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Gold/Mining/Energy : GPW Group West Systems Ltd. (Year 2000 Software Company)
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To: L. D. who wrote (428)4/19/1998 2:26:00 PM
From: Bernard Elbaum  Read Replies (1) of 1443
 
There is no difficulty justifying the Group West price if one believes that the company's revenues will grow rapidly in coming years. If revenue growth is say, 24% per year, total sales would quadruple in just six years. Since markups are high in software and Group West is already at a point of just covering overheads to break even, new revenue of that size would leave a healthy net.

The Y2000 adds a spurt of growth and marketing opportunities. That business alone may be worth a few buck a share, or a good slice of the companay's current market cap. Still, the key and lingering question is how much business will the company have, say, in 2004, after the boom is over. Confidence in the company at bottom then rests on judgment regarding its managerial and technical abilities, and its ability to woo customers after helping with Y2000 problems. Can anyone comment on these points?
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