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Cloud Stocks and PaaS: Which SaaS Players Will Win in PaaS

Posted on Monday, Jan 11th 2021

At the end of 2020, I wrote Big Idea 2021: SaaS Companies Will Create 10 Million Jobs with the central thesis that SaaS players would evolve into PaaS to create deeper moats around their core market positions and gain access to the related force multiplier.

To recap on the assumptions:

  • IF 1000 SaaS companies open up their platforms as a service, PaaS, as Salesforce.com does, by 2025
  • IF each platform lets startups sell through its marketplace, as Salesforce.com does, by 2025
  • IF each platform empowers 1000 startups to build on its stack by 2025
  • >>>

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Samsung’s Convergence Device Prospects Remain Strong

Posted on Wednesday, Nov 21st 2007

I recently covered Samsung, a major vendor of iPhone’s components which also has the manufacturing and design capabilities to become the iPhone’s major competitor in the future. This post will take a look at the company since its earnings release on 12 October.

For the third quarter ending Sept. 30, 2007, Samsung reported revenues of 16.68 trillion won or $18.16 billion, a y-o-y increase of 9.6% and a sequential increase of 14%. Net income was 2.19 trillion won or $2.38 billion, up 1% y-o-y and 54% sequential increase after three consecutive quarters of losses.

>>>

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Convergence Device: Nokia Aligns with ST, Motorola with Infineon

Posted on Tuesday, Nov 20th 2007

Following my posts on Texas Instruments, STMicro, ARM, Infineon in the iPhone and the Future series as well as the iPhone’s Component Ecosystem series, here is an update on the companies.

Texas Instruments Incorporated (NYSE: TXN) reported revenues of $3.66 billion for the third-quarter 2007 on 22 October, up 7% sequentially and down 3% y-o-y. Increased demand for analog semiconductor products and back-to-school demand for graphing calculators led to the sequential growth. EPS was $0.52, an increase of 24% sequentially and 16% y-o-y.

Revenue in the Semiconductor segment was $3.46 billion (up 6% q-o-q and down 3% y-o-y). Within the semiconductor segment, sequential increase was 10% in analog and 6% in DSP revenue. Revenue in the Education Technology segment was $202 million.

In the third quarter, TI repurchased $1.4 billion of its stock. In September, its Board authorized an additional $5 billion in repurchases. For the fourth quarter, TI expects revenue to be in the range $3.40 to $3.68 billion and EPS to be in between $0.48 and $0.54.

>>>

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Apple’s Momentum Will Continue

Posted on Monday, Nov 19th 2007

I have written extensively on the iPhone. You can find them under the iPhone and the Future series as well as the iPhone’s Component Ecosystem series. My last post on Apple (NASDAQ: AAPL) was just a month after the release of iPhone. A month or so later on September 5, it announced a $200 reduction in the price of the 8GB model. The 4GB model has been discontinued. For its early iPhone customers, it is offering a $100 store credit for buying Apple products at its stores. The announcement was met with mixed reactions.

Soon after on September 10, it reached the milestone of 1 million iPhone sales. It started selling iPhones in UK and Germany on November 9, partnering with O2 in the U.K. and with T-Mobile in Germany. It will start selling the iPhones in France from November 29th, partnering with Orange. [I have covered the iPhone’s impact on the US carriers in some detail before.] >>>

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Intel Aligned With Multiple Trends

Posted on Tuesday, Nov 6th 2007

Here’s an update on Intel since my last posts on the company, available here, here (discussion of Intel’s opportunity in the Convergence Device segment) and here (discussion of the multi-core issues).

Intel (INTC) recently announced its results for the third-quarter of fiscal 2007 in October. It reported a 15% y-o-y and 16% sequential increase in revenue to $10.1 billion. Net income was $1.9 billion and EPS was 31 cents. Operating income increased 66% sequentially from $1.35 billion in Q2 to $2.2 billion. Gross margin in the quarter increased from 46.9 % in Q2 to 52.4%, driven mainly by higher microprocessor volumes, lower 45nm start-up costs and lower microprocessor unit costs. >>>

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ADP Can Become a Powerhouse Through Acquisitions

Posted on Monday, Nov 5th 2007

In a recent post, I covered Paychex. This post will look at its largest competitor, ADP.

Automatic Data Processing, Inc. (NYSE: ADP), with nearly $8 billion in revenues, 46,000 employees, and around 585,000 clients in fiscal 2007, is one of the world’s largest providers of business process outsourcing solutions. ADP offers a wide range of HR, payroll, tax and benefits administration solutions to companies of all types and sizes. ADP is also a leading provider of integrated computing solutions to auto, truck, motorcycle, marine and recreational vehicle dealers. Its business is organized into three segments: Employer Services, Professional Employer Organization (PEO) Services and Dealer Services. >>>

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Palm, RIM and the Red Hot Smartphone market

Posted on Friday, Nov 2nd 2007

Both Palm and RIM released their earnings in early October. Here is a look on their results and latest developments since my last set of posts on these companies.

Palm (Nasdaq:PALM) reported total revenue of $360.8 million in the first quarter of fiscal year 2008, up 1% y-o-y. Net loss was $0.8 million, or $0.01 per diluted share compared to net income for Q1 2007 of $16.5 million, or $0.16 per diluted share. Gross margin decreased to 36.3% compared with 37.1% in the year-ago period and 38.3% sequentially.

Smartphone sell-through was 689,000 units, up 21% y-o-y. Revenue from smartphones was $302.2 million, a y-o-y increase of 12% which was offset by 33% decline in the handheld business. For the quarter, revenue mix was 84% Smartphones and 16% handhelds.

In September, it launched Palm Treo 500v with Vodafone and the Palm Centro with Sprint. The Centro, which offers enhanced web and media applications and support for 3G for just $99 has got rave reviews. Based on the Palm OS, it could be a step in the right direction to meet its turnaround challenges as discussed at length in my recently concluded interview with departing Chairman Eric Benhamou. >>>

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SAP Aggressively Going After SaaS, SME, Business Users

Posted on Thursday, Nov 1st 2007

SAP (NYSE:SAP) reported its earnings on October 18 for the third quarter of fiscal 2007. Its revenues were €2.42 billion up 9% y-o-y. Net income was €408 million, a y-o-y increase of 10% over €370 million last year. EPS was €0.34, up 13% from €0.30 in Q3 2006. Software and software related service revenues were €1.74 billion, an increase of 13% over €1.54 billion in Q3 2006. Pure Software revenues were €715 million, up 11% y-o-y.

As per the earnings call, SAP has reiterated that its growth strategy is to continue to grow faster than the market by expanding its addressable market. It expects stable growth from its traditional businesses of horizontal and vertical applications, and accelerated growth from the SME and business user segments of the business process platform. The Business Users, by the way, is an untapped base that SAP really wants to penetrate, to raise its adoption and usage in the enterprise customers. >>>

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Oracle Will NOT Play in SaaS, But Will Continue Gobbling

Posted on Wednesday, Oct 31st 2007

Oracle (NASDAQ: ORCL) reported its earnings for Q1 2008 in September. Revenue was $4.5 billion, a y-o-y increase of 26%. Its EPS was $0.16, up 28% over Q1 2007. Net income was $840 million, an increase of 25%.

Software revenues increased 26% over last year to $3.5 billion with new software license revenues increasing 35% to $1.1 billion. Database and middleware new license revenues saw a y-o-y growth of 23% and applications new license revenues increased 65%. Services revenues increased 25% to $1.1 billion over the first quarter of fiscal 2007.

As I mentioned in an earlier post on Oracle, its on-demand offering is miniscule and it looks like it will remain that way. In the earnings call, Larry Ellison has said that SAAS involves a high cost of sales and cost of implementation. It would not be following SAP in luring the SME SAAS market as it would need to spend on new product development and sales teams. It would rather wait to see how SAP makes money out of it. Interesting conclusion coming from Larry, given that he is a seed investor in both Salesforce.com (Nasdaq: CRM) and NetSuite (about to go public). >>>

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Can Paychex Become a SaaS Aggregator?

Posted on Friday, Oct 26th 2007

I had written about Paychex more than two years back when I started this blog in a post called Microsoft’s Two Should-Be Acquisition Candidates. Since then Paychex has grown steadily, and market cap has appreciated from $12.3 Billion to $15.62 Billion. I will look at it in more detail in this post.

Paychex (NASDAQ:PAYX) is a leading provider of payroll and benefits outsourcing solutions in the SME market with annual revenue of $1.9 billion and net income of $514 million in fiscal 2007. Its biggest rival is ADP which I will cover soon. Based in New York, the company has more than 100 offices with 11,700 employees and 561,000 payroll clients. Paychex takes care of a vital but simple business process for its clients, and has thus positioned itself as an essential piece of the workflow at numerous companies. >>>

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Intuit Bets on SaaS, Not Yet on International

Posted on Thursday, Oct 25th 2007

In some of my earlier posts, I have talked about how Intuit has successfully penetrated SME with its killer app of small business accounting software. You have also been reading my interview with Jim Heeger, who has discussed Intuit’s historical strategy in a fair bit of detail. In this post, I will look at Intuit’s current financials and strategy in more detail.

Intuit (Nasdaq: INTU) is the leading provider of accounting and tax solutions in the SME space with a lion’s share of the market, revenue of $2.67 billion, market cap of $10.62 billion, and 8,200 employees in fiscal 2007. Founded in 1983 and based in California, its business is organized into six segments: QuickBooks, Payroll and Payments, Consumer Tax, Professional Tax, Financial Institutions and Other Businesses. >>>

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