archive link to article here..
https://archive.is/gc6aq
29 replies (most recent on top)
SAS has jumped the shark.
"This type of buyer will view AI and Viya products the same way they view JMP: it’s nice, but it’s small, and it doesn’t fit our business model. Should we keep it? ki-l it? or sell it?"
Keep it? Nope. Because, as you said, it does not fit their biz model.
Ki-l it? No money there. Just a tax write off. Besides that, the draw to ki-ling it is expediency. And that should not be underestimated.
Sell it? Yep. And you can bet the price will be low so sells fast. No one wants to pay to keep clutter.
The problem is getting a buyer in the first place. So far the only nibble has been Broadcom. If Broadcom walked because they saw way too much junk to unload compared to the good stuff they wanted to keep, finding a buyer will take awhile.
SAS, if serious about selling, needs to conduct some major shedding of insignificant revenue products. As is, the clutter is obscuring the appeal of the cash cow, hence constipating a sale.
unfortunately that seems to make sense. make the decline as predictable as possible with high profits (due to the cost cutting) riding it all the way down.
spin off the small entity with higher growth potential and treat it as a risky VC investment with potential returns varying from burning all the cash up to the rare home run.
“Why does a Broadcom or similar company buy declining revenue streams? Presumably to do massive layoffs / cost-cutting then squeeze out the max profit from the declining revenue?”
Yes, they do exactly that. It’s not a pleasant business model, but a lucrative one. Broadcom has bought many such revenue streams, through their CA Technologies subsidiary:
https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_CA_Technologies
Private equity firms like Thoma Bravo do the same:
https://www.thomabravo.com/companies
“If there is any real glimmer of potential in the nascent AI related streams, perhaps that piece would instead be a spin off?”
Almost always, an acquiring company wants to buy the larger piece, and spin off the smaller ones. The nascent AI related streams may grow larger, but that will take time.
Why does a Broadcom or similar company buy declining revenue streams? Presumably to do massive layoffs / cost-cutting then squeeze out the max profit from the declining revenue? - declining (slowly?) from $3B is still a lot of profit potential. If there is any real glimmer of potential in the nascent AI related streams, perhaps that piece would instead be a spin off?
“If and when SAS does go public, Harris sees it doing so as an artificial intelligence company… SAS has been shifting its corporate messaging toward AI and away from legacy analytics… Viya, the company’s AI and analytics platform, saw revenue increase 30 percent year-over-year.”
This is a really interesting article, perhaps a preview of the IPO road show, if there ever is one. One can’t blame BH for giving positive spin; that’s part of his job.
However, if AI or Viya were contributing $500M per year, SAS would let us know. Instead, they announce percentages because these revenue streams are small.
The main asset of SAS is its $3B annual revenue stream — and the main part of that is “legacy analytics”.
Therefore — at least for the next several years — the likely buyer of SAS will be a company that buys large declining revenue streams. That means private equity, or a company like Broadcom.
This type of buyer will view AI and Viya products the same way they view JMP: it’s nice, but it’s small, and it doesn’t fit our business model. Should we keep it? ki-l it? or sell it?
In theory, a small revenue stream might grow enough to attract a different type of buyer. But if SAS is sold in the next few years, there’s not enough time.
"If you don’t see that they are not applying the same criteria to their own statements then I don’t know what to tell you."
It's clear that you think you're making a point. I do not agree that you have a point to make.
To wrap this up, I don't have to be able to report SAS's revenue and expenses in a two-column ledger like the company does (but even SAS can't do that). I only have to show that statements about profit, revenue, and growth are meaningless in the absence of evidence, and I've done that.
Again, we already covered this:
https://www.thelayoff.com/post/@4hmb+1pYqO6eY
All of the evidence supporting any statement I made is available to anyone who has worked at SAS since 2018 or so (because we lived it), or from the press or the company's own corporate communications, and is frequently reiterated here. Choose to believe it or don't, anon, I don't care which.
Comrades, I come to you today with reports of the Great International Horse Race!
Our glorious country, the Soviet Union, finished second!
The United States, our evil nemesis, finished next to last.
Oh hail the grand achievement of our Worker's Paradise!
Ho-o Sovieticus didn't know there were only two horses in the race. The U.S. won, and the Soviets lost.
It's very similar to the language from SAS. Remember the gratis VA "sales" included in contract bundles?
The person said “ so statements like that are meaningless in the absence of real numbers” in the context of "third year of double-digit SAS Cloud growth”
I couldn’t agree more.
But then that same person followed up that statement with stuff like
“ The company has spent billions on Viya. It is literally robbing Peter (SAS9) to pay Paul (Viya), and Viya revenue is not increasing fast enough to offset loss of SAS9 revenue. What's the ROI on Viya? Hundreds of millions on billions?”
If you don’t see that they are not applying the same criteria to their own statements then I don’t know what to tell you.
@2tbh+1sh6GAHf You can call that a childish argument all you want. Deflect with nonsense statements about empowers with no clothes.
But if you don’t see a hint of truth in the assertion you are either not being intellectually honest with yourself or one of the less good alternatives.
@2tbh+1sh6GAHf You probably think that sounded intelligent :)
Sure, I'll explain why I downvoted @2eni+1sh6GAHf. Anon said:
"that same statement nullifies everything you said".
That's a reading comprehension fail. The numbers cited are exemplary, and that is the rational and factual basis for the statement: "statements like that are meaningless in the absence of real numbers". Anon appears to want to argue that those numbers aren't "real", but they're _just as real_ as anything that's ever appeared in any SAS press release, or the most recent meanderings from any SAS executive.
The claim that "that same statement nullifies everything you said" is an argument that a child would make: "nuh-uh!" and contributes nothing to the discussion, but is an obvious and transparent attempt to deflect criticism away from the content-free release that SAS PR wants to focus attention on.
Stop complaining that some kid in the crowd broke the spell by telling you that the emperor has no clothes. The emperor has no clothes.
I would love to hear rational reasons for downvoting @2eni+1sh6GAHf comment.
Rational reasons specifically about what he/she said and in the context of what they were replying to.
“so statements like that are meaningless in the absence of real numbers”
As long as you realize that same statement nullifies everything you said also then fine. Same argument applies to all horsesh-t whether it is rainbows and puppies kind or the anonymous disgruntled kind.
"So much for Viya haters."
Wow. I thought we covered this months ago... but here we go again:
Particularly telling are statements like: "third year of double-digit SAS Cloud growth". That can mean:
2020: $5000
2021: $5500 (+10%)
2022: $6050 (+10%)
2023: $6655 (+10%)
so statements like that are meaningless in the absence of real numbers. Revenue of $6655 is not impressive, but the statement that there have been three consecutive years of double-digit growth is true and sure makes it sound like it's something.
Same for Viya "sales growth". What does that even mean? 2022 sales of $200 million, 2023 $246 million? Who cares? The company has spent billions on Viya. It is literally robbing Peter (SAS9) to pay Paul (Viya), and Viya revenue is not increasing fast enough to offset loss of SAS9 revenue. What's the ROI on Viya? Hundreds of millions on billions? Now that's a conversation starter.
@2djh+1sh6GAHf “Haven't numerous past threads proven the not a word coming out of the mouth of BH can be trusted as being true?”
If by “proven” you mean a bunch of disgruntled anonymous people spouting sh-t then I suppose so. I suspect the word “proven” has a deeper meaning to me than you.
I’d respect BH more if he’d mentioned the relative percentages of SAS revenue that correspond to SAS Viya and SAS9. I’d say that my respect for him might even experience a 30% uptick.
Haven't numerous past threads proven the not a word coming out of the mouth of BH can be trusted as being true?
There’s a reason they use percentages and not specific dollar figures. None of know exactly how much he is talking about and that is intentional.
“ And it’s not just hype at SAS either, Harris said, as Viya, the company’s AI and analytics platform, saw revenue increase 30 percent year-over-year. The cloud native version of Viya is up about 200 percent, he said, with solutions rising 33 percent year-over year.”
So much for Viya haters.
Elon Musk says any company that isn’t spending $10 billion on AI this year like Tesla won’t be able to compete (https://finance.yahoo.com/news/elon-musk-says-company-isn-120935161.html).
“Any company not spending at this level, and doing so efficiently, cannot compete,” he posted on X Sunday.
SAS does not have $10B to put toward AI. We can only put $1B at most toward AI, so we can never compete with the big players at their levels, but we have to be seen making an effort toward AI otherwise there will be no future at all.
The purpose of an IPO is to exit. It’s a guaranteed sale, at the best price investment bankers can find. In 12 months, SAS will meet SEC auditing requirements to IPO.
The purpose of becoming “IPO-ready” is not necessarily to IPO, but to advertise that the company is for sale. Beginning the IPO process may attract a private buyer, which would be simpler for the sellers. If not, the IPO can be their last resort.
The purpose of AI hype is to enhance the chances of a sale. In the current market, AI is necessary to attract buyers.
The purpose of the CTO, in this case, is to advertise the sale. That’s part of his job; he’s doing what he’s paid to do.
Keep on kicking the can...what are they waiting for, Broadcom to return?
SAS is so desperate to be seen to be playing with the big boys in AI...it's sad and pathetic.
Yes, shifting its corporate messaging towards AI, but not its products!
I predict BH is more likely to lose his position in 12 months than SAS is to IPO
womp womp
lol, "Harris estimates the Cary technology company is 12 months away from being ready to go public."
It’s laughable. Sas9 is the only thing paying this billion SAS campus drive.
“said SAS has been shifting its corporate messaging toward AI and away from legacy analytics”
LOL