For arguments sake, let's say SAS was valued at $17B in 2021 based on the potential acquisition by Broadcom. If $17B was the baseline in mid-2021, what do you think the current value on the market would be today? Think the value is down 10%, 20%, 40%? Anyone think it is appreciating in value?
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ideally whatever you do in your plan and execution is good for growth, and that measurable growth would then help you fetch a better sale price as well.
A LinkedIn job search for "SAS" "Viya" returns exactly ten matches -- in the entire United States.
I'd cancel Viya, and reassign its resources to some product that customers want -- if I were positioning the company for growth.
But I might not cancel such a large and visible project -- if I were positioning the company for a sale.
@Qfky+1u9i78Ve
You are spot on.
I was an AE and we we had specific targets for VA - both $ and volume. Every new SAS server sale was VA, even if the customer only ever used EG or Display manager.
Usually, they would try out the freebee VA, decide it was complete rubbish, but it would be left switched on as they needed the SAS9 engine under the hood.
Same thing when VA was moved to Viya. Every Viya Server also had a SAS9 Server bundled in. We'd sell it as Viya, but only the SAS9 bit was used.
I'd wager there are close to zero actual users of the Viya products. All those Viya sales were actually SAS9 sales, dressed up with the Viya baggage that's never used. Quite ridiculous really.
How do they define "sales"?
Is a sale of Viya when the customer trades money SPECIFICALLY for Viya, or is it when a customer trades money for something else, and Viya is bundled with it?
If I recall correctly, this game was played with VA. Customers weren't purchasing it so it was thrust upon them in a bundle and marked as a sale.
From what I understand, there is a Sales portal where those in the know can view the cumulative dollar amounts of deals closed this year. If you can find that, maybe you'll have your answer as to what is really going on, especially if it is broken down by product and has a comparison to previous years.
“They unfortunately aren't close to their revenue and profit targets, and nothing suggests there is anything in the pipeline to turn that around.”
Viya sales are increasing, according to BH’s recent interview.
Will they ever increase sufficiently to make up for the decline of V9?
I doubt it. Therefore, I think the game plan must be to sell the company before that question is clearly answered.
“IPO-readiness” is a guaranteed exit strategy. You can IPO anything, whether revenues are growing or not. But it’s a last resort. It would be simpler to sell to a private buyer.
“IPO-readiness“ also advertises that the company is for sale. But it’s been three years, and clearly no private buyer has made an acceptable offer.
Viya is already a failure, in the opinions of many on this site. The company must be sold before that becomes the opinion of interested buyers — in the case of an IPO, the general public.
They unfortunately aren't close to their revenue and profit targets, and nothing suggests there is anything in the pipeline to turn that around. Even if the original intention was an IPO, they know the numbers aren't there to support a successful one.
Yea, the truth will be revealed late 2025 when we hear (or not) "We are not quite IPO ready, the market is not ready, the goal is 2026!"
You give this guy too much credit. The IPO is Kabuki to string folks along and get them off his back. He's not going to do anything.
"The simplest explanation is more likely: that he’s just doing what any good businessman would do: taking his time, working to get the best price for the biggest sale of his life."
Or maybe he wants to control the trajectory of the sale? If for no other reason he knows the heirs will dispose of SAS in a new York minute.
Yes wife-battering is off the mark.I’ll admit to some trauma bonding regarding SAS Institute; I seem to have had an unusual number of horrible managers. But my wife batters me only rarely :-).
I posted what I posted because I believe these conspiracy theories are harmful. In all probability, they obscure the truth.
Sure, it’s possible that the SAS CEO is clinging to power, like some mad King MacBeth. This happens, and it’s dramatic, and entertaining. it might even be true.
But there’s no evidence for it. The simplest explanation is more likely: that he’s just doing what any good businessman would do: taking his time, working to get the best price for the biggest sale of his life.
All may go as you all believe.
But the simplest, most likely explanation is that SAS is being prepared for sale because SAS is being sold, and is making a reasonable search for a good price.
“But if a psychological obstacle is blocking a sale, it seems that it would also block preparations for a sale.”
I disagree. In the presence of a psychological obstacle to a sale, making preparations for a sale enable the blockee to believe they are getting closer to a sale, even though they might have no real intention of ever pulling the trigger on a sale.
You can prepare for a sale as much as you like, but if you’re not willing to take the last step then it’s much like the dichotomy paradox, in which you continually cover half the distance to the destination. Yes, you move forward but no, you never finish.
"But if a psychological obstacle is blocking a sale, it seems that it would also block preparations for a sale."
Everything is for sale. Price it premium and if a buyer is willing, then the preparations paid off. JG and JS won't have bruised egos if SAS sells for their premium asking price. That puts a smile on their face and makes those old men feel like they still have game. However, it is hard to imagine SAS selling for a premium price because it simply is not a growing company.
Realistically, the preparations most likely will come into play when:
- JG and JS recalibrate due to them realizing the market is not willing to buy at a price anywhere near their asking price.
- Death of one or both founders predates a sale. If it plays out that way, the preparations grease the way for the heirs to sell quickly. The heirs are likely to sell for a price much less than the price the founders were asking - if for no other reason than the heirs simply do not have skin in the SAS operation.
The sale seems to be in a state of constipation. Another possibility could be that JS is continuing to be a PITA to JG and is the one balking at selling. Appearances suggest that JS has less of a life outside of SAS than JG and he is certainly more of a nerd. Bottom line: personalities between two strong willed, but very different men clashing over the sale.
My crystal ball does not see a sale happening before the end of 2025 and that is a best case scenario. Worst case scenario is the economy tanks and the sale drags and drags.
It’s possible that JHG has sunk-cost fallacy or some other sort of stumbling block.
But if a psychological obstacle is blocking a sale, it seems that it would also block preparations for a sale.
It hasn’t.
Again, Occam’s Razor says that the simplest solution is the most likely.
Maybe somebody at the golf game will buy it.
They built something that they can justifiably feel very good about in my opinion. They made some great software (for its time) and provided a very good and stable job for many thousands of people over 4 decades.
"Any experienced businessman like JHG understands this well."
Agree that JG and JS likely understand that very well. Bit understanding is not the problem. The problem is acceptance and that is a totally different matter.
SAS has been their entire life which makes letting go of SAS a huge stumbling block. Their heirs likely don't have that mindset and will expedite a sale post death of either JG or JS.
Remember, none of the heirs have displayed actions indicative of interest in being part of the operational aspects of SAS. Bottom line the owners have as much interest in SAS as their heirs seem to have disinterest.
Sunk-cost fallacy - the phenomenon whereby a person is reluctant to abandon a strategy or course of action because they have invested heavily in it, even when it is clear that abandonment would be more beneficial.
“There is no time like the present when a sale involves a declining revenue stream.”
Any experienced businessman like JHG understands this well.
The actions we’ve seen — buyouts, layoffs, creation of subsidiaries, cleaning up the books — are typical preparations for a sale.
Occam’s Razor says the most likely explanation is the simplest: that the company is for sale, but so far no one has met the asking price.
Precisely, therefore, SAS seems to be JG‘s immortality project:
https://en.m.wikipedia.org/wiki/The_Denial_of_Death
"Does anyone truly believe either founder needs money bad enough or has the stomach to see their baby get eviscerated post sale?"
No. That's why the can keeps getting kicked down the road over and over again. Latest we heard concerning a sale was "maybe 2025".
There is no time like the present when a sale involves a declining revenue stream.
Many years back JG said something like "when I am done with SAS, they will be throwing dirt over me". Seems to be playing out that way.
The owners don't really need the money so they're not going to sell their baby at fair market price (low price). Setting the price too high will discourage buyers (like Broadcom) and that's ok if they're not ready to let go. However, if someone is foolish enough to buy it at a ridiculous high price then maybe it makes letting go a bit easier and they may sell.
“ The owner(s) wanted $20B in cash (based on previous rumors) and Broadcom deal failed through”
Oh well if it is based on rumours…
Does anyone truly believe either founder needs money bad enough or has the stomach to see their baby get eviscerated post sale?
@1uzb+1u9i78Ve
I did not say SAS's $3B declining gross revenue is worth $12B.
I said SAS will be lucky if it gets $12-13B. Notice the word "lucky".
The owner(s) wanted $20B in cash (based on previous rumors) and Broadcom deal failed through. $20B is too much and unrealistic back then and even now $12-13B is too much and SAS would be "lucky" to even get that. Now SAS is probably not worth more than $6B, considering net revenue.
It's reasonable to ask $15-20B -- especially in a frothy market. But fair market value may be half that.
Would you consider IBM comparable? That's another mature tech company with declining sales.
IBM's Price / Sales ratio is 2.9. For SAS, the same ratio suggests a price of $8-9B.
And the market is high now. Last year, IBM's Price / Sales ratio was only 2.0.
https://www.macrotrends.net/stocks/charts/IBM/ibm/price-sales
Perhaps you have considerably more accounting/finance acumen than I, but is there a universe in which $3 billion in declining revenue is worth $12 billion now? — unless the real estate is included, which is a separate entity that JG would not likely consider as part of the $12 billion software company valuation.
Assume the cost of supporting current SAS customers could initially be reduced to ~$800m/year through massive layoffs, moving to bargain basement corporate digs, reducing benefits, etc., and then progressively throttled back as revenue continues to decline over time. Further assume that revenue decline will accelerate if SAS changes ownership, because customers will prioritize moving off the software. Or, if new owner radically increases licensing renewals, triggering further acceleration of customers moving off SAS. So it’s probably safe to assume in a post-sale scenario, gross revenue declines at an average of 10% per year.
If this models reality, then how can a buyer do better than breaking even on their $12 billion in less than ~8 years? That doesn’t sound like a profitable investment, unless there’s some kind of magic in the existing SAS code base they can reinvent new successful products from. If such magic exists, then why isn’t SAS as a company able to capitalize on it now?
Given these factors, doesn’t that mean that a fair market value for SAS would be at most $7 Billion today? Otherwise it seems like they are a whole lot better tech investments out there.
"The only things of value at SAS are the code and the land in Cary."
But what about all the art?
“A declining $3B gross revenue is all that most buyers want.”
Correct. Companies like Broadcom and private equity specialize in acquiring declining revenue streams. That $3B is the main value of SAS, so it will attract that type of buyer.
SAS software and SAS real estate are in two separate companies. A buyer of the declining revenue stream may not want the real estate -- or Innovation Air, or JMP. All these parts have been separated to facilitate a sale.
At the time of the Broadcom deal, the Wall Street Journal reported that the price under discussion was $15-20B. Broadcom had no reason to leak that figure; SAS did.
I guess if anyone had offered $15-20B, the company would have been sold by now.
https://siliconangle.com/2021/07/13/sas-institute-decides-selling-broadcom-reports-say/
The only things of value at SAS are the code and the land in Cary.
That's it. Nothing else. Not the people, not the so-called legacy, not the (haha) brand that most people don't recognize outside of the RDU or Triangle area.
With every year that passes the company's value is declining. The right suitor could use the code to create some great stuff people would actually want to buy and use.
But the fact is that SAS code isn't needed anymore. Every org that is trapped by its use of SAS will eventually break free of it. To pretend otherwise is silly. But SAS acts like this isn't the case.
A declining $3B gross revenue is not impressive for SAS. We don't know what the true
net revenue is since it's a private company that does not disclose this number so we don't really know what the actual profit margin is for SAS.
Gross revenue only includes money earned from sales and doesn't account for other expenses, such as the cost of goods sold or overhead.
Gross revenue provides a basic view of a company's earning potential for its products or services. It's different from net revenue, which is the total amount a company makes from its operations after accounting for adjustments like refunds, returns, and discounts.
No way is SAS appreciating in value since 2021. SAS will be lucky if it gets $12-13B now and $17B was overpriced even back then and would be too much today.
No indications of any interest post Broadcom. Maybe there has been some interest and it was kept secret?
Using "getting the books in order" is a stale excuse and has less and less credibility as time marches on.
Speculation.
What we do know is that SAS has not sold. That can be indicative that the market is not willing to pony up what the sellers want. Complicating matters is all the extraneous stuff that has been unnecessarily bundled. A declining $3B gross revenue is all that most buyers want. In their eyes, the rest is not wanted and is a huge hassle that adds uncertainty from a disposal point of view.
The bottom line is that potential buyers have focus on the short term and the sellers likely have their focus on the long term.
Just guessing but here is how I see it:
- the sellers do not have the stomach to see what would happen to SAS from the time they sell to the time they pass away.
- are content to "get ready" to sell/ipo as merely only a means of streamlining until their death. "Get ready" is a posturing coping mechanism by the sellers. They are rich beyond measure and do not need any more money, especially this late in their life.
- Sellers won't know and won't care what happens to SAS after they pass. No matter what happens or how it happens, their heirs inherit generational wealth on the land alone.
In summary, Buyers want to su-k the remaining life out of SAS and sellers would hate to see their baby die that way. So sellers will give their beloved depreciating asset the very best palliative care they can until they - or SAS - expire... whichever comes first. SAS' worth has nothing to do with seller's wishes and that is why putting a number on worth is a waste of time.
Both founders are extremely intelligent and far be it from me to judge how they wish to play out their final chapter. Just because they are filthy rich does not mean I do not wish them peace. Nothing lasts forever. I was there nearly 30 years and can not imagine being happier at any other company for that long. So, a respectful tip of the hat to the taller founder!