Monday, June 15, 2009

ArcSight - What is The Strategy?

ArcSight, Inc. (NASDAQ:ARST), a leading global provider of compliance and security management solutions that protect enterprises and government agencies, today announced financial results for its Q4 and fiscal year ended April 30, 2009. The company admittedly did well compared to last year. They are positioned in compliance and security management solutions which sounds like a good place to be.

When you check out their cash position you find a $90 million bank account which in relation to current operations sounds very high. Then you check R&D and see that for a new company offering new ideas the R&D spend is very low. So the question becomes what does this company provide in this space that is so unique that will let them survive or thrive. $90 million dollar bank accounts are peanuts in this space.

Management has not spoken to the future in this context. This begs the question as to what their long term strategy really is; if there is one.