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Technology Stocks : Intersolv News

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To: Mike Healy who wrote (1055)	9/18/1998 6:13:00 AM
From: Ian Burton	Read Replies (1) of 1069

Mike - Good post. Good analysis of earnings quality. My error regarding s/w depreciation. Mixed up with another holding I have. Should have claimed that they are better than most at depreciating their s/w asset - a comparison I still believe to be valid even in consideration of your comment about bloated balance sheets. On the basis of the MIFGY Q1 numbers I was concerned about the level of accounts receivable from the perspective of customer satisfaction. I fired off a mail to the CFO. FWIW he replied. "The primary reason for the increase in the Trade Debtors account related to the year over year differences in the quarterly performance. The 4th quarter of FY97 had declined 4% compared with the prior year, and had relatively low turnover. The 4th quarter of FY98, by contrast, increased 39% compared with the prior year. In our products business, most of the activity occurs within the last month of the quarter, and is therefor not collected by the end of the period. As you noted, the receivable (debtor) figure actually came down in Q1 as much of this activity was collected following the end of the year. Hopefully that answers your question -- let me know if you need anything else." From a different angle - why do the ISLI board want this merger and Gary Greenfeild in particular? The public reasons are:: to extend ISLI sales outside of domestic US where MIFGY are stronger; leverage each other's customer base; product synnergies; economies of scale etc. All somewhat generic. I have requested more specific details of the business benefits that the merger will bring - but been told that I have to wait 'till after the EGM's since he US authorities prevent the company issuing any forward looking statements at this time. A road show is planned to sell (mainly to the financial institutions) the benefits of the merger in the two week period following the merger- seems about face somehow! 1st week Europe, 2nd week US. Bottom line then - what's your take on why the ISLI board want this deal?

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