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Strategies & Market Trends : The Round Table: A work by the squares of the SNDK thread.
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To: Ausdauer who wrote ()9/4/1999 11:08:00 PM
From: Bill Zeman  Read Replies (2) of 194
 
Hey gang, long time.

Here is a new investment opportunity for SNDK profits:

SSW Sterling Software

They are one of the 20 biggest software companies in the world. They specialize in enterprise software. They have reported positive earnings and revenue growth for 43 consecutive quarters now. They have a forward PE in the teens, and they have been snarfing up 2-4 good little software companies a year. They keep making great acquisitions, and they can usually work it so that the earnings are immediately accretive from the new companies. Most of these companies have been so small that they lack the contacts and marketing muscle to really push their products. When they are put together with the huge SSW the synergy has been very positive. They recently acquired IACO, (a little software company Art presented sometime back that has the best product in their class, even better than ORCL). This is just one example of the great deals SSW keeps getting when they buy small software companies.

Here's the sweet part. Right now SSW is hovering near 52 week lows at $20. I believe it's weakness over the last year and a half is as follows:

1. General sftwre weakness in anticipation of loss revenues due to Y2K distractions.

2. SSW continued dilution due to new share issue to cover acquisitions.

3. SSW as a tech stock is not viewed as an internet stock and it's earnings are clearly defined. Even though earnings are good it does present the "problem" of a more certain outlook, thus limiting the upward volatility common in tech issues with nebulous future earnings potential especially of the internet variety. Thus SSW suffers from neglect.

ALL OF THESE REASONS FOR SSW WEAKNESS ARE SHORT TERM AND TEMPORARY!!!!!! Sooner or later these issues will work themselves out and the stock will see the 30's again!! I am betting it happens before March 2000, (I own some calls with Mar exp.). The Y2K problem will be over by then, and the dilution fears should begin to subside with their recent announcement to buy back shares. Now all it needs is for investors to notice a screaming buy.

Bill Zeman
20
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