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Technology Stocks : Documentum (DCTM) Software
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To: Stephen Swantz who wrote (312)4/24/1998 3:26:00 PM
From: rainman  Read Replies (1) of 600
 
Increased revenue is usually a combination of customer growth and/or better profit margins. Sometimes a company experiences increased earnings by growing margins without growing their customer base. I worked for a company where this happened and it was great for the short term but bad for the long term. My comment was directed at finding out how the 67% gain in revenue was accomplished. I'm assuming they grew their customer base within the last year, but I'd like to know by how much. I'd also feel a bit more comfortable knowing their projections for growing the customer base in the future.

Increased earnings without increased sales or with marginally increased sales can be a formula for disaster. Personally, I like to see good earnings be the direct result of increased sales as opposed to better margins.

I'm surprised by the markets response to the better than expected earnings. As I write this, DCTM is down 1 5/8 at 55 5/16 on volume of 236,900.
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