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Technology Stocks : BMC Software

BMCS 0.00820

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Nov 7 9:30 AM EST

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To: Edwarda who wrote (1176)	1/27/2000 7:45:00 PM
From: Marq Spencer	Read Replies (3) of 1492

Edwarda, I found the BMC call quite disturbing. For example, the following was stated on the call: * Some delays in big deals... people did not want to close business at the end of the quarter... already closed some of these in January... * Current qtr. (Mar. 2000) will be $450-460MM (not meet previous forecasts)... net will be $0.45-0.46 (instead of $0.53) Can someone explain how to reconcile those statements? The first set of statements would imply that this quarter would be better than previously thought since it has some of the revenues from the last quarter. The second obviously contradicts that. Also, the statement that the mainframe DB2/IMS business will now be flat/down long term was a surprise. BMC has been touting that this part of the business is directly linked to IBM MIPs shipments (in fact Chuck Phillips did a correlation write-up on this not too long ago). The third disturbing fact was the flat sequential quarter in the distributed business. I think it was Drew that pointed it out during the Q&A which they would have rather not brought up. The fourth is the fact that they're continuing to dip into their deferred license revenue pot. Down $27MM to about $40MM. This means that actual revenues for the quarter were around $400MM (not $426MM). As this dries up, it will be even harder to show license revenue growth. And lastly, the comments about sales org being new and comp plan being messed up. Well that was set up three quarters ago - kind of funny to find out at the end of the third quarter. Even if you take that on face value, isn't Max listening to his sales people, especially since sales is his background?? All in all, I think it was a scary call. I'm neither long nor short, but was thinking of getting in if the call was convincingly positive. For me, it was convincingly negative. - Marq.

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