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Sunday, May 22, 2005

BakBone Software

BakBone Software makes backup/archival software which has a low total cost of use. Sales are rapidly increasing across the board and they seem to have crossed the operating cash flow breakeven point (earnings breakeven doesn't seem far behind). High gross margins are a good thing. They've had problems with late-filings and restatements. And they give out shares of stock like AOL hands out free CDs.

May 31, 2005 update: I've decided against investing much in BakBone (I had started buying a few shares). They're a good company, they have a good product, their revenues are growing fast, but I really have no idea how long they'll keep their competitive advantage. In going through the 10-K, I just got a bad sense of where they stand in the food chain. I may come back to this later on. But I'd rather find something that's a lot more certain.

UPDATE: I changed my mind again when the stock price dropped to $1.50 and below after they reported bad news. I gathered more notes on BakBone here and here and here and here. This is a case where a really cheap price makes it worth looking closer at the business. Make no mistake about it, the accounting is definitely screwed up.

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