on that FIPS certification, maybe we are, but they aren't waiting THAT hard if they are making presentations of Globalscape's product lines ALL OF THEM I think I heard Randy say. Lol. One caller asked, like "Which software products, Randy?" Moment of SILENCE ... then ... "ALL of them" and I think he cleared his throat or something for effect. It was cool. Check it out on the audio. ALL of them!

He said as far as how big these deals were, EVERYTHING Synteras does is big, so he's not going into that. Now I DO understand FIPS is going to aid the Synteras deal, so logic dictates I should say right here, Everything we heard on Synteras-Globalscape partnership and the THREE deals currently going on ... SOUNDS GOOD!! If FIPS is needed for them, then Synteras must be aware the FIPS is coming in soon. If FIPS isn't required for these deals, then we can expect EVEN MORE deals to be lined up once they are. Either way .... SOUNDS GOOD!! Oh, my notes show this too: these three deals with Synteras are not the long, drawn-out type that take months and months to play out, but are up-front deals and happen all at once. "Not months to do, but could be VERY SOON."

More on partnerships:
Randy discussed his current #1 priority on the call. We all got a big surprise. After he stated how they began as a small FTP outfit to individuals on the Net, and grew into a bigger firm handling Enterprise software to Fortune 100 & 500 companies, he said THEY ARE NOW READY to make the next leap to finding a Global Partner. He said that since the impact of a Global Partner on the future of Globalscape would be so great, he's made it his NUMBER ONE PRIORITY. Then he said they are looking for the right fit, and however long that takes, picking the right partners is their plan. Yes, I said PARTNERS PLURAL. He restated it, Partners! One or two global partners. Whoa Nelly! Hang on Pat Brady! (Roy Roger's sidekick.)

Lol, we tried to get him to decide for us which was going to be bigger, FIPS or PCI DSS softwares, and he wouldn't step into that one. Good for you, Randy. That's like, Which ocean has more fish? The Atlantic or the Pacific? lol. We talked about all the irons they have in the fire, and he said the important thing was to get into those areas, like the latest HS PCI software, for instance, and then each branch would grow larger from there. To that point, they added a lot of support for the software and also some key execs in top positions.

Oh, and there's this new standard that supports AS-2 and you have to have it to be able to work with GE, Valero, and some other biggies. They are working on being compatible with that too. So great! In my opinion, they are seeing the results of being compliant with FIPS, HIPPA, PCI DSS, Sarbanes Oxley and the rest, and so are spot on target looking at opening up the products to sales among the AS-2 standards crowd. See this link ==> http://en.wikipedia.org/wiki/AS2

I have listen to the CC also, I can fully support these comments!
Long And Strong imho
cheers from SGP
Oliver

I've just listened to GSB's conference call and was prepared to bring some highlights, but it seems la-onda already brought us most of the material stuff.

In summary, the shortfall relative to the $20 M guidance was due to the DoD taking more time than expected in fully installing the $2.5 M of software they bought. Only 1/3 of it has been installed and the $750,000 in maintenance fees which were scheduled to happen in Q3 were delayed and may or may not happen in Q4 2007. But they will surely happen in Q1 2008. Another reason for the shortfall, according to the CEO, was that three larger orders were delayed because the people involved suddenly got worried about where the economy is going. But Randy (the CEO) said he's absolutely confident that they'll close the deals sooner or later.

He didn't rule out meeting the $20 M guidance in 2007 and said the new $17.5 M - $18 M is the absolute minimum. It all depends on these larger orders being closed until December 31st or not.

The Availl part of the business, that is, WAFS and CDP, accounted for about $0.7 M in revenue for the quarter, but they're the fastest growing part of the business and the one getting more excitement and attention. The CEO said he's been talking with potential much larger partners who are interested in these products and this will be his # 1 priority going forward.

As for the Synteras partnership, he said there are three major deals in the pipeline which will involve GSB. If they're indeed closed they'll have a material impact on GSB's financial condition (to the better, of course).

All in all, we know Randy Poole is a nice and exuberant person which sometimes gets a bit ahead of himself with excitement, but over time he always delivered on his promises, even though not in the exact timings.

GSB continues to be one of the best long term investment ideas I have and the potential is huge. I don't mind the big drawdowns for as long as I remain confident in the long term outcome of this investment, which I believe will bring several bags of profit to the Main Portfolio in three years time.

I'll continue holding GSB for the long term.

1)
San Antonio Business Journal:
GlobalSCAPE posts double-digit increase in earnings for the third quarter

GlobalSCAPE Inc. continued to benefit from strong sales of file-sharing and storage products, the company said Thursday. GlobalSCAPE's net income and revenues were up 31 percent and 50 percent, respectively, for the third quarter, compared to the same period last year.
San Antonio-based GlobalSCAPE (AMEX: GSB) reported net income of $702,875 on revenues of $3.9 million for the quarter ended Sept. 30, 2007.

This compares to net income of $536,545 on revenues of $2.6 million for the same period a year ago. "We feel very good about our program and our performance so far this year. While the third quarter would qualify as outstanding performance by virtually all yardsticks, it could have been better," President and CEO Randy Poole says. "The (Department of Defense) has not completed its order with us per its original schedule, delaying $750,000 of revenue, and some other larger deals have also been delayed." For the full year, GlobalSCAPE expects to report revenue of $17.5 million to $18 million, which is short of management's prior guidance.
GlobalSCAPE develops security products that allow users to transmit sensitive files -- such as financial data, medical records, customer files and intellectual property -- over the Internet.

2) AMC research update
9.13$ price target, please download

It's amazing how three days can make a significant difference. Three days ago I was making almost 100% in GSB and today, after yesterday's awful sell-off, I have just a 33% profit.

It's really tough to be a long term investor, I didn't realize the drawdowns would be this big. But nobody said it would be easy.

I could have taken profits around $7 - $7.50, as I advised some of you to do so, but I didn't because I like the stock for the long term and believe it will be a multi-bagger.

I realize that most of the times it takes several years for a multi-bagger to evolve into one. It isn't a quick process. But I remain a believer that investing for the long term is the most sound, probably the unique strategy to build and grow one's wealth over a 20 or 30 years live of investments.

As I look at GSB's products, I'll believe they'll be in very high demand for many years to come.

Yesterday's sell off was, in my opinion, due to two short term factors:

1) The general market mood is bearish (but I believe that's about to change)

2) GSB missed forecasts in the 3rd quarter, when it earned just 4 cents a share. Investors multiply this by 4 quarters and reach a $0.16 EPS number for a full year, so they conclude GSB is trading at 31.8 times earnings, which seems expensive. But we've seen the 3rd quarter EPS number was affected by special factors ... and the company will probably get back on track in Q4 2007 or Q1 2008.

I'll continue holding GSB for the long term, despite the horrible setback.

at the end of the day, with GSB we are @ break even.
Next time, good idea not only to sell before earnings,  but going short :-)

Quote from: terainvestment on November 27, 2007, 03:20:22 PM
at the end of the day, with GSB we are @ break even.
Next time, good idea not only to sell before earnings,  but going short :-)

I'll probably never short another stock in my entire life. Better to put my energy in searching for the potential multi-baggers out there.

Anyway, what happened to SILC, NVTL and GSB, to name a few, has made me think that perhaps, instead of having the fear of losing I have the fear of missing out. I'm afraid of missing the long term move of a multi-bagger if I sell out, even though there's plenty of fundamental evidence stocks will fall over the short and medium term.

Right here and now I've decided to combat my fear of missing out. The next time I have a stock which I believe is a great long term investment but I clearly see it will go down due to new fundamental information, I'll sell first and consider buying back later, hopefully at a lower price.

Not selling GSB, not even half of the position (even though I've advised you to do so) was the main cause to bring the Main Portfolio down this much. Hopefully I've learned my lesson and will be more flexible in the future.

Anyway, I believe GSB is now very attractive again and it would be foolish to sell now. Missed the short term timing for taking profits, but still have no doubts this little company will grow to be a multi-bagger.

I'll keep holding GSB for the long term.

QuoteRight here and now I've decided to combat my fear of missing out. The next time I have a stock which I believe is a great long term investment but I clearly see it will go down due to new fundamental information, I'll sell first and consider buying back later, hopefully at a lower price.

A very good decision, David, applaud! This means you're not giving up on a long term prospects of a company, but rather taking a precaution and merely reacting to the short term development. I always have a difficulty to press the trigger (eggman helped this time), but with you managing the trade it'll be a lot easier now.

I think about it this way: "if I sell today for the gain and watch what comes out next, all I lose is the roundtrip broker fee and the potential several points of advance, that is if I was wrong and want to get back in immediately."

I notice that GSB remained all day long flat @ 4$.
Any thoughts on this "impasse" of GSB?

QuoteA very good decision, David, applaud! This means you're not giving up on a long term prospects of a company, but rather taking a precaution and merely reacting to the short term development. I always have a difficulty to press the trigger (eggman helped this time), but with you managing the trade it'll be a lot easier now.

Yes, I guess I can't keep wasting all my daily work because of my fear of missing out. If I see the stock will go down due to relevant fundamental information (not technical), I'll sell it and will keep studying it looking to perhaps buy it back hopefully at a lower level.

Quote from: terainvestment on November 28, 2007, 04:00:02 PM
I notice that GSB remained all day long flat @ 4$.
Any thoughts on this "impasse" of GSB?

GSB loves the $4 level. It traded around it for a somewhat prolonged period.

Yesterday there were reports saying the VP of Sales sold all his holdings (41,247 shares) at $4.4. This worries me just a bit ... as Peter Lynch says, insider selling is one of the worst reasons to sell a stock. He missed several multi-baggers in the first years of his money management career because of selling due to insider selling. Maybe the man just wanted to buy an apartment for his daughter, who knows?

GSB isn't cheap if we use a simple multiple comparison, but if we consider the products, prospects and potential ... I see it as very attractive. GSB is a fast grower which may very well deliver several bags of profit over the long term. The risk is ... well, the stock can stay around $4 for a long time before anything meaningful from a fundamental standpoint unfolds.

I'll keep GSB for the long term.