LET'S SIMPLIFY:
1. Fundamentally, Zitel is without question a speculative investment. Company has declining revenues and earnings, and even if it's able to turn this around because of the Matridigm product, will they be able to have enough talent and manpower to sell and support the software, train clients, and do the necessary things to manage growth ... don't forget, they've not been able to have more than $50 million in annual revenues ...
2. Technically, expect a roller coaster which allow plenty of short term trading profit ... no quarrel with that, I enjoy that too ...
Now, for the benefit of those who have never been involved in a Year 2000 conversion, Fortune 500 companies do not just turn over their bread and butter legacy systems to a sub $50 million company ... most likely, they will seek the help of major consulting firms like Andersen, Cap Gemini, Computer Horizons to do the whole Year 2000 project, so question becomes, will these firms choose the Matridigm product ... Those that go directly to Zitel will now have to contend with whatever support the company can muster ... As hot as a sector is, growth can still be hampered by marketing/support that cannot keep up with demand ... a case to point is the hot helpdesk/customer service sector where Vantive just reported disappointing revenue growth not because of slowing demand but because they cannot get more people into their sales staff ... this brings us to the question, what should make us think ZITEL will be different from most small companies that hit it big?
We've also seen a lot of start-up companies with fantastic revenue growth that have to wait at least a year before showing profit from operations (Netscape and Iomega are examples), and another year or so before operating profit reach 10 to 15% of revenues ... again, what makes you think Zitel will be different ...
Then, when things are really looking rosy, its 1999 ... then what, wait till next century
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