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Technology Stocks : SSA (SSAX) BPCS/Client Server

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To: MAURICE J. SADOWSKY who wrote (527)	2/2/1998 11:16:00 AM
From: MAURICE J. SADOWSKY	of 915

Eugene--see your problem--sorry but not thinking straight today--going back to bed and plan to feel sorry for myself and make my wife as miserable as I am--what else can I do! First, however, Ken and I have been talking about the model--I have made some changes as follows: 1. Number of shares for calculating the EPS---48.6 million 2. Q1 97 vs Q1 96 growth--lic. rev. @25.0%--services @ 18.2% 3. This gives total revenue of $113.4 million or 23.0% qtr over qtr growth. 4.Ratio of cost of revenue are unchanged and all other costs are the same across the board. 5. SSAX has large "tax loss credits"--I haven't the foggiest idea how to treat this one so I did not--taxes are $3.0 million (36% rate)--this compares with $1.5 million in Q4 when operating income was $13.9 million (H&Q data and factors used in this analysis). So in fact the tax number is way off--it could be $0.00 but I doubt that. Then there is the signing bonus for Bill Stuek ($1.05 million)--don't know where to put that either. Bottom line is we should easily beat the First Call projection which is based on 13% growth and $0.03 per share--Ken and I seem to agree that earnings should come in at about $0.10--the model says 0.11--if you take the taxes out you can add another $0.06. I'm going to stop here because this is getting pretty wild. What I believe is we will NOT be getting a earnings warning that will scare the pants off of the market for SSAX. What I believe is that earnings per share will beat First Call--If I were more skilled in tax matters and had insight into growth--we could fine tune this thing--but I don't--and I'm sick--and I'm not getting any sympathy. Maurice

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