Microsoft Corp. - Moderated (MSFT) Message Board

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Technology Stocks : Microsoft Corp. - Moderated (MSFT)

MSFT 487.55

+0.1%

Dec 30 3:59 PM EST

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To: miraje who started this subject	8/13/2002 10:21:16 AM
From: Exacctnt	Read Replies (1) of 19790

Goldman Sachs comments. U.S. Software Thoughts: All Eyes on Oracle 08/13/02 8:42am ET August-quarter results from Oracle Corp. (MO) will be an important bellwether for the broader software sector. An in-line quarter for the company probably would be viewed as a further sign of stabilization of the software business following many quarters of earnings shortfalls and estimate reductions. Confirming evidence of stabilization in business would potentially be a benefit to investor sentiment. However, it is uncertain whether any benefit in sentiment would be overshadowed by apprehensions over likely 2003 estimate reductions. We expect more back-and forth volatility in sector sentiment, with a potential upward bias if there is seasonal strength in the December quarter. The lingering issue will likely be investor concerns about just how high the sustainable growth rates are for software and the broader technology sector given the protracted slowdown in IT spending. Company highlights: In the sector we tend to prefer Microsoft Corp. (RL), given the benefits over the next year to be realized from the deferred revenue buildup over the past year, as the company has adopted its Software Assurance and Upgrade Advantage programs. Any improvement in PC demand over the next year would be significantly additive to earnings. For Oracle, there has been considerable pressure on earnings and the stock already, so evidence of a stabilization in business could benefit the stock further. However, we believe that the growth rate in the database market, which accounts for 80% of license revenues, will tend to lag behind that of the software industry in general. Siebel Systems (MP) will likely benefit as a continued relative high demand for CRM is funded by stronger IT budgets. But near term, tight IT budgets will likely continue to constrain the funding of these projects, allowing competitors (particularly SAP) to work on product functionality.

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