Thursday, August 10, 2006

Calls of Note Part 3

- Roth Capital is out commenting MicroStrategy's (NASDAQ: MSTR) 10-Q, saying they are very pleased to see that its impressive 22% y/y growth in support revenue was driven by customer growth and NOT price increases. The disclosure gives them more confidence that MicroStrategy can continue to book strong growth in support revenue and should displace fears that the company is reaping benefits that are 1x in nature.

Another positive disclosure was that the company repurchased another 74k shares of its stock in Q3 for $6 million. From May 1 to August 1, share count has declined 4% from 13.3 mln to 12.8 million. The company reiterated for the second time that it may use debt financing to fund future share repurchases.

In firm's view, the 10-Q's disclosures are encouraging about the company's efforts to build brand awareness, hire aggressively in sales, and penetrate new geographies; we consider these moves a good leading indicator of future license-revenue growth.

Maintains Buy and $110 price tgt.

Notablecalls: expecting to see interest in MSTR shares today. It is always a good sign for software company to grow recurring revenue base - and that's exactly what the company did according to the 10-Q.

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