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Technology Stocks : Y2K (Year 2000) Stocks: An Investment Discussion
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To: paul e thomas who wrote (9218)1/28/1998 8:59:00 PM
From: Jeffrey S. Mitchell  Read Replies (3) of 13949
 
Re: What the market is looking for in earnings reports

I have always contended that the true winners in Y2K will be the companies that use the problem to build a strong client base. While I have not studied earnings reports nearly to the level that I know you have, I do think recent price movement in this sector supports this hypothesis.

What it boils down to, I believe, is the perception that a service oriented vendor has clients, whereas a product oriented vendor merely has customers. Thus, since the bond is stronger with the former, recurring revenues from such a relationship should be commensurate in increased strength.

The Indian body shops did extremely well early on because they had already forged strong ties with certain companies for doing custom programming. Y2K specific vendors that do well in winning Fortune 500 accounts will have a strong base from which to draw post year 2000 for things like Euro conversion (if it gets delayed that long), migration to client/server, adaption to electronic commerce, etc.

In other words, companies that treat Y2K as a passing fad -- the ones that make it a point to downplay it -- are the ones that are most in danger post year 2000. Time waits for no one and there's no better time to pick up clients than now.

- Jeff
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