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Technology Stocks : SSA (SSAX) BPCS/Client Server
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To: kvogel who wrote (466)1/27/1998 4:34:00 AM
From: MAURICE J. SADOWSKY  Read Replies (2) of 915
 
I agree--initially its the system that counts more than any particular number. H&Q uses only 13% growth Q198/Q197. That to me is not acceptable considering the product a year ago was still not market approved with any significant number of live sites. I would tend to agree that $110 million makes more sense--key here is that the cost of liscenses is 25.6% --In the previous five quarters cost of licenses have been:
28.8%, 24.4%, 26.4% 23.3%, 25.4%. Cost of service for the previous five quarters has been: 86.7%, 86.7%, 71.5%, 78.4%, 73.6%--compared with the Q198 estimate of 70.0% (Think you can see the hand of H&Q here). Still think that number is high. The H&Q % for total revenue was 40.4%--so $110 million could generate an additional $2.34 million in net assuming all other costs remain the same--well to make this thing work each number has to be looked at one by one. Why--none of the numbers may be good given the choas of the last year.

I will not be satisfied until the profit margin is greater than 10% of revenue--then in round numbers on revenue you would have $10 million net profit on 100 million of revenue devided by 50 million shares or $2.00 earnings per share. Don't say its not possible from 92-98 margin was: 11.6%, 8.9%, 3.1%, 7.1%,(-13.5%), 1.9% and a H&Q estimate of 5.3% for 98. Problem is it is back end loaded as follows: 1.1%-3.1%-6.1%and 8.9% (Q1 through Q4). Like I said--you got to start somewhere.
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