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Technology Stocks : Siebel Systems (SEBL) - strong buy?
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To: Reginald Middleton who wrote (2202)10/16/1998 10:11:00 PM
From: Mike Buckley   of 6974
 
Reginald,

>>When growth companies expand their net margins, they make a discretionary decision not to increase their long-term investments at the rate that their revenues are increasing. <<

I understand the point you make, but in the case of Siebel's acquisition of Scopus I would hope that at least a small part of the expanded margins is the result of three factors:

1)increased economies of scale; and
2)reduced cost of selling new products to existing customers by capitalizing on the Scopus/Seibel cross-selling opportunities; and
3)lower back-office expenses of the two former companies compared to those of the new, merged company.

--Mike Buckley
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