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Technology Stocks : Verity (VRTY)
VRTY 2.4000.0%Dec 22 4:00 PM EST
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To: kech who wrote (642)3/11/1998 10:45:00 PM
From: Don McCauley  Read Replies (1) of 1011
 
Just a quick comment re: Lotus

I actually think that while Lotus and Verity are scrapping, the dispute is over how to interpret a 6 year old fairly vague agreement and how it defined (or didn't) future technologies to be included.

The good news for Verity is that Lotus is dependent on the Verity technology and recent announcements suggest increasing rather than decreasing. Verity's engine works well for Lotus and thanks to a great deal 6 years ago (before VRTY was public), they haven't been paying much for it. So unless Lotus were to "throw out" Verity, which I think is extremely unlikely, what we will have here is a royalty dispute that can only add to Verity's revenues.

If Verity's technologies are important to IBM/Lotus on several fronts (as Nick Arnett wrote today), then an acquisition certainly could happen. For $100 million or so, they'd get a lot of technology and talent. But I don't think this is the current strategy at Verity, and certainly not related to this lawsuit. This lawsuit has been long overdue. Lotus assumed they could do whatever they wanted and Verity would either "fold" or take the "long view" that the relationship would somehow turn to gold for Verity later. CEO Gary Sbona believes that the only good customers are paying customers. I second that emotion.

Don
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