Market Gems:Stocks w/Strong Earnings and High Tech. Rank Message Board

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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank

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To: LastShadow who wrote (4670)	1/12/1998 7:33:00 AM
From: mark joyce	Read Replies (1) of 120523

FRTE!?! The chart looks horrible. Volume fell after the most recent sell off. I don't see any buyers. Here is an excerpt of a report from Chuck Phillips, Investment Analyst at Morgan Stanley: START MORGAN STANLEY REPORT Forte Software ($5, FRTE, Neutral) - On Monday, January 5th, the company preannounced an earnings shortfall for the quarter. Revenues for the quarter came in around $17 to $18 million dollars. Based on our $22.3 million dollar revenue estimate we estimated an EPS of $0.01. The company expects to report an EPS in $(0.25) to $(0.32) range. It is important to note that $0.03 of this loss was due to a change in tax treatment. - The company blamed the shortfall on 1) the Year 2000 problem pulling corporate funds away from new application development, and 2) large ERP implementations which have sucked up personnel bandwidth and pushed new development projects to the back burner. - The company plans to reduce its operating plans and focus on expenses and cash management. The nominal pipeline continues to look fine in total amount but the close rate is falling. Customers are deferring decisions because of other priorities and the company's ability to predict deferrals has been deteriorating. - Product development plans remain on schedule. The company released its workflow product, Conductor, in September and generated some modest revenue from the product this quarter. The mainframe version of Forte is under development and targeted for mid-1998. The company is working with IBM on the product and hopes to have some Y2K refurbishing business since some customers would like to rewrite applications but leave them on the mainframe for some interim period. The next major release for Forte (Release 4) will add scaleable enterprise class Internet/Java development capabilities and is expected sometime in early 1999. Forte has been forced to respond to the popularity of Java. Release 3 of Forte contains some initial support for Java applets but version 4 is the release that integrates Java more closely in the Forte development methodology. Hence, there are no near term product events that could serve as a catalyst to increasing demand. I think the last sentence says it all. Mark.

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