Thin Clients And Application Service Providers
The macroplay
is a very powerful investing strategy designed to capitalize on a
wide variety of fast-moving news events or “macrowaves†— from war in
Afghanistan and the war on terrorism to interest rate cuts and, yes, even rain
in Brazil. At the same
time, escalating assaults on the web itself have heightened the need for
Internet security. These two macrowaves
are giving a big boost to “thin client†computing and application service
providers.
Thin client computing involves the use
of cheap terminals connected to a central server hosting a variety of
applications. In most cases, it’s a lot
faster and cheaper than networking a bunch of “fat client†PCs, each with
their own applications and hard drives. It’s
also a lot easier to protect a thin client system from attacks by computer
viruses and worms.
Application service providers step into the role of hosting applications.
In other words, rather than a business or organization buying their own
servers and loading them up with applications for a thin client, an ASP runs
both the hardware and software. Because
of economies of scale, it’s typically cheaper to use an ASP than build your
own system for all but the largest companies.
Currently, there are a number of very cheap ASP stocks that are showing strong
solidification of their technical characteristics, e.g., Corio, Digital River.
This is happening because of the macrowave propelling the whole industry.
At the same time, the thin client revolution is finally beginning to
occur, likewise propelled by the 9/11 macrowave.
Citrix Systems
(
CTXS |
Quote |
Chart |
News |
PowerRating) is one stock ideally positioned to take advantage of both of
these trends.yes”> Its Metaframe software allows seamless deployment of Java, Unix,
and Windows applications from central servers to users on virtually any device,
including thin client terminals and even web browsers.
From a technical perspective, this stock looks lousy.
It’s under distribution, its key moving averages are all down, and
the MACD signals are bearish. On
the other hand, IBD ranks it 12th out of 245 stocks on fundamentals
— not bad.
I see this as a value play and position trade based on a compelling set of
macrowaves. I’m looking for a
turnaround that may well be triggered by the release of a new integrated ASP
portal platform, code name South Beach, that is creating a buzz in the ASP
community. I’m scaling in very slowly
looking for some movement — and always ready to bail if things go very south,
rather than South Beach.
If you have a favorite macroplay you
would like me to feature in this column, send me an e-mail or go directly to my web site https://www.peternavarro.com.Â
I’d love to hear from you.