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Cloud Stocks Again Lagged Equity Benchmarks in 1H2014

Posted by Igor Stenmark
Igor Stenmark
Igor Stenmark is a Managing Director of MGI Research.
User is currently offline
on Wednesday, 09 July 2014
in MGI Quant

As was the case in 2013, during the 1H2014 equities of cloud companies have lagged broad market benchmarks. In 2013, the 2nd half of the year reversed the trend - cloud equities not only caught up but also outperformed the market finishing the year up over 32.22% vs. S&P 500 up 29.69%.

As of July 7th 2014, MGI Cloud 30(tm) Index - a portfolio of 30 leading cloud related equities, was at $273.97 - down 4% on a YTD basis.

While the broad market benchmarks have also had a stormy 1H2014, on YTD basis S&P 500 squeezed out a 2.27% gain by July 7 2014.

 

 

 

 

 

 

 

 

On a cumulative basis since we have begun tracking MGI Cloud 30 Index, the cloud stocks have vastly outperformed general markets. Since late 2009 when we first created and began tracking MGI Cloud 30, the index has gained almost 174% on a cumulative basis. During the same period, S&P 500 advanced by 69.66%.

During the period from late February to early-mid May of 2014 we have seen MGI Cloud 30 correct by about 28% (peak to trough), followed by a recovery back to the long-term trendline.

A similar and more dramatic sell off took place in 2011 with a 33% correction which was then followed by a reversal to the mean and an outperformance with an over 2% gain in 2011 and a 33% gain in 2012.

Cloud adoption continues to grow - it is a steady process with an increasing number of buyers. The growth in cloud far outpaces GDP growth, inflation and growth in IT budgets.

Marketo (NASDAQ:MKTO) replaced Vocus (NASDAQ:VOCS) as an index component as Vocus was taken private by GTCR for $18 per share.

For additional information, index composition, data or index licensing, please contact MGI Research at 888-801-3644.

© 2014 MGI Research, LLC
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Amazon’s Huge Cloud Lead – Looking for #2

Posted by Andrew Dailey
Andrew Dailey
Andrew Dailey is a Managing Director of MGI Research
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on Monday, 18 November 2013
in Cloud Computing

Road Notes – Amazon re:Invent Conference in Las Vegas, Nov. 11-14, 2013

The re:Invent conference, Amazon’s annual gathering of its cloud computing customers, prospects, and partners, has become the barometer of industry adoption of cloud computing. It’s become a massive event, hosted in Amazon’s distinct style, and underscores Amazon’s lead in the nascent, but growing market for cloud-based IT services.  Organizations of all sizes are looking at Amazon, and practical hurdles limit the path of adoption.  The success of the event also highlights the lack of a clear #2 player in the market.  This is a real issue for competitors, because there is ample room for Amazon to improve its messaging and sales pitch.

© 2013 MGI Research, LLC
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Replay of Primary Access Oct 10 2013 Conference Call on Cloud ERP is now available

Posted by MGI Research
MGI Research
MGI Research Analyst Team
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on Tuesday, 15 October 2013
in SaaS
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Replay of Primary Access Sep 25 2013 Conference Call with Jaspersoft

Posted by MGI Research
MGI Research
MGI Research Analyst Team
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on Monday, 30 September 2013
in Big Data

The replay of Primary Access September 25 2013 conference call with Karl Van den Bergh of Jaspersoft is now available. If you are a current subscriber, please CLICK HERE to access. If you are not a subscriber, please contact Vince Conrad at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

© 2013 MGI Research, LLC
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Cloud Stocks Pull Higher Away from Market Benchmarks

Posted by Igor Stenmark
Igor Stenmark
Igor Stenmark is a Managing Director of MGI Research.
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on Thursday, 19 September 2013
in Cloud Computing

After a long period of under performance in 2013, cloud equities caught up and surpassed major market performance benchmarks. The MGI Cloud 30 Index has been making and breaking new highs and the pull higher has now accelerated vis-a-vis the market overall.

© 2013 MGI Research, LLC
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The Cloud Trend is Intact - MGI Cloud 30 Index Reaches an All Time High

Posted by Igor Stenmark
Igor Stenmark
Igor Stenmark is a Managing Director of MGI Research.
User is currently offline
on Monday, 29 July 2013
in MGI Quant

The upward trend in cloud equities is intact. On Friday, July 26 2013, The MGI Cloud30(tm) Index reached an all-time-high of 247.02. But even with the latest surge in performance, the cloud stocks have markedly under performed the broad equity index benchmarks like S&P 500. The gap between MGI Cloud30 and S&P 500 has narrowed considerably from over 17% earlier this year to just over 3.5% as of Friday. While it is difficult to assess how many investors have followed this arbitrage situation, it is clear to us that the interest level is clearly rising.

© 2013 MGI Research, LLC
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State of Mobile Apps 2013 Study Continues - Make Your Input Count

Posted by MGI Research
MGI Research
MGI Research Analyst Team
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on Friday, 26 July 2013
in Mobile Computing


Our 2013 State of Mobile Apps study is on-going.

The study main focus is on mobile strategies. Almost half of the companies we have interviewed this year on mobile, indicate either an average or below average ROI. Many cite lack of a clear and focused strategy as a key contributing factor to these results.

Early data shows very interesting changes in mobile strategies.

© 2013 MGI Research, LLC
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Posted by MGI Research
MGI Research
MGI Research Analyst Team
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on Friday, 12 July 2013
in Cloud Computing

This is the opening keynote delivered by Igor Stenmark, Managing Director of MGI Research at the 2013 MGI Research Cloud Innovators Summit on March 5, 2013 at the Core Club in New York City . Discusses market sizing for IaaS, valuation trends, key drivers for growth, winners and losers.

© 2013 MGI Research, LLC
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Jack Sepple, Global Managing Director of Accenture at MGI Research 2013 Cloud Innovators Summit

Posted by MGI Research
MGI Research
MGI Research Analyst Team
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on Wednesday, 12 June 2013
in Cloud Computing

Presentation by Jack Sepple, Global Managing Director of Cloud Strategy at Accenture at the 2013 Cloud Innovators Summit hosted by MGI Research on March 5th 2013 at the Core Club in NYC.

© 2013 MGI Research, LLC
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Michael Crandell, CEO and Founder of RightScale Speaks at the 2013 MGI Research Cloud Innovators Summit

Posted by MGI Research
MGI Research
MGI Research Analyst Team
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on Wednesday, 12 June 2013
in Cloud Computing

Michael Crandell, CEO and Founder of RightScale Speaks at the 2013 MGI Research Cloud Innovators Summit about cloud management tools market, competitive landscape and positioning of RightScale within that market. Recorded on March 5th 2013 at the Core Club in New York, NY.

© 2013 MGI Research, LLC
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Interxion Holding B.V. added to MGI Cloud 30 Index

Posted by MGI Research
MGI Research
MGI Research Analyst Team
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on Wednesday, 10 April 2013
in Cloud Computing

As of April 9th 2013 MGI Research added Interxion Holding B.V. - a Dutch-based provider of data center and interconnect services to MGI Cloud 30 Index - an index of 30 cloud equities.

Interxion, which trades on the NYSE under the INXN symbol, replaces Saba Software and holds about a 3% target weight in MGICloud30. Other key components of the MGI Cloud30 Index include companies such as Equinix, Dupont Fabros Technology, Digital Realty Trust, Salesforce.com, Rackspace and ServiceNow, among others. For additional information on the index and its components see a recent research note: MGI Cloud 30 Index - Is the Cloud Trend Intact?

 

Relevant Research:

Rackspace Revenue Miss: An 800-to-1 Punishment

© 2013 MGI Research, LLC
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An In-Depth Look at How Mobility Drives Business

Posted by MGI Research
MGI Research
MGI Research Analyst Team
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on Thursday, 04 April 2013
in Mobile Computing

We are launching our 2013 industry study of mobile strategies, tools, best practices and budgets. This is an extension of the highly successful 2012 mobile study that focused on identifying the gaps that separate companies that are best in class vs. those that are average.

If you have a point to of view and more importantly hands-on exposure to mobile at a management, business and/or technical levels, we invite you to participate in the survey. Additional details about the study are available here. All participants will receive a free copy of the Executive Summary and will be entered into a drawing to win an iPad Mini.

Numerous CIOs have shared with us feedback from last year's study, indicating how the results have helped fine tune their strategies and budgets. We look forward to hearing from you.

Past Related Posts:

Mobile Apps Study Aims at Budgets, Practices, Strategies

NPR Marketplace Interview on Mobile Payments

Microsoft Surface - Curiosity is not Enough

Mobile Enterprise Application Platforms (MEAPs) Buyer’s Guide

CIOs talk about not renewing RIM Contracts - Next Six Months Critical

© 2013 MGI Research, LLC
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Rackspace Revenue Miss: An 800-to-1 Punishment

Posted by Igor Stenmark
Igor Stenmark
Igor Stenmark is a Managing Director of MGI Research.
User is currently offline
on Thursday, 14 February 2013
in Cloud Computing

A very modest miss of analyst revenue estimates has cost Rackspace (NYSE:RAX) dearly. The company quarterly results fell short of analyst estimates by $2.54 million, or less than 1% of its quarterly revenue target. The punishment that RAX endured as a result of this miss could only be described as brutal. From its pre-announcement level of around $75 per share Rackspace stock fell in two days of trading to just below $60 - a loss of over $2Billion in market value. For every dollar that Rackspace revenue missed the Street estimate, it has so far lost over $800 in market cap - an 800-to-1 punishment. As a reminder, Rackspace typically trades in a multiple range of 7X to 9X revenue. So what is behind the sell-off, is it an over-reaction and when will it stop?

RAX was clearly priced for perfection, - a momentum story and a trend stock that could only stay at its hefty levels if it not only met but consistently exceeded analyst estimates and raised guidance if available. At around $59 the shares are trading at an intermediate support level. If the shares make a break below $59, - more downside is possible. At the same time, we continue to see the momentum in cloud computing as strong and accelerating. The long term trend remains in place and is broadening outside the base of early adopters. Rackspace continues to be cited by IT buyers and competitors as one of the Top 3 suppliers of cloud computing infrastructure services. Its service levels are praised and pricing levels are often subjected to criticism - a sign that the company is able to maintain its margins against a perception (misguided in our view)  that there seems to be an onslaught of near infinite capacity of cheap computing power. One of the consistent inputs we hear from the field is that many customers use Amazon Web Services for development, but for production often chose Rackspace regardless of price.

Where we do see a challenge for Rackspace and other providers of cloud services, components and tools is that the very broadening of the appeal of cloud computing may actually create a temporary slow down in the sales momentum. The focus of the market is shifting away from early adopters to a much more mainstream set of buyers who take longer to buy, run longer trials and negotiate much harder on price and service levels. This transition is a process, not an event and will create a temporary damping effect in the cloud space. So far, during the recent earnings announcement season, we have seen a number of pure play and component suppliers in the cloud space stumble and see their stocks punished severely. VMware, Riverbed and CenturyLink are all examples of recently disappointing results.

In the near to mid-term Rackspace may see a moderation of its multiple. We do not see the company going the way of Blackberry but investor caution will be more pronounced as the company and some of its key competitors, suppliers and partners wade through this near term period of buyer transition.

Note: The preceding is not an offering or a recommendation to buy or sell securities of any kind. Rackspace, VMware, Riverbed and Centurylink are components of the MGI Cloud30 Index.

Recent Research:

2013 Cloud Innovators Summit: Core Club, NYC March 5th

Monetization as a Service - 20 Questions with MetraTech CEO Scott Swartz

Secure Cloud Opportunity - 20 Questions with CEO of Firehost - Chris Drake

Video Replay of the "Battle of PaaS Evangelists July 25 2012"

Is Security a Barrier to Cloud Adoption?

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2013 Cloud Innovators Summit: Core Club, NYC March 5th

Posted by MGI Research
MGI Research
MGI Research Analyst Team
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on Thursday, 07 February 2013
in Cloud Computing

On March 5th in New York City we are hosting the 2013 MGI Research Cloud Innovators Summit. This will be a half-day, invitation-only conference focused on business and technology innovation in Cloud Infrastructure and Tools. This is an exclusive opportunity to meet CEOs of up and coming cloud providers, network with cloud industry executives, investors and analysts. MGI will also present our 2013 Cloud Computing Scenario and discuss the MGI Cloud30 Index.

© 2013 MGI Research, LLC
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Microsoft Surface - Curiosity is not Enough

Posted by Igor Stenmark
Igor Stenmark
Igor Stenmark is a Managing Director of MGI Research.
User is currently offline
on Tuesday, 08 January 2013
in Mobile Computing

During the holiday season we have been taking a closer look at the Microsoft Surface tablet and assessing interest among consumers, enterprises and app developers.

Our take is that the current version of Surface has some interesting aspects but lacks the critical mass of capabilities and design elements to really "move the needle" for Microsoft in the near future. Our skeptical view is shaped by several factors:

© 2013 MGI Research, LLC
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2012 SaaS Innovators Summit - Nov 13th 2012 in San Francisco, CA

Posted by MGI Research
MGI Research
MGI Research Analyst Team
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on Wednesday, 17 October 2012
in SaaS

On Nov 13th MGI Research is hosting an intensive half-day, invitation-only “21 conference” focused on technology and business innovation in SaaS.

© 2012 MGI Research, LLC
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2012 SaaS Innovators Summit - Nov 13th 2012 in San Francisco, CA

Posted by MGI Research
MGI Research
MGI Research Analyst Team
User is currently offline
on Wednesday, 17 October 2012
in SaaS

On Nov 13th MGI Research is hosting an intensive half-day, invitation-only “21 conference” focused on technology and business innovation in SaaS.

© 2012 MGI Research, LLC
Tags: 3 factors shaping cloud, ACI Worldwide, ACIW, Acquia, acquisition for saas product, acquisition multiples, acquisition sap, Actuate, ADBE, Adobe, ADSK, Advent Software, ADVS, Amdocs, amdocs saas, app industry trends, application software industry trends, ARBA, Ariba, aspen technology, aspen technology, Autodesk, average saas revenue, average valuation for saas, AZPN, BBBB, BIRT, Blackbaud, Blackboard, BLKB, BMC, BMC Software, Broadvision, BTIG, business saas software valuations, BVSN, CALD, Callidus Software, Certain, Citrix, CKSW, Clicksoftware, cloud, cloud computing, cloud computing industry analysis, cloud computing industry trends, cloud computing security incidents, cloud computing technical analysis, cloud cyber incidents, cloud industry trends, Cloud software valuation, CNQR, CNVO, collabnet, company valuation trends, compare saas multiples to tech software, Concur, Constant Contact, Constellation Software, Convio, Coupa, CRM, CRM valuations, CSG Systems, CSGS, CSOD, CSU, 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Monetization as a Service - 20 Questions with MetraTech CEO Scott Swartz

Posted by Igor Stenmark
Igor Stenmark
Igor Stenmark is a Managing Director of MGI Research.
User is currently offline
on Friday, 12 October 2012
in SaaS

While much of the focus of SaaS is on services that are driven off a browser, there is nothing inherent in the model that prohibits programmatic access to structured web services with a defined business functions. We are begininng to see an evolution of a market for complex business functions offered on a web as a service. One of such services is Monetization, i.e. ability to perform complex calculations over the web for functions such as billing, sales compensation, benefit/pension calculations, complex revenue splits, etc. etc. Examples in the business world abound and range from stock exchange transactions to cell phone billing to sales commissions for complex products.

In the past such processing was largely handled by programs embedded inside monolithic ERP products or custom coded by enterprises. In both cases, the cost for anything robust was prohibitive for most small and medium sized businesses. Now, with a cloud-based offering, many midsize and some small firms will have access to very flexible calculation capabilities.

One of the companies focused in this space is MetraTech. We recently hosted the CEO of MetraTech Scott Swartz for a 20 Questions session during which we discussed the merits of this emerging opportunity.

© 2012 MGI Research, LLC
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Secure Cloud Opportunity - 20 Questions with CEO of Firehost - Chris Drake

Posted by MGI Research
MGI Research
MGI Research Analyst Team
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on Monday, 01 October 2012
in Cloud Computing

Earlier in September we had an in-depth conversation with Chris Drake, CEO of Firehost - an emerging supplier of secure cloud computing infrastructure services. In this 20 Questions session, Chris shared his views and practical experiences with bringing to market a secure cloud offering.

Related Recent Reports and Comments:

Video Replay of the "Battle of PaaS Evangelists July 25 2012"

Is Security a Barrier to Cloud Adoption?

© 2012 MGI Research, LLC
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Video Replay of the "Battle of PaaS Evangelists July 25 2012"

Posted by MGI Research
MGI Research
MGI Research Analyst Team
User is currently offline
on Wednesday, 01 August 2012
in Cloud Computing

MGI Research - Battle of PaaS Evangelists July 25 2012 from MGI Research on Vimeo.

 

 

Recording of the "Battle of PaaS Evangelists" on July 25 2012 with Andrew Dailey and Igor Stenmark of MGI Research, Sacha Labourey, CEO of CloudBees and Sinclair Schuller, CEO of Apprenda

© (c) 2012 MGI Research, LLC
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