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Technology Stocks : Systemsoft Inc. (SYSF)
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To: Robert Scott who wrote (3043)2/13/1998 11:50:00 AM
From: Robert Scott  Read Replies (3) of 3529
 
Seems to have found a trading level between 3 1/4 and 3 1/2 since the news. I wonder what could affect it downwards from here. I think they have taken whatever measures they need to to make sure no further downward surprises for Q4. Expect "double digit" range for revenues for next Q and flat earnings. Q2 is supposed to begin climb out of the flat to negative earnings. Have mentioned that revenues follow within about 6 months after announcement of SystemWizard license.

Negative surprises could be:

1. Lawsuit
2. No Compaq deal
3. Dell or other OEM pulling out of program

Positive surprises could be:

1. Compaq deal broader than anticipated
2. Additional breadth in other OEM implementations
3. Angelo resigning or taking a back seat to Deb

Overall:

1. All Angelo credibility lost as it relates to analysts and many shareholders.
2. There is a risk given SYSF's problems, cash position and size that OEMs may feel uncomfortable giving them more business until picture is clearer.
3. No risk of MSFT entering this business IMHO - companies would not want such sensitive info in their hands.
4. Opportunity is still significant if they can navigate through these troubled times.
5. Card and BIOS product lines still good - believe Q4 was really a blip like an inventory correction.

If annualized revenues are in the $40-50M dollar range now, stock is trading at about 2X sales. A little over 3X book. These are not dead cheap prices on a relative basis. Perhaps a small entry position is warranted given the price/risk.
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