Metrowerks (MTWKF) - low volume, low visibility Message Board

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Technology Stocks : Metrowerks (MTWKF) - low volume, low visibility

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To: lynch who wrote (40)	5/14/1997 3:54:00 PM
From: Sam Ragucci	of 82

I listened to the conference call, here's what I got out of it: * the Major Issue is the product transition from Code Warrior for Mac to CW for embedded systems (OS/9, Palm Pilot, PlayStation, WinCE, etc.). Sales of Mac CW are now less than 33% of total sales, but the fall-off in Mac sales happened faster than expected and before other revenue streams have ramped up, hence the sequential revenue decline. * CW for OS/9 was slipped to June for more QA - this is one of the most promising embedded systems platforms for Metrowerks, and will probably contribute over $2 million per year after initial ramp. * The one-time charge of $4.3 million allowed them to get all the bad news out of the way in one quarter (my interpretation, they didn't say this!), and clear the decks for profitable quarters ahead. Next quarter will probably be about break-even or a small loss. * Total headcount is up to 165 and will not be increased further for awhile. * They were more forthcoming about answering questions than most companies, giving in some cases detailed breakdowns of revenues. For example, about $150K of revenue came from essentially hardware sales of the Palm Pilot (on which there is a lower margin than on software). Contract sales accounted for $1.3 million and will probably be similar next quarter. * As reported in a press release (see Company News) they are combining their Mac CW and Windows CW into CW Professional for $599 retail (each was $399 before) and moving to twice yearly releases. Although I logged into the relevant programmers' newsgroup this morning, I haven't seen much reaction to the new plan yet - I'll report on this later if it seems significant. I'd be interested in other people's takes on the conf. call and press releases - IMHO we will see short-term weakness in the stock based on uncertainty, but in the long term the diversification away from the Mac platform will succeed (and has already been proven necessary!). Sam

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