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Strategies & Market Trends : Roger's 1997 Short Picks
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To: schadenfreude who wrote (6544)11/6/1997 12:52:00 AM
From: Roger A. Babb  Read Replies (2) of 9285
 
Jon, I will try to answer your questions on BROC. First I must admit to having a large long position and thus will have an optimistic viewpoint. That said, here goes:

1. I expect that revenues will be incresing over the next two quarters from upgrades of existing products. But the real driver will be anticipation of NetGain, it is a real leap ahead of the competition using thin client remote computing.

2. I think the total development cost of NetGain is much less than $5 million so far. But NetGain is the product of some very high tech development out of the Ga Tech incubator. Yes, Seibel and others can and will catch up but BROC has at least a one year head start and the competition will have to invent some stuff. BROC has solved some tricky implementation problems in innovative ways, but there is no barrier except time and effort preventing Siebel or others from developing a competitive product. (But it might be more interesting for them to just buy out BROC. That is purely my own speculation, not trying to start a rumor.)

2a. Yes, BROC does have the client base, the sales force, and the name recognition to compete if they have a superior product. Just converting the existing client base to NetGain would be substantial. Siebel has a lot of momentum in the marketplace, NetGain must live up to its expectations as a superior product to reverse that momentum.

The BROC investors conference this Friday will demo NetGain to the investment community. Hopefully it will spark enough interest to change expectations and start the stock price moving up if the analysts change their ratings.
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