DLJ ****** DONALDSON, LUFKIN & JENRETTE ****** DLJ
June 6, 2000 Joseph J. Farley US (212) 892-6290
John DiFucci US (212) 892-4257
Jane M. Ngo US (212) 892-0587
QUINTUS CORPORATION (QNTS: $9.25) ##+
Receivables Improve; Attractive Investment Opportunity
Range: Earnings Per Share 2001 vs 2000 % Chg
59-6 Old New P/E Ratios F1Q $(0.09) vs 0.01 NM
(FY:Mar.) 2001E $(0.20) $ NM F2Q (0.08) vs 0.01 NM
2000A (0.18) NM F3Q (0.04) vs (0.12) NM
1999A (0.37) NM F4Q 0.02 vs (0.06) NM
Yield: % Market Cap.: $302 Mil 5-Yr. Growth Rate: 50%
Dividend: $ Avg. Trading Vol.(000): 313 Book Value: $3.33
RATING: Buy Change: None 12-Mo. Target: $85
VIEWPOINT
We believe the recent share price of QNTS stock provides a very attractive
investment opportunity and has led us to revisit two issues that, in our
opinion, are pertinent to the perception and potential of the company:
1. Balance sheet: We expect DSO's to decline for the June quarter. The
company's balance sheet attracted scrutiny following the March quarter
primarily due to the lengthening of receivables as measured in DSO's. As
we have noted previously, this effect can be attributed to a single marquee
customer with a very large contract. We now believe that about 50% of this
fee has been collected since the end of the March period. We also
reiterate that we do not expect the company to be constrained by cash
issues in the near future. The company used approximately $8.4 million in
cash during the March quarter, while it had cash of almost $60 million at
the end of the period. This reserve should be more than sufficient given
our expectation that the company becomes earnings and cashflow positive by
the March 2001 quarter.
2. SEBL alliance: Upon further review, we believe that QNTS' recently
announced relationship with SEBL should yield even greater benefits than we
originally anticipated. The alliance could eventually lead to QNTS
providing the communications infrastructure for every SEBL server sale.
SEBL has traditionally utilized third-party routing technology and with the
QNTS partnership, SEBL will now be able to provide multimedia queuing and
intelligent routing capabilities per QNTS' eContact universal routing
technology. In addition, QNTS will market and sell SEBL's eBusiness
Applications Suite in conjunction with QNTS' eContact suite, and the
companies will partner in joint marketing and sales efforts worldwide as
part of the SEBL Alliance program. We believe that all of this should lead
to further exposure for QNTS' products, and subsequently, incremental sales
opportunities. This relationship should be further leveraged by SEBL's
installed customer base of over 1,000, aggressive salesforce of about 250,
massive distribution channel, and the complementary nature of the
companies' products.
We continue to believe that the e-CRM (Customer Relationship Management)
segment of the software market will experience rapid growth over the next
five years as a result of the significant value that these solutions bring
to an enterprise. We believe that QNTS' position as the most complete
solution at this early stage of the industry's development is further
strengthened by the strategic alliance with SEBL. Given our expectations
for the growth of the e-CRM arena and QNTS' unique position to capitalize
on that growth, we believe that QNTS will emerge as a leader as the
industry emerges. We reiterate our Buy rating on the shares and would
encourage investors to be aggressive buyers at current levels.
+ WITHIN THE PAST THREE YEARS DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION HAS BEEN A MANAGING OR CO-MANAGING UNDERWRITER OF THE COMPANY'S
SECURITIES.
## DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION ("DLJSC") ACTED AS
UNDERWRITER IN THE MOST RECENT PUBLIC OFFERING OF SECURITIES OF QUINTUS
CORPORATION (THE "COMPANY"), MAKES A MARKET IN THE SECURITIES OF THE
COMPANY AND, IN ADDITION, AFFILIATES OF DLJSC OWN A SUBSTANTIAL POSITION IN
SECURITIES OF THE COMPANY AND AN EMPLOYEE OF AN AFFILIATE OF DLJSC IS A
DIRECTOR OF THE COMPANY.
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