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Technology Stocks : Avant (AVNT)

AVNT 36.02

+2.9%

3:59 PM EST

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To: PMylnar who wrote (1571)	11/24/1997 4:58:00 PM
From: Peter Bernhardt	Read Replies (2) of 3441

3) Fundamentals. If the legal battle w/CDN is hurting AVNT, it isn't showing up in AVNT's financials except in thier legal expenses. I looked at AVNT's 3q 10-Q this weekend on the web, and although AVNT reported EPS of $.33/s (vs. an estimate of $.29/s from Wall Street)on an operating basis in the 3q97 that included about $2.5mm of legal expenses in the quarter. I disagree. Avant! is indeed showing wear on a fundamental level. In the quarter last reported, accounts receivable exploded from $12.9M to $25.5M -- a 97% sequential increase and a 180% increase from last year. This represents a huge increase is A/R turnover and DSOs. Not a positive sign at all. When we first discussed this issue, some speculated that the A/R increase was the result of the Compass acquisition. I doubt it. Rather, it points to troubles brewing in quarters to come. My guess is that the recovery in Avant! is the result of short covering. The drop was sharp and rapid and the stock price is only moving back into the lower end of a downward channel. Technically, the stock remains extremely feeble and I'll be looking for a chance to short again in the near future. - Peter B

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