Focus Company: Actuate Corporation (ACTU)
By: Bill Mathews - The CHEAP Investor - Date: June 11, 2005
Introduction
Actuate Corporation is the world leader in Enterprise Reporting Applications that ensure 100%adoption by users. Actuate's Enterprise Reporting Application Platform is the foundation on which Global 9000 organizations (companies with annual revenues greater than $1 billion) and packaged application software vendors develop intuitive, Web portal-like reporting and analytic applications that empower 100% of users with decision-making information.
These applications are deployed inside and outside the firewall to improve corporate performance across a range of business functions including financial management, sales, human resource management, and customer self-service. When tested against other business intelligence products, Actuate's Enterprise Reporting Application Platform has been proven to offer industry-leading scalability and the lowest Total Cost of Ownership. Actuate has over 3,000 customers globally in a range of industries including financial services, pharmaceuticals, insurance, and distribution services, as well as the government sector.
The Company has been a big buyer of its own shares. Actuate's Board recently modified its stock repurchase program implemented in 2001 that allows it to purchase each quarter a dollar amount of stock equal to the amount of cash generated from operations during the prior quarter, with the exact amount to be approved in advance by the Board. During the first quarter of 2005, Actuate is authorized to repurchase up to $2.8 million in shares, which is an increase from the previous amount of up to $1.5 million in a quarter.
Financial Condition
The stock was a high-flyer, trading at almost $40 per share in 2000. With the price down 95% from that high level, it could be an interesting investment. The Company posted good revenues, returned to profitability and reported an excellent balance sheet. Insiders own 7% of the 62 million total shares outstanding and institutions own 65% of the 58 million-share float. Actuate has a healthy balance sheet with almost $50 million ($0.80 per share) in cash, a book value of $.75 per share and no long term debt. The stock trades good volume of approximately 250,000 shares daily. One Director purchased 150,000 shares at $3.05 to $3.20 each in May of 2004. The only negative we see is the recent decrease in revenues. We hope Actuate can turn this around.
While Revenues declined slightly, net income moved from a loss to a profit. The Company's first quarter results, ended March 31, are shown below.
| First Quarter 2005 | First Quarter 2004 | |||
| Revenues | 24,625,000 | 25,668,000 | ||
| Earnings | 245,000 | -377,000 | ||
| Earnings/Share | 0.00 | -0.01 | ||
| Shares_Outstanding | 64.6 million | |||
"Actuate continued to make solid progress with solutions targeted at specific business processes," explained Mr. Cittadini, Actuate's president and CEO. "These are mission critical Enterprise Reporting Applications designed and developed by application development professionals, often with help from our eServices organization, which deliver informational value to everyone using that application. In the first quarter, our focus on solutions resulted in larger orders and a growing pipeline of opportunities, particularly for Financial Performance Management and Customer Self Service applications. We will continue to focus on Enterprise Reporting Applications, adopted by 100% of large user populations, which access diverse data sources delivering breakthrough corporate performance to fuel growth in 2005.
"In our view, Actuate's stock price does not reflect the company's long-term prospects for earnings growth and cash generation and we look forward to this opportunity to enhance shareholder value," concluded Mr. Cittadini.
Conclusion
The stock certainly has the potential to move at least 50 to 100% over the next year. It could move substantially higher if we have a good market.
General information
| Market | NASDAQ |
| Symbol | ACTU |
| Price | $1.84 |
| Contact: | Actuate Corp - 701 Gateway Boulevard - South San Francisco, CA 94080 |
| Telephone | 650-837-2000 |
| Website | www.actuate.com |
© Bill Mathews - The CHEAP Investor
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