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Technology Stocks : edusoft (EDUSF)
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To: H.J. Schellenberg who wrote (70)9/2/1997 9:44:00 PM
From: Frank Gasker   of 272
 
funny you should mention Microsoft
been monitoring news releases since DEGEM indicated that they were selling part of the company. Microsoft released news last week they were entering the market with software for early childhood development. It (i believe) is there second attempt. They may be in the market to expand this product (and others) globally.
My thoughts are (IMHO)

1. Although EDUSF managed to ride out the downturn of 1996 and eke out .23 per share earnings on reduced revenues. Degem suffered a loss for the year. Degem has since turned positive q's for 97 but there probably is a need to part with a portion of EDUSF.
2. Though there may or may not be a need for Degem to sell a portion of EDUSF. I'm rather certain that numerous offers are on the table not because EDUSF will be offered at a bargin. The products that they offer are focused at the right markets. Software abounds for English speakers to learn other languages. The reverse, that is quality ESL courseware is not. Edusoft has both the quality software, the expertice in management specific to this area, the personel and resourses to continue and expand the market.
3. WHY SELL I'm not convinced EDUSF could not just make it on thier own. I guess it's good for Degem to own 66% of Edusoft but it's really not doing holders of the remaning 33% much good. Besides if you want quick growth, team up with a big brother and act as a pipeline for sales. The hardest part of this equation is how Degem fits in later. Edusoft has benefited from Degem using this same method.
4. I'm convinced that Isreali high techs are trending toward a stradegy of selling equity interests to larger capitalized companies with the intention of injecting adrenalin into the business. Wiztec and Vocal tech both at 20%. My guess Degem offers up 20% (about 1 mil shares) say @ $10. That's lunch money for Bill.

gfrank
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