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Technology Stocks : New Era of Networks (NEON)

NEON 2.120

-0.2%

Nov 18 3:59 PM EST

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To: Neil H who wrote (869)	8/27/1999 7:01:00 AM
From: ISOMAN	Read Replies (1) of 1222

I highlighted some key points from the article that I thought were pertinent when I looked at NEON after the July 6th, anouncment: As the table shows, things got ugly in a hurry this year. But looking beyond the disappointing trends of the past two quarters, one can clearly see past proof of the kind of the growth that exists for the company and the EAI sector as a whole. Even though Neon started to lose its grip on this growth in Q1 and finally hit a brick wall in Q2, it's still in an enviable business position. The EAI market did not evaporate overnight along with the company's share price. If anything, the company's target market is only getting bigger. As Sun (Nasdaq: SUNW) reminded investors earlier this week with its proposed acquisition of applications developer and integrator Forte Software (Nasdaq: FRTE), the enterprise demand planets are starting to align for EAI vendors. Y2K legacy spending and enterprise resource planning (ERP) implementation efforts over the past few years are giving way to a tidal wave of corporate e-commerce application initiatives at enterprises of all shapes in sizes. The EAI market is projected to swell to $3 billion by next year, and some analysts are going so far as to predict that the market can possibly double in size every year for the next five years. Having some 60 to 70 deals slip through its fingers from its joint-marketing channel with IBM (NYSE: IBM) in Q2 certainly took the momentum out of Neon's share price. But the EAI market momentum is still there. With some tweaking to its business model, the company is hoping it can get back on track. To gain more visibility from the IBM channel, Neon will start recognizing IBM revenues on a delayed basis from now on. Operating expenses and headcount will be cut back. Products that allow Neon to collect 100% of the revenues, rather than splitting them with IBM, will be emphasized.

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