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Technology Stocks : RATIONAL SOFTWARE- BUY OR HOLD

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To: John Mansfield who wrote (1981)	12/23/1997 2:22:00 PM
From: ratlong	Read Replies (2) of 3115

There are two ways to slice the Y2K situation- and the point you raise is definitely a valid one. The other concept is that companies are doing an increasingly large amount of development to replace systems and therefore, RATL tools benefit. I think the two might cancel each other out. The other thing about corporate IT departments is that the people who would be buying RATL tools are fundamentally different people than those who are writing lines of cobol code to address y2k issue. Different departments, different functions, different knowledge sets and mostimportantly, different budgets. IDC, which is clearly a leading research org for tech sectors, predicted that corporate expenditures on OO and Component based development tools(of which RATL is a major market holder) will grow from $125m in 1995 to $3B in 2001, which goes directly against the theory that people will stop spending money on OO and CBD tools because of Y2K. Garntner is bullish on OO and CBD tools and recognized RATL as the leader. Also, the fact that SQA is being used to test Y2K compliance also positions RATL well for post Y2K business. Of the risks facing RATL, I do not consider this to be a major one.

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