Genesys Telecommunications (GCTI) Message Board

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Technology Stocks : Genesys Telecommunications (GCTI)

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To: Jay Nitschke who wrote (113)	7/23/1998 3:04:00 PM
From: Bobo	Read Replies (1) of 220

Jay, I think the stock price is a reflection of what you described. Here is a little detail from the conference call. The facts are mixed with my opinion which I have delineated with IMO (I am long BTW). - The pipeline of deals are quite strong. New orders were in excess of revenue. Deferred revenue grew again during the qtr. 2/3's of it is license revenue. It appears that several deals will fall in early in Q1 (current qtr). IMO it appears mgt is managing the revenue growth but I expect to see sequential growth from Q4 to Q1. - DSO's were up to 95 days from 90 which is which IMO is the only fact that challenges my mgt-of-the-top-line thesis. Mgt indicated that they expected this to be under 90 at the end of the next qtr. The only thing I can figure is that with several deals closing at the beginning of Q1, it will be a linear or front-ended qtr. - 212 external integration consultants were trained during the Q and 817 over the last 4 Q's. - Six sites are live with the NSP offering by Connectivity. This service will be aggressively marketed across Canada in the next 12 months. Version 5.1 of T-server will provide a network interface option that will productize the T-server in the WAN configuration. - Sales reps will be expanded from 70 to 100 or 110 by eof fiscal 99. (IMO, this translates into $175mm in rev for 99 if the company can execute) -- another 100% growth year. Operating margins are expected to be 20% by the eof the year from the current. IMO, this translates into $.76 for fiscal 99. So right now, the stock trades at 38 times 99 eps. If they can maintain the growth, it seems that the company should trade at 60 times trailing eps 12 month from now or $45. - Based on some discussions I have had, you should hear more in the next 6 to 9 months about additional products outside of the call center and more about NSP customers beyond Connectivity and MCI. - IMO and through some discussion I have had with Genesys employees, mgt is attempting to pace the growth of the company and (as consequence) the stock price. The internal Genesys view is that they can double the company each year for the next several years. But the lack of a blowout qtr (like Siebel and Itwo) sure challenges the valuation and certainly challenges the patience. In fact, today is probably a reflection of that lack of patience. - IMO, it is a large and growing market that Genesys participates in. It does not seem at this point that market size is an inhibitor to the company's growth. Genesys has to get big quickly to compete against incumbent vendors like PBX. It also has to establish a better presence with carriers. Buy and hold, Bobo

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