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Technology Stocks : PEGA - Pegasystems
PEGA 59.12+0.3%3:59 PM EST
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To: David R. Doerr who wrote (111)7/30/1997 3:35:00 PM
From: Mark B.   of 504
 
SHORT SHORT SHORT ...........
I listened to the conference call and this is a short if I've ever seen one. Heres why: 1) The First Data deal is only marginally incremental to the internal projections that the company has had from day one (First Data was a big reason why the stock was so strong the past month); 2) Their accounting is suspect (at best) - most of their "revs" in the quarter were from license renewals or extensions where much of the revenue isn't collected for several years; they acknowledged that one of their deals was up and running on the last day of the quarter so you can be certain that aggressive revenue recognition on this deal helped them make the numbers; they were openly soliciting suggestions from listeners as to how they could change their balance sheet to distinguish between s-t and l-t receivables (makes you wonder, doesn't it?); 3) They only added a handful of new clients during the quarter and acknowledged that they're facing more competition in some of the new areas that they've been pursuing (they're in one of THE most competitive segments in technology), and 4) If you compare their REAL revenue and client growth to a company like Siebel Systems (also a fairly expensive stock), you'll see that their relative valuation is way too high.

While Pega may prove to be a good company, it is definitely not worthy of the current valuation.
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