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Technology Stocks : SDRC - Structural Dynamics Research Corp.
SDRC 0.370-7.0%Jan 30 9:30 AM EST
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To: gary althoff who wrote (766)6/11/1998 7:41:00 PM
From: Jerry Rush  Read Replies (1) of 946
 
My 2-cents worth:

First off, I see this as a short term negative.
...Many people were unaware of the fact there was (or might be) a problem.
Now, Problem is a given.
That revelation will likely create some selling pressure.
Any business may have litigation pending at any point of time, but lawsuits are an expensive undertaking.
(I know of no other litigation).

How big is the problem?
...As big as Ford.
Ford uses ICEM for body surfacing and "white."
Other autos use different tool-sets.

What impact will this have on SDRC?
...I was told, NO IMPACT.
Now, how accurate is that?
I dunno.
Maybe I couldn't be told because it was "Insider Info."
But from what I was told, the ICEM purchase is more of a problem for Ford than for SDRC.

When the takeover (PTC of ICEM) was announced rumors flew.
Here are a few I heard:
..Ford was HOT.
..They wanted nothing to do with PTC.
..PTC had used all kinds of underhanded tactics to foil Ford/SDRC contract.
..Ford was heavily dependent on ICEM.
..PTC would use ICEM to gain Ford.

What now?
Well, the fact PTC bought ICEM from Digital DOES NOT relieve ICEM from fulfilling the contract signed before the takeover.
i.e., it matters not whether PTC or Digital owns ICEM.
SDRC/Ford has a contract.
ICEM has an obligation to live up to its terms.

The lawsuit is obviously a move to protect SDRC/Ford from anti-competitive and unfair business practices.
And probably necessary.

As I said previously, I do see this as a short-term negative.
Longer term, it will be an expense item that will dilute earnings somewhat. Probably marginally.

I have no idea how it might be resolved.
But no matter.
The suit should tie things up for PTC.
And allow SDRC/Ford to continue the status quo.
Ford can continue to use the software while they evaluate the options of continuing or switching.
Although for Ford, neither choice is palatable. They would rather the 150 person workforce that is ICEM continue as a part of Digital.
But short of winning the lawsuit, that won't happen.

Tying things up in court buys time.
Time to do what?
Business as usual.
Such as making a buck and half this year. Two dollars next.
(less a few cents for lawyer fees)
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