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Update:
Book 322 percent profits on Oracle
We've made some fantastic gains with Oracle (ORCL:NASDAQ) over the past year in Taipan. I recommended the world's second largest software company on the basis of a pre-Y2K sales drought. The scenario has now played itself out and Taipan members are up more than 322% in ten months.
At a time when the economy is slowing and Oracle is priced to perfection, top brass in the company is leaving. Ray Lane, the company's president and chief executive officer, has bailed.
I could be wrong, but it's better not to be greedy. Pigs get slaughtered. If you stick around this play could turn into another Computer Associates, which took a header earlier this month — falling 40 percent after pre-announcing an earnings shortfall.
Don't get me wrong, ORCL is well poised to benefit from the growth in IT markets. But when it has multiples corresponding to the likes of Cisco, along with uncertainty in upper management, it becomes obvious that there is more downside than up.
Sell Oracle, buy a new car, take your kids to Disneyland or free up some cash for the next opportunity. Lock in 322 percent! Congratulations.
 Media 100 jumps 64 percent in three months after joining the Russell 2000
Like ducks following their mother, the gaggle of Wall Street wallflowers waddled in and put out "strong buy" recommendations on Media 100 (MDEA:NASDAQ). I told you about this company two months ago in Taipan. If you bought at US$17, the day the issue was stuffed into your mailbox, you are up 64 percent — congratulations.
A streaming bargain
MDEA is running based on the annual reshuffle of the Russell 2000 — an index of the bottom two thirds of the 3000 largest stocks in America. Small cap funds that are indexed to the Russell 2000 must buy new inclusions.
MDEA also announced that it beat top-line growth expectations for the quarter, while hitting the US$0.10 EPS number the street foresaw. Revenue for Q2 was US$20.6 million. Expectations were US$18 million.
The most promising portion of the Q2 report was the growth potential in its Streaming Media business, which has growth to US$9 million from US$7.6 million in Q1. This is an 18 percent sequential growth rate. This segment should continue to grow. I expect it to represent 2 thirds of the business next year and maintain an 80% annual topline growth for the foreseeable future.
MDEA is massively undervalued in comparison to its peers Loudeye (LOUD:NASDAQ) and Sonic Foundry (SOFO:NASDAQ). MDEA is trading at less than 4 times 2001 revenue; SOFO has a multiple of 12, LOUD has a multiple of 40. Recent acquisitions by MDEA have transformed the company into an end-to-end supplier of streaming video solutions.
Time for a run
The next product upgrade, Media 100 iFinish version 3.2, will be available in August, 2000. Further upside will be created by the ever-increasing broadband capabilities of the Web, the growth in video-enabled websites (from 100,000 to 300,000), and a revaluation in comparison to its peers.
Valance powers up 46 percent in two months
Valance, Taipan's play on advanced rechargeable batteries for wireless devices, has graduated from its developmental stage and is beginning its ramp up. Recent positive news from the annual report has propelled the stock up 3 points in the last few days.
If you bought below Taipan's suggested price of US$14 you now have a solid 46% gain in a difficult market.
Electric ramp-up
Revenues are expected to grow from US$1.2 million this year to US$25 million next June and US$100 million by June 2002. But losses are expected to continue until fiscal year 2002. Taipan has a conservative one-year price target of US$40.
In addition to his duties at Taipan, Chris DeHaemer is the editor of The Hammer.
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