Coverage: Overview
The enterprise software industry is always evolving as vendors continuously strive to add new functionality to their products or introduce new solutions. However, we believe there is one thing about software that hasn’t changed through the years – the needs of the users are always the same. We believe the entire history of enterprise software can be traced to two fundamental drivers that have shaped the industry: 1) software must provide to customers a tangible return on investment through improved efficiency, or 2) software must allow management to increase revenues through better information management. Time and time again, the emergence and/or failure of new software markets can be directly tied to the degree by which the respective technology leverages the above two drivers to allow firms to grow their businesses. In our view, those vendors that can offer solutions that increase productivity and achieve higher ROI will be in the best position to succeed. Accordingly, we advise investors to focus on strategic areas of IT spending such as security, storage, and Linux, as we believe these areas will continue to garner the lion’s share of software budgets going forward. However, we also recommend that investors add to their portfolios a little dose of those companies with exposure to emerging areas of the market, such as “applistructure” management, on demand applications, and Internet-based infrastructure, as we believe these nascent industries will be benefactors of future IT spending patterns.
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Lawrence Petrone, CFA
As a Senior Research Analyst at WR Hambrecht + Co, Lawrence covers the Special Situations and Enterprise Software sectors. Lawrence has over 12 years of experience in capital markets and investment experience as a senior analyst and PM in the equity markets, and as a senior analyst in the high yield and corporate bond markets. His research experience includes the Data Security, Networks & Communication, and Telecommunications Hardware, Software, and Services industries. Prior to joining WR Hambrecht + Co, Lawrence was Director of Research at TheStreet.com Ratings, a Supervisory Sell-side Analyst at America’s Growth Capital and Fidelity Capital Markets, a Senior Sell-side Analyst at Decision Economics, a Portfolio Analyst at Fidelity Management & Research Company and a Senior Corporate Analyst at The Boston Company.
Lawrence was also Portfolio Manager and founder of Walden Brook Capital Partners LLC, a small cap long/short hedge fund. Lawrence is a Chartered Financial Analyst and a member of the Boston Security Analysts Society. He has a B.A. in History and Education from Gordon College, and a M.Ed. from Boston College. |
