Bullish News...... ORCL! How can you not be BULLISH!
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Analysts: mild rebound for software
No repeat of bloody first quarter expected
By Brenon Daly, CBS MarketWatch
Last Update: 5:01 PM ET Jul 2, 1999 Software Report
NEW YORK (CBS.MW) -- After a rough first quarter, many software companies are expected to post decent earnings for the second quarter, as the reports come trickling in over the coming month.
"There's fewer sections doing poorly than are doing well," said Bruce Lupatkin, head of San Francisco-based North Bay Technology Partners. One pocket of strength: software that helps businesses automate their dealings with customers.
"Front office (software) is perhaps the strongest area," Lupatkin said. "We've already had a preview of that with Oracle."
The database giant (ORCL: news, msgs) said sales of its customer relationship management (CRM) software rose 138 percent to $44 million. The blistering growth boosted the outlook for the largest CRM player, Siebel.
Shares of the company (SEBL: news, msgs), which is one of Lupatkin's top picks, have jumped one-quarter in value since Oracle reported its results two weeks ago.
Another of Lupatkin's selections, although it brings a little more risk, is applications development company Forte (FRTE: news, msgs). "There's pent-up demand for application development ahead of the Year 2000," Lupatkin projected.
Indeed, many software companies have been reporting slowing sales as businesses concentrate on making sure their current software will function in the new millennium before adding more software. Some computers can't read the first two digits of a date, which could knock automated systems for a loop when 1999 rolls into 2000.
In the first quarter, a number of high-profile software companies fell short of analysts' earnings expectations, including PeopleSoft (PSFT: news, msgs), Axent Technologies (AXNT: news, msgs) and Network Associates (NETA: news, msgs). Most blamed the slowdown on the upcoming turn of the millennium.
Those concerns will continue to make the second quarter reports "a little squirrelly," said CIBC World Markets Analyst Melissa Eisenstat.
She's looking for solid reports from makers of business intelligence software and management software. She counts Business Objects (BOBJ: news, msgs) and BindView Development among her top picks.
Microsoft Chief Financial Officer Greg Maffei said on Wednesday that he's "comfortable" with earnings projections for its fiscal fourth quarter, which ended on Wednesday. Analysts see the software giant (MSFT: news, msgs) earning 35 cents a share.
Microsoft releases its results on July 19.
Brenon Daly is a reporter for CBS MarketWatch.
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