Software Industry update from Briefing.com:
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Comment: As we expected, the software group did quite well over the past few months as fears over Asia gave way to the
realities of much better than market sales/earnings growth. Even the relational database companies have firmed a bit,
particularly Informix which has had a good run so far this year. While we remain very optimistic over the industry's prospects
for the long-term, an overbought market tone, the threat of higher interest rates and relatively rich multiples compel us to
downgrade the group's short-term rating from 1 to 2. Conversely, we are upping our long-term rating from 2 to 1 now that the
Asian crisis looks to be contained. In fact, to date the surprisingly strong domestic economy and a resurgent European markets
have largely offset the weakness seen out of Asia. In addition, demand for sub-$1000 PCs continues to drive consumer
interest, which will lead to solid sales of operating systems, games and applications. Barring action from the DOJ, MSFT is set
to unveil its Windows 98 OS in June, which will give the stock and the industry a solid boost. Internet-related firms will fare
well, as will those companies providing Y2K solutions. Finally, the technical tone of the group's leaders remains decidedly
bullish. In sum, we contend that the group has had a very good run and that pace of gains going forward (over the next few
months) will slow a bit. Long-term, we expect the group to post average annual earnings growth of near 20%, well above the
market rate. As such the industry will remain one of the market's top performers. Stocks: Adobe Systems (ADBE), America
Online (AOL), Autodesk (ADSK), Automatic Data Processing (AUD), BBN Corp. (BBN), BMC Software (BMCS),
Borland International (BORL), Broderbund (BROD), Ceridian (CEN), Computer Associates (CA), Computer Sciences
(CSC), Forte Systems (FRTE), Informix (IFMX), Intuit (INTU), Microsoft (MSFT), Netscape (NSCP), Network Associates
(NETA), Novell (NOVL), Oracle (ORCL), Parametric Technologies (PMTC) , PeopleSoft (PSFT), Sybase (SYBS),
Symantec (SYMC), System Software (SSAX)
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Shane. (and 18-22 sounds good to me!)
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